Quit Wasting My Healthcare

The Doctor is In: Reasons #6 & #7 for Healthcare Overutilization

This posting is the conclusion in my series “The 7 Causes of Healthcare Overutilization.”  Reasons #6 and #7 focus on patients and their behavior.

6.       Marketing to Patients

Earlier I wrote that the pharmaceutical industry spends $7 billion marketing to physicians.  Well, they also spend $4 billion marketing directly to patients.  These ads encourage patients to ask their doctor about the most expensive medications, not generics.  Case in point, the cholesterol-lowering drug Zocor was Merck’s biggest seller in 2005 with $4.3 billion in sales.  There were commercials all over television for Zocor encouraging patients to ask their physician about the medication.  Then Zocor’s patent expired in 2006 and now it can be purchased under its generic name—simvastatin.  Now a Zocor ad can’t be found anywhere.  However, you do see constant ads for Zocor’s competitor—Lipitor—which is still on patent and the number one selling drug in America.  The cost of a 30 day supply of simvastatin is $28; Lipitor $120.  So why isn’t simvastatin the number one drug in America?

7.        Third-Party Payment

Because patients are often only responsible for a small copay when they see a doctor, they are shielded from the true cost of care.  Health insurance changes the behavior and decisions of patients who only have to pay $25 for a $325 prescription.  As in the earlier case with Zocor, more patients would be asking for generic medications if they were exposed to the actual cost.

What You Can Do as an Employer or Insurance Broker

As a CFO, benefits manager or insurance broker you can structure your insurance plan so as to minimize this healthcare overutilization.  Many companies are raising their deductibles to $5,000 and having “sub-plans” underneath the deductible that require the employee pay 20% coinsurance or use a health savings account or health reimbursement arrangement.  By restructuring your benefits you can save upwards of 20% on your healthcare costs.