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Unintended consequences: Co-Pays up, productivity down

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in Employee Benefits Program,FMLA Guidelines,Human Resources

If your employees have to shell out for co-pays that they believe are too high, they might opt not to buy their medicine or even seek treatment, even for major health ailments.

That can be a problem for your organization because sick employees are not productive.

In fact, in a three-year study of 17 employers, the nonprofit organization Integrated Benefits Institute (IBI) found that absenteeism and lost productivity cost those organizations $17.2 million. The reason: Half of several thousand workers with rheumatoid arthritis did not take their drugs. Many of them said their out-of-pocket co-pays were too expensive.

The co-pays were designed to shift more of the cost of the drugs—about $18,000 a year per employee—to the worker. The strategy backfired, though, leaving the employers with a tab for lost productivity of about 26% more than the cost of the drugs that would have helped the employees feel well enough to work.

The surprise: The workers’ co-pays averaged just $26 for a 30-day supply of the medicine. Still, they perceived the co-pays as too expensive, so they didn’t buy their medicine.

The IBI study uncovered these key findings:

  • The higher the out-of-pocket expenses for employees, the less likely they are to fill prescriptions that could relieve their symptoms and allow them to work more productively.
  • Employees who don’t take their prescribed medicines are more likely to wind up on short-term disability leave.

What lessons can employers learn from the study?

  • Cross-referencing data from all of their health-related benefits programs helps employers understand how one affects another (e.g., how the amount of a co-pay affects the use of short-term disability leave).
  • Your organization might be able to improve productivity and lower medical costs by reducing or eliminating co-pays for diabetes, asthma and heart disease—common, yet frequently debilitating illnesses that can affect the performance of employees.
  • Adding productivity measures to your calculation of the cost of employee health care can help determine the true value of your benefits.
  • It’s worth studying your employees’ overall health records to learn if medical conditions are affecting employee productivity. Encourage those employees to seek treatment.

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