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Can Value-Based Insurance Be Cost-Effective?



January 22nd, 2010

A Web First article published January 21 by Health Affairs reports new evidence that value-based insurance design (VBID) programs, in which patients pay little or no copayment fees for high value health care services, can break even, or even save money.  The results, reported by Harvard’s Michael Chernew and coauthors, came from analysis of data from one large corporation that implemented a VBID program in 2005. Copayment rates were reduced for employees using five classes of drugs used to treat several serious but common chronic conditions, including diabetes and hypertension.

A 2008 Health Affairs article by Chernew and coauthors on VBID won the Research Award from the National Institute for Health Care Management Foundation.

The VBID program analyzed in the new article was implemented by Active-Health Management, an independent subsidy of Aetna. Patients using the specified medications were offered at least a 50% copayment reduction.  The authors examined employee spending on the subsidized high value services and overall spending by the employer using the VBID plan, and compared both to a control employer with similar benefits that did not lower copayments.  The percentage of eligible patients taking their medication increased from about 70 to 73 percent and, as a result, non-drug spending (e.g., hospitalizations) was reduced.  The results suggest that the program likely had a favorable financial profile when both employer and employee costs were considered and that a substantial portion of the added employer spending on high-value prescription drugs was offset by fewer hospitalizations and emergency department visits.

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1 Trackback for “Can Value-Based Insurance Be Cost-Effective?”

  1. uberVU - social comments
    January 23rd, 2010 at 3:08 am

1 Response to “Can Value-Based Insurance Be Cost-Effective?”

  1. John Ballard Says:

    I hate to sound like a curmudgeon but I’m getting used to it. Here are a couple of curmudgeonly notions…

    ►First of all, the core costs of health care derive from providers, not insurers. Insurance is a practical method of coping, perhaps minimizing the underlying costs, but the big money still derives from how much is billed and whether OR IF is required for good health.

    ►Insurance plans are to health care what public stock offerings are to private businesses, yet another layer of expenses and drains on profits. Those extra costs can be minimized by group plans (rather than individual plans), mutual insurance for populations not affiliated with an employer, or non-profit plans. (That last one is in the list for comic relief. I’m not aware of any.)

    ►Everyone is in favor of maintaining good health, but good health, not money, is its own reward. Yes, I know about peer group and employer influence, but in the end the person living with obesity, diabetes or hypertension is not all that different from the substance abuser who can simply afford to continue bad habits. Groups seem to ameliorate the costs in statistical terms, but health costs have more to do with community, state and national populations than subset of people in relatively small groups.

    ►Trends and expenses tracked using insurance and provider data include but fail to address the impact of that large and growing population of UNinsured and UNDER-insured people whose expenses are real but whose existence is not recognized.

    An elephant in the room is a large and growing number of uninsured and under-insured people who access health care only when necessary but whose costs far exceed any savings realized by all the wonderful efforts on behalf of the insured population.

    And finally, the longer we live the more we cost. That cost is cumulative but unevenly spread, concentrated at the end of life when the target populations of working people are no longer part of exercises in reducing access or costs. It’s gratifying to know that group insurance plans, their clients and the health care providers they coordinate are doing such a good job with costs. This leads to my last curmudgeonly point…

    ►Medicare, SCHIP, Medicaid, Tricare and the Veterans Administration are now picking up so many heavy duty costs that the insurance industry is mainly skimming the cream. In a few states there are even high-risk exchange pools acting as safety nets for them.

    Other than that, thanks for the good information.

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