Prescription Insurance Myth
I’ll front-load this post with a personal belief that may not be readily apparent when reading: Prescription medication should be affordable and accessible to all. However, insurance is not the best means to achieve this goal.
To start, I’ll ask you to ponder — what types of insurance have you purchased? …Life insurance? Home and auto? Disability insurance? Maybe even insurance for the new iPhone 13? Insurance products are designed for high cost, unknown events. It is a way of pooling risk and sharing costs of these events. You never know, you might break your new, $1000+ phone the following day, become disabled and lose your income potential, total your car, have a house fire, or even die.
Interestingly though, car insurance doesn’t cover routine oil changes, and you likely wouldn’t buy AppleCare for the $10 USB cable. Why? Because these are not high cost, unknown events. Rather, they are relatively low cost and/or predictable. This quote from a recent presentation resonated well, “The fundamental mathematical principles of insurance were never designed to cover predictable events. It leads to an inflation of premium and cost that is unsustainable.” This makes sense though, market forces already make oil changes quite affordable (~$60). When choosing to get an oil change, you can choose the lowest-priced, fastest, and/or local small business. If oil changes were covered by insurance, you might be told that only 2 changes a year are covered, that you have to go to the over-booked carrier-approved shop 10 miles away and 2 weeks of driving after you are actually due for one, and, oh, only 5W-30 is covered despite your car guide’s preference for 10W. Not to mention, you pay $120 a year for the insurance and a $10 copay for each oil change. Instead of insuring oil changes, it makes more sense to save/budget for them.
Let’s take the USB cable for example. Buying insurance on this (not that it’s even offered), would be silly. They generally are lost before needing replaced, only cost $10 to replace, and filing an insurance claim would take more time/effort than worth.
Let’s now look at generic prescription drugs. The average acquisition cost on 30 units (capsules/tablets) for everything on hand at Blueberry Pharmacy is $3.79. Add on our $3.00 dispensing fee for members, and you’ll find the average monthly member cost to be $6.79. Is this more in line with the USB cable or the iPhone? Lest we forget, this is a monthly cost for a routine medication. So more routine oil change OR totaling a car in a collision with a deer? Most definitely the former.
Buying generic medications in a transparent, cost-plus manner allows consumers to choose the pharmacy that offers the lowest prices, best service, or some combination of the two. Buying generics through insurance actually raises costs. They also implement unnecessary limitations, such as quantity limits per month, only covering one medication in a class despite another working better or being better-tolerated, and only filling a the pharmacy 20 miles away that carries the same heart-shaped logo that matches that on your insurance card — all for a medication that would otherwise cost $6.79 without insurance.
Brand/specialty medications are different. They are more expensive (many times, artificially so through baked-in rebates). At $500+/mo, they more correctly fit in the insurable category from a cost perspective; and unless already prescribed one, may not be predictable.
If not through insurance, what are some solutions to prescriptions costs?
- Open and transparent marketplace: If all prescriptions are bought and sold at pharmacies that fairly and openly share their prices, patients can purchase at the prices that fit them best. Additionally, market forces will drive down prices quite drastically.
- Health Savings Accounts/Flexible Spending Accounts: These types of accounts marry well with a transparent marketplace. With predictable, low-cost medications available outside of insurance, saving for these $6.79/mo medications makes more sense. Accounts like FSAs/HSAs can allow employers and governments to still contribute to drug costs without involving insurance.
Whether you see it or not, you are paying more for your generic medications through insurance. Through premiums and employer/government contributions, this higher cost is readily not apparent through copays alone. If you’re curious how much your medications might be outside of insurance, give us a call or check them out here: https://price.blueberrypharmacy.com. (Employers, we encourage you to reach out as well — you are overpaying too!)
