Bryan Ferguson, Editor, Insights
Within 1-2 weeks, 1 million people laid off in March will begin to lose their health benefits.
Laid-off patients who previously had access to drug insurance will now find themselves with no coverage or, if coverage continues, with reduced financial means to afford copayments and deductibles.
Using PDCI’s recently acquired Market Access Toolkit, a model was built to estimate the share of the private market that falls into each of the above categories. I define the private market as the number of lives covered by private insurance as of December 31, 2019, or the status immediately prior to the outbreak. There are several unknowns which at this point require assumptions, which will be enhanced as better information becomes available.
My current estimates show that for every 1 million layoffs, approximately 600,000 lives (including the plan member and dependents) who previously had group benefits, will have no coverage, starting a month after layoff.
As well, 850,000 lives will have coverage, but reduced financial means to afford copayments. This reduces to about 400,000 lives in the second and subsequent months as patients move from “covered” to “uncovered”.
The model is sensitive to the number of laid-off employees who keep their benefits during the temporary layoff. We know anecdotally that many (particularly large) employers are working with plan members to extend benefits, but there is no data on how many at this stage. Our model assumes one-third.
With a private insurance market at December 31, 2019 of approximately 22 million lives, current modelling suggests that for every 1 million layoffs, about 3.5 percent of privately insured patients will lose benefits with a lag of one month. A further 4 percent will have limited financial resources to pay copayments in the month of layoff. The two groups are mutually exclusive.
The following table shows the loss of benefits impacts if Canada has 1 million layoffs per month for 3 months, then adds back 500,000 jobs per month.
|Cumulative Layoffs (millions)||1.0||2.0||3.0||2.5||2.0||1.5|
|Share of private market with no coverage||0||2%||5%||7%||7%||6%|
|Share of private market with coverage but reduced ability to pay||3%||6%||7%||5%||3%||2%|
COVID-19’s impact on employment and associated private health benefits have important implications not only for patients but for industry planning. Manufacturers and insurers should evaluate potential effects especially for products with high dependence on private health coverage. Manufacturers and insurers should:
- Review private market share within portfolio
- Review potential impact on costs for Patient Support Programs (PSPs) with income-based support for out-of-pocket costs, particularly for high-cost drugs.
- Assess impact on PSP utilization and budget higher costs for assistance programs.
- Evaluate impact of reduced utilization due to delays in diagnosis or discontinuations of treatment due to absence of benefits.
Throughout the remainder of 2020, subscribers to PDCI’s Market Access Toolkit will receive exclusive ongoing insights into the impact of COVID-19 on pharmaceutical spending and related private health insurance coverage.
For further inquiries regarding the PDCI Market Access Toolkit please contact Paul Henricks, Associate Director, Reimbursement Strategy, PDCI Market Access Inc.