NU706 Unit 3 Insulin Cap Policy Analysis Example

A Cap That Lowers the Bill but Not the Gap: A Unit 3 Policy Analysis of State Limits on What Patients Pay for Insulin

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Purdue University Global

NU706: Ethics, Policy, and Advocacy in Population Health

Unit 3 Policy Analysis

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[Date]

The hospital and patients are composite and illustrative; the laws and studies cited are real.

The Problem the Policy Addresses

Insulin prices in the United States rose steeply over two decades, and patients with high deductibles or coinsurance often paid hundreds of dollars a month. Cost leads patients to ration. At an academic diabetes center, roughly a quarter of patients admitted to skimping on prescribed insulin over the prior year because of price, and their glucose control was worse on average (Herkert et al., 2019). For a patient newly started on insulin in the hospital, an unaffordable first refill can undo everything the discharge teaching accomplished.

The Policy

State insulin caps limit the amount an insured patient pays out of pocket for a monthly supply, commonly between $25 and $100. Colorado's 2020 law was the first, and many states have since enacted caps. They apply to health plans that states regulate, mainly fully insured individual, small-group and large-group plans.

At the federal level, the Inflation Reduction Act limited cost sharing for insulin covered under Medicare to $35 a month, beginning in 2023 (Inflation Reduction Act of 2022, 2022). In 2023 the three major manufacturers also announced list price cuts and their own $35 out-of-pocket programs, which changed the market in which state caps operate.

What the Evidence Shows

Garabedian et al. (2024) studied commercially insured patients with diabetes in a national insurer's data, comparing states that adopted caps with states that did not. Among insulin users, out-of-pocket costs fell by about 17 percent relative to comparison states, with larger savings, about 40 percent, where caps were most generous at $25 to $30. The savings were concentrated among patients in high-deductible plans with health savings accounts. However, insulin use did not increase overall: the relative change in monthly fills was 1.8 percent, with a confidence interval from a 3.2 percent decrease to a 6.9 percent increase.

The cap lowered what patients paid, but it did not, on this evidence, change how much insulin they used.

Several explanations are possible. Many patients already paid less than the cap, so the law changed nothing for them. Follow-up was short, nine months. And patients who were rationing may face other barriers, such as costs of needles, glucose monitors and visits, that the cap does not touch.

Whom the Policy Leaves Out

State caps do not reach three groups. First, people with no insurance pay full price; a cap on cost sharing means nothing without coverage. Second, self-funded employer plans answer to federal rules and sit largely beyond the reach of state insurance mandates, and a large share of workers with employer coverage are in such plans. Third, people whose plans count insulin under a cap but not the supplies needed to inject it still face costs.

Among the composite hospital's 214 patients discharged on new insulin last year, case management records show 19 uninsured patients, 38 with Medicare, 71 with Medicaid, 64 with commercial coverage and 22 with other coverage. State caps would potentially affect only the commercial group, and only the part of it in fully insured plans. Medicare enrollees are covered by the federal cap, and Medicaid enrollees already have low copays. The uninsured, who had the highest return rate in the hospital's data, are untouched.

Stakeholders and Their Positions

Patients and diabetes advocacy groups generally support caps and press for broader coverage. Insurers have argued that caps shift costs to premiums and do not address the list prices set by manufacturers. Manufacturers, after years of criticism, now offer their own out-of-pocket programs, which reduce pressure for legislation but can be withdrawn at a company's discretion. Employers with self-funded plans prefer federal flexibility to state mandates. Hospitals and clinicians see the consequences of rationing in emergency departments and admissions, but rarely take a formal position. Nurses, as the largest group of clinicians who teach patients to use insulin, are well placed to describe what cost does to a discharge plan, a voice the debate has often lacked.

Alternatives Compared

Three alternatives to state caps address different parts of the problem. A federal commercial cap would reach self-funded plans that states cannot regulate, but it has not been enacted for commercial coverage. State-run or state-contracted insulin supply programs, which some states have pursued, aim to lower prices for everyone, including the uninsured, but need several years and a willing manufacturer before any insulin reaches a pharmacy. Expanded coverage, through Medicaid or subsidized plans, addresses the uninsured directly but is a much larger policy decision. Compared with these, state caps are quick, cheap for states to enact and popular, which explains their spread; their limits follow from the same features that make them easy, since they change cost sharing without changing price or coverage.

Ethical Assessment

From the standpoint of justice, caps distribute benefits to insured patients facing high cost sharing, which is a real gain for that group. But they leave the worst off, the uninsured, where they were. A policy that helps many without helping the most vulnerable is incomplete rather than wrong. Its main risk is political: having passed a cap, legislators may consider the problem solved. There is also a question of who pays. Insurers spread the cost of capped cost sharing across premiums, so all members in a plan share the savings that insulin users receive, a transfer most people would consider fair given the stakes, but one that should be acknowledged openly.

Recommendations

The analysis recommends three directions. At the state level, extend caps to cover insulin supplies and support programs that provide insulin to uninsured residents at a fixed low price. At the federal level, support a commercial cap that would reach self-funded plans. At the hospital level, act on what the hospital controls: screen every patient starting insulin for coverage and cost barriers before discharge, enroll eligible patients in manufacturer programs and dispense a starting supply to uninsured patients through the bedside pharmacy.

Conclusion

State insulin caps lower what many insured patients pay, particularly those in high-deductible plans, but the best available evidence shows no overall increase in insulin use, and the policy does not reach the uninsured or people in self-funded plans. For the patients leaving one Dubuque hospital on new insulin, the cap is part of the answer; the hospital's own discharge practices must cover the rest.

References

Garabedian, L. F., Zhang, F., Costa, R., Argetsinger, S., Ross-Degnan, D., & Wharam, J. F. (2024). Association of state insulin out-of-pocket caps with insulin cost-sharing and use among commercially insured patients with diabetes. Annals of Internal Medicine, 177(4), 439-448. https://doi.org/10.7326/M23-1965

Herkert, D., Vijayakumar, P., Luo, J., Schwartz, J. I., Rabin, T. L., DeFilippo, E., & Lipska, K. J. (2019). Cost-related insulin underuse among patients with diabetes. JAMA Internal Medicine, 179(1), 112-114. https://doi.org/10.1001/jamainternmed.2018.5008

Inflation Reduction Act of 2022, Pub. L. No. 117-169, 136 Stat. 1818 (2022).