Rx for an Ailing System
Like a one-size-fits-all shirt that doesn’t fit anyone very well, American health insurance plans charge every person the same out of pocket cost for medical services—regardless of their effect on a person’s health. So, whether your visit to the doctor is for life-threatening cancer or just the common cold, you’ll pay the same co-pay or deductible. These cash costs set by your employer and your insurance plan are designed to keep you from using “too much” health care.
But what if those out-of-pocket costs are high enough to keep your coworker from taking a medicine that could greatly reduce her risk of having a heart attack? American employers—and citizens—could get a lot more value out of their health insurance by abandoning the old-fashioned system of charging everyone the same, says a team of UM and Harvard University researchers.
By tailoring their plans so that people who can get the most benefit out of a particular drug or screening test will actually pay the least for it, companies might not only get more for their money, they might even save money in the long run by helping their employees prevent expensive health crises.
This approach, called value-based insurance design or VBID, was first conceived at UM in 2001. Under VBID, a person with diabetes would pay little for drugs that can delay diabetes-related health problems, and for tests that can spot those problems early, and employees in their fifties might get free or low-cost colonoscopies, to spot pre-cancerous polyps and treat them before they become cancer.
“Employers and benefits consultants are taking a real interest in value-based benefit design,” said Dean Smith, director of the UM Center for Value-Based Insurance Design and SPH senior associate dean for administration. “They increasingly recognize that health comes from investments in prevention as well as treatments.”
In a paper published in January in Health Affairs, VBID Center faculty Michael Chernew, A. Mark Fendrick, and Allison Rosen described the principle in depth and gave examples of where it’s being used. They include UM, where 2,200 diabetic employees and dependents are receiving free or reduced-cost medications and tests as part of a pilot project headed by Rosen, and the city of Asheville, North Carolina, which showed increased adherence to recommended medications and tests, and decreased sick leave and health costs, after reduced co-pays and other programs were put in place for employees with diabetes.
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Companies may get more for their money—and save money in the long run.