GLP-1 drugs are bankrupting self-funded health plans. We know because we’ve seen it. And it’s ugly, real ugly.
Let’s look at the math. PBM GLP-1 pricing for a 30 day supply of Ozempic and/or Monjaro is north of $1,200 for a 30 day supply. A 500 life case has 150 employees taking these medications which means 350 aren’t.
The group is funding $500 pepm. This means they are negative funding 150 employees by $700 each per month leaving no money left for any other medical and fixed cost expenses for 30% of the group.
The plan’s loss ratio is 120%.
The remaining 350 employees must make up the difference, or about $105,000 per month. That comes out of their $500 employer contribution leaving $200 for other medical and fixed cost expenses to pay for all other expenses and claim costs for the entire group. Net effective funding minus GLP-1 expenses drops by 40%.
If the group were to exclude coverage for GLP-1 drugs the loss ratio drops to an acceptable 80%. Otherwise, the math simply does not add up unless the employer increases funding by 50% to maintain an 80% loss ratio.
What should the plan do?
HR says “We can’t take it away, the employees won’t be happy! After all, we want to take care of our employees!”
The CFO says “We can’t afford it! We will have to increase funding, increase employee’s cost share, and raise the deductible and copays and cut out all overtime!”
HR says “No! We can’t do that the employees won’t be happy!”
At what cost is happiness?
