Is anything really "free"?

August 11, 2011 Gregory Wald

Growing up in small-town North Dakota, I attended public school. There was no tuition, no fees to participate in extracurricular activities, no textbook charges. It was free, right? At least that's how it seemed to me at the time. As a child, I had a vague notion that taxes paid for me to go to school. As an adult, that vague notion of taxation is now a very real part of my monthly mortgage payment.

A couple of recent news stories made me think about the notions of "free" and "lower cost" in a similar way. Except this time, the topic was health care, not education.

The first story is the U.S. Department of Health and Human Services' (HHS) announcement  that women's preventive health services would be included on the list of health services that insurance companies will be required to cover with no out-of-pocket expenses to the consumer. The requirement is part of federal health reform. Women's preventive health services include things like annual exams, PAP smears and birth control prescriptions.

The second story involves the large number of best-selling brand-name prescription drugs that will lose their patent protection in the near future, including cholesterol-lowering Lipitor and blood-thinning Plavix.

Both developments will, indeed, dramatically reduce consumers' out-of-pocket expenses. Media descriptions often use the word "free" when talking about the HHS ruling, and an Associated Press (AP) story described how expiring drug patents would allow one patient to travel more with his savings.

As with my childhood public education, though, we need to be careful about how we use the word "free." The costs do not go away. They are just shifted to a different payment model.

With women's preventive health services, the costs will be spread across the entire pool of insured persons. Premiums could be affected as more health services are required to be provided with no out-of-pocket costs to the patient.

In the case of the expiring drug patents, drug company revenue will drop, along with profits. How will that affect research and development of new drugs? Employment in pharmaceutical companies has dropped 10 percent in the past four years, according to the AP story.

Of course, part of the discussion needs to focus on how pharmaceutical companies promote drugs; how much profit pharmaceutical companies, insurance companies or health care providers should make; or which health services should be provided at no out-of-pocket cost to the consumer.

But there is always a cost. The question is: who will pay it? The consumer? The government through taxes and national debt? The insurance company? Other people in the insurance pool through higher premiums? Future generations who may not have the bonanza of breakthrough drugs this generation has enjoyed?

Health care is changing. With or without federal health reform, health care is changing in America and in North Dakota. Blue Cross Blue Shield of North Dakota is collaborating with all stakeholders–members, health care providers, business leaders, policy makers–to work toward a sustainable health care system in the state. One that delivers the quality and affordability North Dakotans expect.

How are we doing? What more can we do? How do you feel about the federal government requiring certain services to be covered with no out-of-pocket expense to the consumer? What is a reasonable amount of money to pay out-of-pocket for a prescription?