OTC drugs get the boot

Most of the new Patient Protection and Affordable Care Act (PPACA), aka ObamaCare, takes effect in 2014, but its early mandates suggest that the “affordable” part is a complete misnomer.

I have seen nothing in the act that reduces costs, prices or premiums. In fact, the new law is raising costs. One example: just before yearend, I received a notification that, effective Jan. 1, over-the-counter (OTC) drugs and medicines would no longer be eligible for reimbursement without a prescription.

Now, why in the world would President Obama and the Democrats in Congress want to prohibit use of personal health accounts for inexpensive medicines? At Serigraph, we have designed our health plan to do just the opposite.

We encourage the use of health accounts for OTC drugs, and we reimburse 100% if co-workers and their families buy low-price generic drugs at Walgreen’s, WALMART or Target. They are only $1 per week.

Those and other measures have enabled Serigraph’s employees to keep health costs under control for seven years.  The result is that plan members will see no premium increase in 2011, the fifth time in eight years we’ve pulled that off.

On the positive side, if it survives the next three years in Congress, ObamaCare will eventually allow another 32 million Americans to access health care. That will bring coverage to more than 90% of the nation’s population.

Note, Wisconsin has been above 90% for a long time. One in five persons in Wisconsin is covered by BadgerCare, our enlarged version of Medicaid.  That’s  more than a million people. As with the federal Medicare and Medicaid programs, BadgerCare is essentially busted.  At last count, it was running a billion dollars a year in the red.

The social engineers in the Doyle Administration were compassionate and artful in expanding the program. They just didn’t figure out how to manage its costs. 

As I have maintained for years, there are innovations available that can dramatically reduce costs. The private sector has pioneered those reforms and has proven them out. They include incentives for better utilization and smart consumer choices, rewards for improved health, free primary care and proactive management of chronic diseases. 

It all boils down to a collaborative model where employees and employers collaborate to keep people out of the hospital, where a night can run $5,000.

None of those proven reforms have been worked into BadgerCare or ObamaCare. Indeed, the Democrats seem determined to undermine any attempt to make consumerism or the marketplace work in health care. What they really want is a government run plan, no matter what it costs.

Therein lies the Achilles heel of ObamaCare. It does not make health care “affordable.”

Two other recent examples: caps were removed on lifetime coverage and on maximums for an episode of care.  That mandate, like many mandates, won’t be paid for by the federal government. Serigraph and its employees will pay for it. The cap removal has added about 1% to our health care bill.

If the government wanted catastrophic risk coverage, why didn’t Congress take that on as a societal cost?  Wisconsin already has such a plan.

The new mandate to add 19-25-year-olds to an employed parent’s coverage has added another ½% to the mutual costs of the Serigraph and its employees. It’s a compassionate idea, but it doesn’t come for free.  Not much does.

In short, the early returns on ObamaCare are higher costs, not the lower costs that were promised.

Back to the OTC drugs and reimbursement. Of course, the drug companies that supported politicians with millions of dollars in campaign donations and lobbying expenditures cut a deal. They made OTC drugs more difficult to get and their prescription drugs more likely to be used. 

Take reflux, Prilosec, the over-the-counter drug costs about $40 for a one-month supply, while the prescription drug Nexium costs about $120.  For most people, Prilosec works fine. Now if people want to take Prilosec and submit it for reimbursement under an FSA account, they will require a cumbersome prescription. So less Prilosec and more Nexium will probably be sold. And health care costs will rise.

This is a move toward away from affordability. I don’t get it. Do you?

This entry was posted in Health Care Economics. Bookmark the permalink.