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HR Knowledge Health Insurance Update for 2016

By December 22, 2015No Comments

shutterstock_213919159What can we expect to happen with health care trend in 2016?

While medical plan costs are expected to rise modestly, the big health care cost driver next year will be prescription drugs. In fact, cost trend rates for drugs are expected to reach double digits, according to the 2016 Segal Health Plan Cost Trend Survey.

The good news is that breakthroughs in prescription drugs during the past few years have made a tremendous impact for millions of people. But the downside is that these drugs come with huge price tags.

What’s behind the surge in prescription drug costs?

In addition to the impact of general cost increases and utilization rates, a key driver is the growing popularity of very high-cost specialty drugs. This is particularly true in the specialty class—advanced medications used to treat complex conditions such as hepatitis C, rheumatoid arthritis and multiple sclerosis.  During the past two years, HR Knowledge has learned that many of the health insurance carriers are seeing a year-over-year specialty drug cost increase from approximately 12% to over 34%. There are a number of drugs that contribute to this figure; treatment for hepatitis C has emerged as a major driver. The significant increases in Prescription drug costs are pushing health care trend increases in the 8-11% range. (This will vary by carriers, group size, etc.)

What are the Health Insurance companies doing to make a difference?

When HR Knowledge recommends a carrier for your group, we want to ensure that the members and their doctors have the very best drugs available to treat their diseases and to effectively manage the associated costs to keep health care affordable as possible.  Many carriers are in negotiations or have finalized on a discount with the maker of the hepatitis C drug Harvoni.  (Approximate cost is $1,000 per pill with a 90-120 treatment plan) Other carriers have negotiated with Amgen on Repatha, a new drug that lowers cholesterol. It’s used for patients who have an inherited disorder resulting in high levels of LDL cholesterol or who have certain high-risk cardiovascular diseases, such as heart attack or stroke, that have been resistant to treatment. Repatha is very effective, but it’s priced at $14,100 per year. By comparison, generic statins, which are the most commonly used treatment, cost about $300 per year. As a result, many carriers have put policies (i.e. Step therapy) in place that ask patients to first try statins and other safe and cost-effective therapies before taking these new entrants.

What can we all do to help curb costs?

The best advice for members is to take the tried-and-true approach of asking prescribers for less costly alternatives or generics, while also taking advantage of potential savings from mail service prescriptions for maintenance medications.

For more questions on this topic or other benefit related news, please contact Ken Bettenhauser at