$tretching Health Care Dollar$
As Health Care Costs Continue to Climb, People Seek Ways to Save
With a family of five, Helen Bristow feels the impact of rising health care costs first hand. That's why she signed up for Duke's Health Care Reimbursement Account during the annual open enrollment for health benefits last fall.
"I use the reimbursement account to help pay for glasses, contacts, and dental work," said Bristow, director of marketing for the Organization for Tropical Studies at Duke. "Dental insurance, for example, pays for about half of the cost of a crown, so I can use the reimbursement account to pay for the rest."
Bristow is not alone. Last fall the number of people participating in Duke's Health Care Reimbursement Account grew by nearly 25 percent.
Reimbursement accounts help Duke employees manage their health care costs by setting aside pre-tax money each month to help pay for eligible expenses incurred during the year that are not covered by insurance.
"A lot of these expenses can be rather large, so it helps to be able to set aside a little each month," Bristow said. "And the great part is that you don't have to pay taxes on it, so it's like free money."
Reducing the Pain of Prescription Drug Costs
With experts projecting the cost of health care to increase by about 15 percent nationally this year, individuals and families are seeking other ways to stretch their health care dollars. One of the areas with the greatest potential cost savings is prescription drugs.
Prescription drugs costs are the fastest rising area of health care and are one of the biggest reasons behind the dramatic increases in health care costs nationwide. For Duke, prescription drugs account for a quarter of the total cost of providing health insurance to employees and their families. It is also the fastest growing medical expense at Duke.
What's driving this? The major factors include increased advertising, the development of new and expensive drugs, and greater usage - people everywhere, including Duke, are simply taking more prescription drugs today than before.
 |
The average number of filled prescriptions per person per year under Duke's health plans has increased from 8 to 11 since 1995. |
|
Lois Ann Green, director of Benefits at Duke, says that the most
effective way to reduce the cost of health care is to make better decisions about the way we live, including the way we eat and exercise. Those decisions also include the way we buy prescription drugs.
"Because there are more choices today, we have to be smarter consumers about health care than ever before," Green said. "You can't watch television these days without seeing a commercial about some new brand-name drug. This is a relatively new phenomenon that has prompted people to request specific drugs from their doctors. In many cases, there are generic versions of these drugs or other effective options to treat the same condition that are much less expensive."
Many employers, including Duke, offer a three-tiered co-payment drug plan to provide participants with greater flexibility and options for less expensive alternatives. Under Duke's co-pay structure, if you order a 34-day supply at the pharmacy you have a $10 co-pay for a generic drug, a $20 co-pay for a formulary brand drug, or a $35 co-pay for a non-formulary brand drug. And for those who need prescriptions for longer periods of time, mail order offers substantial savings compared to the local pharmacy (see sidebar article).
Each year Duke pays an average of $500.42 for each person covered under its health plans for prescription drugs. |
|
"Generic drugs are not always available," Green said. "But when they are, generics can offer significant savings for individuals and for Duke." While the difference in co-pay between a generic drug and a formulary drug may only be $10 for plan participants, the cost to Duke's health plans is typically much greater. For example, a person with arthritis pain who asks the doctor for a prescription for Vioxx would pay $20, while Duke would pay $114. A generic version of the prescription for Motrin, a similar painkiller, would save the individual $10 a month and reduce the cost to Duke by more than $100 a month. "Multiply that type of savings for one person by the more than 43,000 people who participate in Duke's health care plans, and the cost saving over a year can really add up for an institution like Duke," Green said. "This savings could have a significant impact on slowing down the rise in health care premiums for employees."
Unfortunately, says Green, Duke's prescription drug costs for the first two months of 2003 are already higher than the first two months of 2002 (see chart).
Since prescription drugs are a major part of the overall increasing cost of health care, reducing prescription drug costs can have a direct effect on premiums and co-pays for Duke's plan participants the following year.
"It is still early in the year," Green said. "By sharing this type of information now and raising awareness about how our health care decisions today impact the health plan costs next year, we hope that together we can make a difference in slowing the type of cost increases we've seen in recent years."
|
