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News

Wal-Mart generic drug program promotes self-pay health care, Duke Economist Says

Duke University Pratt School Of Engineering : 27 December, 2006  (Technical Article)
An announcement by Wal-Mart that it will offer hundreds of generic drugs at $4 per month boosts the self-pay model of health-care delivery, which can lower insurance premiums and increase a patient
An announcement by Wal-Mart that it will offer hundreds of generic drugs at $4 per month boosts the self-pay model of health-care delivery, which can lower insurance premiums and increase a patient’s role as a consumer, says a Duke University health economist.

“Four dollars for a prescription puts the price of many of these drugs below the cost of a co-pay for insured persons,” said Frank Sloan, who has testified before Congress on vaccine financing and other health-care topics. “That means, for some drugs, people will be bypassing their insurance.”

If insurance companies do not have to pay for as many prescriptions, they can either lower insurance premiums or maintain premiums and offer more coverage, Sloan said.

The self-pay model treats someone seeking low-level health care as a consumer as well as a patient, and will encourage people to shop for value, Sloan said.

“With strong price incentives like Wal-Mart’s, consumers will select generic drugs before deciding if they need to pay for a brand-name drug,” Sloan said.

“Given the substantial increases in health care spending, there are an increasing number of advocates for this approach, which includes health savings accounts,” he said.

“It’s an American way” to address health-care costs, Sloan said. “It’s market forces.”
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