A Healthy Blog

Massachusetts health care — wonky, with a healthy dose of reality

Thanks Obama: Drug Spending Up, But Drug Co-pays Down

Thanks Obama: Drug Spending Up, But Drug Co-pays Down

January 13, 2017

National trends mean the rising cost of prescription drugs remain a driving factor of rising medical costs. In the preliminary findings of the annual Cost Trends and Market Performance report released by the Health Policy Commission (HPC), it is made apparent that a significant portion of growing medical expenditures in Massachusetts can be attributed to increased spending on prescription drugs.

The HPC found that spending on prescription drugs increased by 8.8% from 2014 through 2015. Additionally, prescription drugs now constitute 17.2% of commercial healthcare spending in the Commonwealth, more than total spending on hospital inpatient care.

However, for consumers, the news is not all bad; the HPC report also indicates that several key components of President Obama’s Affordable Care Act (ACA) have insulated consumers from the worst impact of rising drug costs. According to HPC analysis of data collected from the Massachusetts All-Payer Claims Database, at the same time drug costs have been on the rise in Massachusetts, cost-sharing has been on the decline.

HPC Chart: Out of pocket drug costs down in MA

Due to protections included in the ACA which prevent payers from imposing coinsurance or copayments on many preventative drugs, including contraception, Massachusetts has seen a 6% decrease in average cost sharing for generic drugs and a 13% decrease in average cost sharing for branded drugs. So while total spending on prescription drugs has increased, the average out-of-pocket price for Massachusetts residents has been on the decline, thanks to the ACA.

Another success of the ACA, correcting gender inequities in the health care system, can be observed in the HPC report. The mandate included in the ACA that requires insurers to cover many contraceptive methods has led to lower out-of-pocket payments for many women in Massachusetts and across the country.

Mass HPC Chart: Copay differential by gender

Specifically, the HPC report finds that from 2012 to 2014, the percent of prescription drug claims with zero cost sharing for women increased by 10.2%. Over this same period, average annual cost sharing for Massachusetts women fell 14%, from $205 to $176. This effect also benefits Massachusetts men, who saw a decline in average cost sharing of 4% over the same period.

Even though drug costs continue to plague the healthcare system, the good news is that the ACA has proven to be an effective shield protecting Massachusetts consumers from soaring out-of-pocket costs. Combined with the progress on correcting gender inequity in our health care system, the data makes it clear that the ACA has worked for Massachusetts consumers, something lawmakers should consider prior to hasty efforts to repeal the law.

                                                                                                                                                                                    -- Alec Lebovitz