Impact of HIE Drug Formularies on Patient Out-of-Pocket Costs

Objectives: To assess the generosity of drug coverage in federally facilitated Health Insurance Exchanges (HIEs). Study Design: We linked publicly available benefit design data from 36 federally facilitated HIEs with drug formulary data for 10 therapeutic categories from Managed Markets Insight & Technology. We used health plans as our unit of analysis. Methods: We created a generosity index reflecting the ratio of patients' out-of-pocket payments to the total drug price (higher values indicate less generous coverage). Because patients' total out-of-pocket spending changes throughout the year due to deductibles and out-of-pocket maximums, we also examined generosity by varying levels of annual drug spending. Results: Platinum plans covered nearly 90% of drugs that we studied, while bronze, silver, and gold plans covered approximately 80%; results by therapeutic category were similar. Nine in 10 plans used 4-to 6-tier drug formularies, and approximately 24% of branded drugs were associated with some type of utilization management. Bronze plans were less generous than other metal levels, requiring consumers to pay about 94% of the total pharmaceutical costs prior to the deductible being met, while platinum plans required consumers to pay about 43% of such costs. As consumers' out-of-pocket spending increased throughout the year, differences in generosity across plans narrowed. Conclusions: Benefit structure and formulary design contribute to significant variation in prescription drug coverage generosity within HIEs. These characteristics of health plans are important for individuals with high out-of-pocket costs.