In 2019, the IRS tweaked coverage to allow certain drugs to treat chronic conditions to be covered pre-deductible. (Photo: Shutterstock)
A recent regulatory change expanding the number of medications included for pre-deductible coverage did not result in significantly increased insurance premiums, a new study has found.
The report from the Employee Research Benefits Institute (EBRI) looked at a regulation change from 2019 that expanded the list of pre-deductible drugs to include several that address chronic diseases. The change by the IRS allowed Health Savings Account (HSA)-eligible health plans to provide pre-deductible coverage to 14 medications and services that treat chronic illnesses.
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High deductible health plans that use HSAs have greatly increased in popularity and utilization in the U.S., but consumers have listed high deductibles as a financial burden and even an impediment to accessing care. The IRS changes could be seen as a case study on whether allowing more drugs to be covered on a pre-deductible basis would have a serious impact on premiums in employer-based plans. In this study, the premium increase was minimal.
"The impact on premiums of expanding pre-deductible coverage for 14 services in HSA-eligible health plans … is small," the study said. "Estimated premium increases range from virtually zero to 1.5%."
Spreading the costs
The IRS change in pre-deductible coverage affected medications and treatments for diabetes, heart disease, asthma, depression, and osteoporosis. The report found that there may be a range of reasons for why expanding pre-deductible coverage has little impact on premiums. For one, the percentage of people who have the kinds of chronic conditions covered is relatively low, and the costs of covering the drugs is low when spread out over an entire population.
In addition, the users of the medications and services have chronic illnesses and are likely to meet their deductible anyway. Employers also can mitigate costs by imposing copays or co-deductibles, the study said.
The EBRI study found that in cases where all 14 services were covered with no cost sharing, even with an increased use of health care services, premiums only increased by 1.5%.
Policy implications
The study noted that these findings could support proposals to further expand pre-deductible coverage for chronic disease management.
"Even before there was evidence that expanding pre-deductible coverage had a negligible impact on premiums, there was an appetite among employers for adding more services if allowed by the IRS," the study said. "There is also support for expanding pre-deductible coverage among policymakers, as evidenced by the Chronic Disease Management Act, which was reintroduced in the U.S. Congress as recently as May 2021. This bipartisan, bicameral legislation would provide HSA-eligible health plans additional flexibility to provide pre-deductible coverage for services that manage chronic conditions."
Officials with EBRI noted that employers have shown strong support for such policy changes. An EBRI survey found that 81% of employers would add pre-deductible coverage for additional health care services if allowed by law.
"Employers and policymakers have an appetite for more flexible plan designs or 'smarter' deductibles because rising health care spending has created serious fiscal challenges," said A. Mark Fendrick, M.D., co-author of the study and director of the Value-Based Insurance Design Center at the University of Michigan.
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