One of the arguments that insurance executives sometimes make is that they can't cover certain new drugs because they create unsustainable cost increases. But is that really the case? The tool below provides an illustrative example of how health insurance spreads the cost of a new medication across everyone in a health plan.


Here's how it works:

You put in the monthly cost of a new drug to the insurer and the number of patients enrolled in that plan who will need the new drug. What you will see is that, even in cases of more expensive drugs, per-member costs increase only nominally when the cost is spread across the entire population. Isn't that worth it to make sure you or your loved ones can get the medicines they need when they need them?  And isn’t that what insurance is supposed to be about?

Here's something else to consider as you use this tool: The amount your insurer requires you to pay out-of-pocket for the new drug as a deductible or as a co-pay or co-insurance offsets the total costs of the new drug to the insurer – and thus should further minimize cost pressures.  And finally don’t forget that the price you put into the tool is likely the list price of the drug, and not the privately negotiated discounted amount the insurer actually pays.  Again, this results in an over-estimation of the likely impact of adding even expensive new drugs to an insurance plan’s coverage.

It raises the question: What is health care cost growth and why are insurers shifting more and more of healthcare costs to you? 

Learn about the calculators methodology.