should prescription drugs be insured

THE PURPOSE OF HEALTH INSURANCE IS TO MANAGE…

As described in the presentation -- http://www.slideshare.net/dholdford/why-insure-health-care

PERSONPAYS A SMALL, CERTAIN

FOR INSURER PROTECTION

FROM POTENTIAL

PERSON PAYS PREMIUM

INSURER WRITES A POLICY

FOR EXAMPLE

GROWING OLD IS NOT USUALLYINSURABLE BECAUSE IT IS NOT…

GROWING OLD IS INEVITABLE AND GRADUAL

AND WE CAN SAVE MONEY, TAKE CARE OF OURSELVES, AND DEVELOP PERSONAL NETWORKS TO HELP US IN OUR OLD AGE

INSURABLE HAZARDS ARE TYPICALLY UNEXPECTED AND/OR SUDDEN

LIKE WITH AN ACCIDENT

AND DIFFICULT TO AVOID OR PREPARE FOR

INSURANCE ONLY WORKS WHEN THE INSURED AND INSURER…

FAIRLY SHARE THE BENEFITS AND RISKS OF AN INSURANCE

AGREEMENT

UNFAIR INSURANCE CONTRACTS ALLOW ONE PARTY TO BENEFIT

AT THE OTHER’S EXPENSE

FOR EXAMPLE

IF I INSURE MY CAR FOR MORE MONEY THAN IT IS WORTH

THEN

I UNFAIRLY BENEFIT AT THE EXPENSE OF THE INSURER

AND IF MY INSURANCE COMPANY TOOK MY PREMIUMS UNTIL I FELL UNEXPECTEDLY ILL

AND THENCANCELED (A.K.A. RESCINDED)

MY CONTRACT…

MY INSURER UNFAIRLY BENEFITS AT MY EXPENSE

GOOD INSURANCE CONTRACTS CAN PROTECT BOTH INSURER

AND INSURED FROM…

A HAZARD BECOMES “INSURABLE” WHEN THE FOLLOWING SIX

ELEMENTS ARE PRESENT

Chapter 14 Private Health Insurance from Introduction to health care delivery: a primer for pharmacists By Robert L. McCarthy, Kenneth W. Schafermeyer Pgs 381-382; 2007.

1. THE PROBABILITY OF A PERIL IN A POPULATION MUST BE ACCURATELY CALCULATED

FOR EXAMPLE: THE PERIL OF A HEART ATTACK IN A 50 YEAR OLD HISPANIC MALE IN THE WESTERN U.S CAN BE ESTIMATED WITH SOME PRECISION

THEREFORE, AN INSURANCE COMPANY CAN CALCULATE THE

RISK TO INSURE INDIVIDUALS

AND WHAT TO CHARGE TO MAKE AN ACCEPTABLE PROFIT

2. THE PERIL IS UNPREDICTABLE FOR ANY SINGLE INDIVIDUAL

ALTHOUGH WE MIGHT KNOW THAT RISK OF HEART ATTACK FOR INDIVIDUALS,

WE CANNOT KNOW WHICH INDIVIDUALS WILL SUFFER ONE OR WHEN

OTHERWISE, INSURERS CAN DROP INSURANCE FOR THE INDIVIDUAL

BEFORE THE PERIL STRIKES

OR THE INDIVIDUAL CAN ADD INSURANCE WHEN THE PERIL IS IMMINENT

3. LOSS ASSOCIATED WITH AN EVENT IS ACCIDENTAL

http://www.flickr.com/photos/greg-palmer/3490903215/sizes/l/in/photostream/

ARSON, MURDER, SUICIDE, AND OPTIONAL COSMETIC SURGERY

ARE EXAMPLES OF NON-ACCIDENTAL EVENTS

4. THE EVENT MUST RESULT IN A SUBSTANTIAL LOSS

LOSSES MUST THREATEN THE FINACIAL HEALTH OF THE

INSURED

SMALL LOSSES ARE NOT WORTH THE TIME AND COST OF

INSURING

FOR EXAMPLE, YOU WOULD NOT INSURE AGAINST A MILD

HEADACHE

5. LOSS MUST BE SPREAD ACROSS LARGE POPULATIONS

THE LARGER THE POPULATION, THE SMALLER THE POTENTIAL

RISK OF LOSS TO INDIVIDUALS IN THE POPULATION

6. ECONOMICALLY FEASIBLE TO COVER

WITH REASONABLE PREMIUMS AND LOW ADMINISTRATIVE COSTS

PREMIUMS MUST BE LOW ENOUGH TO ATTRACT

CUSTOMERS BUT HIGH ENOUGH FOR A FAIR PROFIT TO INSURERS

PREMIUMS ARE KEPT LOW BYREDUCING PAYOUTS FOR

EVENTS & INSURANCE ADMINISTRATION COSTS

1. CAN THE PROBABILITY OF NEED FOR PRESCIPTION DRUGS IN A POPULATION BE ACCURATELY

CALCULATED?

YES!! EPIDEMIOLOGICAL STUDIES CAN IDENTIFY HOW MANY INDIVIDUALS IN A POPULATION NEED

PRESCRIPTION DRUGS.

2. IS THE NEED FOR PRESCRIPTION DRUGS UNPREDICTABLE FOR ANY

SINGLE INDIVIDUAL?

YES!! ALTHOUGH WE MIGHT KNOW THE RISK THAT SOME INDIVIDUALS WILL NEED DRUGS,

WE CANNOT KNOW EXACTLY WHICH INDIVIDUALS OR WHEN

3. IS THE LOSS ASSOCIATED WITH PRESCRIPTION USE ACCIDENTAL

http://www.flickr.com/photos/greg-palmer/3490903215/sizes/l/in/photostream/

YES!! MOST PRESCRIPTION DRUG USE IS UNPLANNED. DRUGS ARE TYPICALLY USED TO

TREAT OR PREVENT AN UNEXPECTED INJURY OR ILLNESS.

4. DOES PRESCRIPTION DRUG USE THREATEN THE FINANCIAL

HEALTH OF THE INSURED?

IN MANY CASES, YES!! THE DRUG BILL FOR THE SERIOUSLY ILL CAN BE

THOUSANDS OF DOLLARS A MONTH.

5. CAN THE COST OF PRESCRIPTION DRUGS BE SPREAD ACROSS LARGE

POPULATIONS?

YES!! PRESCRIPTION DRUG USE IS WIDESPREAD, BUT RELATIVELY FEW PEOPLE

MAKE UP THE BULK OF DRUG COSTS IN A YEAR.

6. IS PRESCRIPTION DRUG COVERAGE ECONOMICALLY

FEASIBLE?YES!! USE OF TECHNOLOGY AND AUTOMATION

CAN ALLOW INSURERS TO OFFER COVERAGE WITH REASONABLE PREMIUMS AND LOW

ADMINISTRATIVE COSTS

6. IS PRESCRIPTION DRUG COVERAGE ECONOMICALLY

FEASIBLE?

WHETHER INSURERS ACTUALLY OFFER COVERAGE WITH REASONABLE PREMIUMS & LOW

ADMINISTRATIVE COSTS IS OPEN TO DEBATE

FOR ANY QUESTIONS…?