Today’s Managing Health Care Costs Number is 2570
Peter Ubell has a commentary in today’s JAMApointing out that “value based insurance design” will only save money if it is “two sided.” Allowing lower patient cost share for high value services is politically popular – and can increase utilization of these high value services. Examples are first dollar coverage for screening colonoscopies, or “free” test strips for diabetics. But we’ll need to also charge patients more for low value services if we want this type of insurance design to genuinely lower costs.
Congress has gotten into the act, and House Bill 2570 (which is currently referred to the Senate Finance Committee) instructs Medicare to
…establish a three-year demonstration program to test the use of value-based insurance design methodologies under the eligible Medicare Advantage (MA) plans
Ubell complains that the Congressional legislation
…promote(s) the use of high-value health care services without creating strategies to reduce the use of low-value ones. Unless value-based insurance programs in particular, and value promotion more generally, are balanced, they are unlikely to restrain health care expenditures.
Ubell notes that HR2570 prohibits Medicare Advantage plans from increasing cost share for any services. This means that MA plans are likely to only offer value based design to improve their marketing position, not to genuinely improve the value of health care delivered.
The only interventions within the medical care delivery system that routinely lower future costs are immunizations and contraceptives. Even preventive care like cheap generic statins to prevent future heart attacks add value but at a cost of over $37,000 per quality adjusted life year gained. Therefore, even carefully designed incentives to increase use of ‘high value’ services are likely to help Americans gain QALYs – but they will increase overall health care costs.
Value based insurance design will only lower health care costs if plan design incentives drive down the use of low value services.
