Value-based Insurance Design: An Evaluation of Insulin Cost-sharing Caps

Abstract

Decades of increasing diabetes prevalence and insulin costs in the U.S. have heightened attention to insulin cost-related nonadherence – impacting approximately one in five insulin-users. As of June 2024, 25 states and D.C. have capped insulin out-of-pocket costs for state-regulated health plans, but a federal cap for the privately insured remains an ongoing policy discussion. We evaluated three aims informing key questions regarding insulin out-of-pocket cost caps. The first two aims used multicarrier employer-sponsored insurance claims and a triple differences design to assess the first-year causal impact of caps ($25-100/30-day supply of insulin; capping ≥1 product of each type/form) in ten states with insulin caps in place by January 2021. Comparisons were insulin-users enrolled in fully insured plans (state-regulated) to those in self-funded plans (generally exempt) in cap and no-cap states pre-/post-implementation. The first aim evaluated cap effects on insulin-user out-of-pocket costs and total (plan+member) paid for insulin, all prescriptions, and all health care. We saw modest decreases in insulin out-of-pocket costs (mean: $67 annually; 95th percentile: $347 annually) and declines or no evidence of increases in other spending. We saw evidence of spillover effects in fully insured plans in no-cap states, suggesting a larger true policy effect. High caps (e.g., $100) may be insufficient to support the most cost-vulnerable insulin-users. The second aim evaluated the impact of caps on 30-day standardized long-acting insulin fills and found no evidence of meaningful changes. Future research should focus on cost-vulnerable subgroups, more precise outcome measures, and additional years post-implementation to capture plan renewal and product switching lag effects. The third aim used national/state health statistics and employer-sponsored insurance claims to describe what may occur under a federal cap. We estimated that almost 2 million insulin-users enrolled in ESI – including 372,000 estimated to be rationing insulin – could be newly covered by a federal insulin copay cap. A federal cap will also likely meaningfully increase health equity. Our research advances the discussion on policies to address insulin costs and related nonadherence, especially regarding a federal cap for the privately insured.