How We’re Making Health Care More Affordable for Employees

Today’s guest blog comes from Dave Ricks, Lilly Chairman and CEO.

Beginning this year, Lilly’s health plan cut patients’ costs on all insulins to a new low: zero.

This is our latest step to reduce out-of-pocket costs for medicines. We’ve found it helps both our people and our health plan save money.

We’re sharing our experience in a new report on health benefits innovation. I believe it’s time for employers—who cover more than half of all Americans—to drive the health care and insurance systems to do a better job caring for people with chronic diseases.

 Employers are spending more than ever to provide health benefits to their workers—more than $20,000 for family coverage. Yet 2 out of every 5 workers say their employers could do better. Many, especially those with chronic illnesses, say they struggle with affordability and access to the care they need.

In today’s tight labor market, this disconnect is a recipe for losing talented workers.

How do we address it?

Some say we need government intervention to control the costs of medicines and medical services. But many companies, including Lilly, are already trying innovative health benefit designs to reduce both out-of-pocket costs and overall health spending growth. And they’re having success.

If more employers—especially large employers—reduce cost-sharing for high-value therapies, they can change the insurance market in ways that improve health and productivity while constraining costs. A recent column in Fortune I co-wrote makes the case for why employers should do this—and simple ways they can fund it.

Lilly’s Experience

Like all employers, Lilly works every year to minimize the rising costs of health care. For more than a decade, we’ve offered exclusively high-deductible plans to our employees. But we take certain steps to make sure our high deductibles don’t lead our people to skip or ration the care they need:

  • We fund our employees’ health savings accounts all at once in January. Whether someone gets sick around New Year’s Day or Thanksgiving Day, they should have money to help cover their costs.
  • We exempt preventive drugs from our health plan deductibles. That means our people pay 10 percent to 20 percent of those medicines’ prices, but not the full retail price.
  • For all medicines, Lilly’s health plan has lowered costs by passing through rebates to patients at the point of sale. In just one year, sharing these rebates helped more than 11,000 of our members, who saved $265 on average—or nearly $3 million collectively.

This year, Angela McDaniel, a mom of three who works in Lilly’s diabetes business, will pay nothing for insulin to manage her Type 1 diabetes—versus the $500 a month it would cost without the pre-deductible coverage Lilly provides.

As we’ve expanded these cost-saving policies, premiums for our plan (both company-paid and employee-paid) have grown an average of just 3 percent annually—half as fast as the trend among all employers.

Reducing employee costs can also help restrain employer health costs. CVS Caremark estimates $0 co-pays on a broad list of preventive drugs can reduce overall medical spending by $70 per person, because lower-co-pays lead to better adherence and better health.  I hope to see similar results at Lilly.

A Better Way Forward

Of course, not everyone has employer health coverage. Even among the largest employers, only one-third offer reduced or no cost-sharing for medicines for chronic diseases.

For people who need Lilly medicines, yet face high out-of-pocket costs—especially those with diabetes—Lilly provides many other solutions, including:

  • Automatic price caps at the pharmacy.
  • Insulin donations to free clinics.
  • Insulin at no cost to patients who qualify through the separate Lilly Cares Foundation.
  • A half-priced insulin, identical to our Humalog insulin, called Insulin Lispro.

But we know there’s more to do. Employers can lead the way. C-suite leadership can make the long-term decisions and trade-offs needed to do health benefits more effectively. I urge my fellow CEOs to take an increasingly assertive role to do health benefits differently—and better.

Working together, employers can move good ideas forward and show a better way to make U.S. health care and health insurance work for all Americans.