The New Health Dialogue

Picture this. You have two choices for insurance at your job at an Oregon steel mill. One is the traditional model we are all familiar with (those of us who get decent insurance through our jobs, at least, are familiar with it). The other one is value-based insurance. There will be no premiums and it will provide inexpensive care for chronic diseases -- asthma, congestive heart failure, diabetes, depression, heart disease, chronic bronchitis or emphysema. But if you need -- or want -- pricier and often overused procedures like heart bypasses or hysterectomies, you will pay more.

Julie Appleby writes in USA Today/Kaiser Health News:

The policies are among the first to apply financial incentives on both sides of one important factor driving up the nation's health care tab: The underuse of proven treatments and overuse of certain surgeries and diagnostic tests that may be less valuable.

If the model works, employers save money. And patients get the right care. It may reduce costs both by cutting down on the costlier procedures and imaging, and because chronic diseases will be kept under control so there are fewer expensive acute crises and complications.

Usually we condense interesting articles but Julie's excellent piece covers a lot of ground and it’s hard to boil down without losing the subtleties. So go read the whole thing yourself. (We read it three times.) Check out what our colleague Tom Emswiler has blogged about tiered pricing too, although that is often restricted to drugs, not surgeries or imaging.

A few points to highlight though. For now, at least, the value-based alternative is an option, not a requirement. That of course may change. Right now it may well be a good deal for someone with chronic disease or the risk for chronic disease, but may not be the best choice for someone who may need a bypass.

The pricing structure isn’t a whimsy. These procedures cost more AND there is evidence they are overused and aren't actually better for most people. That doesn’t mean that the costlier procedures aren’t necessary in some circumstances (Julie cites the obvious one of a hysterectomy for uterine cancer or stents for a heart attack) or that people might try more conservative treatments first and then decide that the knee replacement really is the way to go. People can still get those treatments. It will cost more -- but this is still insurance. The patient will have to pay hundreds of dollars more, but there are limits to their financial exposure. The policy described in the article would limit an individual exposure to hospital bill to $1,500 annually, $3,000 for a family.