Insurance cutbacks on costly GLP-1 coverage are good for small businesses
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'We've been hearing from employers, with increased alarm, about the cost of these medicines,' Blue Cross spokesperson Amy McHugh told the Globe. 'They need some relief.'
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Small, fully insured employers in Massachusetts already operate at a severe disadvantage on premium costs for a variety of regulatory and marketplace reasons, compared to their larger competitors. As president and CEO of the Retailers Association of Massachusetts, representing about 4,000 mostly smaller employers, I know of many small businesses that have faced double-digit premium increases year to year.
It is now not unusual for a small employer in the Commonwealth to have annual premiums of $40,000 for each employee with a family plan. The primary tools employers have to lower those premiums are to go to high-deductible and high-copay plans, shifting more costs to employees. The disproportionate cost of health insurance for small employers is rapidly making them less competitive for workforce recruitment and retention, and salary growth is being held back because of increases in employee benefit costs.
Meanwhile, drug manufacturers continue to seek revenue growth through high reimbursement rates and increases in the use of their products. When they can increase both their prices and sales volume, they see massive bottom-line growth. And they wield considerable political power to get provider-friendly public policy.
If it weren't for that political power, government regulation could cap name-brand drug reimbursements at reasonable levels. But absent regulation, we need consumer choice — and engaged insurers — working for the premium payers, not the drug companies.
Blue Cross Blue Shield of Massachusetts and Point32Health are now doing the right thing for premium payers: They are giving large employers the option of paying more to retain coverage of GLP-1 drugs for weight loss. But all employers can now restrict coverage of these drugs to their original purpose of combating diabetes. In so doing, insurers representing struggling small businesses and their workforces are effectively telling the drug companies that they may seek a rapidly growing customer base or charge unjustifiably high prices, but they can't have both.
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Consumers will still have the choice to pay for these drugs out of pocket or to move to an insurer or plan that covers the drugs — but that will mean higher monthly premiums. If consumers don't want the drugs, they shouldn't be forced to pay higher premiums for others who are using them.
The drug manufacturers have choices, too. They could simply lower their prices to the levels they charge in other countries. That would be the best possible outcome.
As the two largest health insurers in the state, Blue Cross Blue Shield of Massachusetts and Point32Health are right to exert this kind of pressure on drug companies. We need more of this from other insurers as part of broader efforts to bring down unaffordable health care costs in the Commonwealth.
Ultimately, to make health care more affordable, consumers paying insurance premiums must become more important than drug manufacturers. For that, Massachusetts needs both lower prices and more empowerment of consumers to choose the insurance coverage they need and can afford.
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