Can we have it all? A look at value-based insurance design

Policy initiatives at the state and federal levels are being rolled out in order to increase health insurance coverage. At the same time, policymakers and employers are struggling with how to contain insurance costs.   Here’s the rub, though. These objectives are traditionally at odds with each other as utilization of health care services (and subsequently costs) increase as people gain coverage.

The good news is that an exploration will soon be underway in Colorado that has the potential to increase coverage while reducing, or at least controlling, costs.

Value-based insurance design is a concept in which individuals are offered incentives (through reduced co-pays and/or deductibles) to use high value services that are proven to be effective.  These services would include screenings, certain preventive services and evidence-based chronic disease care.  Enrollees are financially discouraged (through higher cost sharing) from using services that are low value—that is, those that are relatively expensive and not necessary proven to be highly effective.

Working with a panel of independent physicians and experts, Engaged Public, a public policy strategy firm led by Chris Adams, has developed an insurance product for a self -insured employer in the San Luis Valley. It’s a pilot study that will test the value-based insurance concept and is funded by the Department of Health Care Policy and Financing’s grant from the federal Health Resources and Services Administration.

But how do consumers make decisions about whether higher co-pays for low value services are still worth it?  Engaged Public also received grant funding from the Robert Wood Johnson Foundation to help educate people about various treatment options.  These “decision aids”, which can be available on DVDs or through the Internet, include non-technical explanations about what research shows about the pros and cons of different courses of treatment.  Some research shows that informed consumers tend to choose less invasive, less expensive care when they fully understand their options.

Can we have it all - increased coverage and a reduction in the growth of health care costs?  Stay tuned to find out.  The two-year pilot will be launched in January. CHI will be conducting the evaluation of the project.

Amy Downs is a vice president at CHI.