Prescription Medication Costs Surge by 400% in the Last Decade…
The rising cost of prescription drugs is a significant issue that affects self-funded employers. Self-funded employers are companies that pay for their employees’ health care costs instead of buying traditional insurance plans. These employers bear the risk of covering the cost of their employees’ medical expenses, including prescription drugs.
The cost of prescription drugs has been steadily increasing over the past few years, with some drugs costing hundreds of thousands of dollars per year. According to a report by the Centers for Medicare & Medicaid Services, prescription drug spending in the US is projected to grow at an average annual rate of 6.1% per year reaching $576 billion by 2028.
For self-funded employers, the rising cost of prescription drugs can have a significant impact on their bottom line. As the cost of prescription drugs increases, self-funded employers must absorb these costs and potentially cut back on other investments in their businesses to cover these expenses, which can hinder their growth.
The impact of rising prescription drug costs on self-funded employers can be seen in several ways. First, higher drug costs can lead to increased overall health care costs for employers. This, in turn, can reduce employers’ ability to invest in other areas of their businesses, such as research and development, marketing, or hiring new employees. In the long term, this can hinder the growth and success of the company.
Second, rising prescription drug costs can also impact the quality of health care that employers can offer to their employees. As employers struggle to cover the cost of expensive drugs, they may need to limit the types of medications that their employees can access or require employees to pay more out-of-pocket for their prescriptions. This can lead to decreased employee satisfaction and reduced productivity.
Finally, high prescription drug costs can also impact the competitiveness of self-funded employers. As health care costs continue to rise, companies that cannot afford to provide comprehensive health care benefits may struggle to attract and retain top talent. This, in turn, can hinder their growth and success.
Rising costs of prescription drugs is a significant issue that affects self-funded employers’ growth and success. The impact of high drug costs can be seen in increased overall health care costs, reduced ability to invest in other areas of the business, decreased quality of health care, and decreased competitiveness. As the cost of prescription drugs continues to rise, self-funded employers must find new ways to manage these expenses and ensure that they can continue to provide quality health care benefits to their employees.
References:
- Centers for Medicare & Medicaid Services. National Health Expenditure Projections, 2019-2028. https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/ForecastSummary.pdf
- Business Group on Health. Large Employers’ Health Care Strategy and Plan Design Survey, 2020. https://www.businessgrouphealth.org/resources/large-employers-health-care-strategy-and-plan-design-survey