• Value-Based Insurance at a Portland Steel Mill

    Kaiser Health News staff writer Julie Appleby reports today on value-based insurance soon to be offered to workers at a Portland steel mill.

    [E]mployees with certain conditions — asthma, congestive heart failure, diabetes, depression, heart disease, chronic bronchitis or emphysema — would get prescription drugs and visits with physicians free or at greatly reduced rates. High blood pressure, another common condition, would qualify for low-cost care if it was part of an overall diagnosis of heart disease.

    Conversely, they’d pay much more if they have a treatment or test from a list of about 20 broad categories, including knee or hip replacement, cardiac bypass surgery, artery-opening stents, hysterectomies, high-tech-imaging exams or emergency room visits.

    Appleby goes on to report that value-based design is not without controversy. In a world with heterogeneous responses to treatments there is no way that one set of financial incentives will seem fair to all policyholders, or to all clinicians. This is an unavoidable consequence to cost control via value-based design.

    On the other hand, it is imaginable that some of those faced with relatively higher cost sharing due to their mix of use ultimately benefit in absolute terms from an overall reduction in health care costs. That is, relative to the counter-factual world with cost sharing incentives that are insensitive to efficacy and cost offsets, value-based design may benefit more people than just those with preferred conditions.

    • There are a number of papers scattered throughout the medical literature asserting that increased use of primary care physicians reduces total spending. I think this may partially substantiate the concept of value based insurance. I would like to see pilots carried out on a fairly broad based group of patients to verify this approach. I remain a bit skeptical that most older patients will benefit from this approach unless it addresses the provider in some manner. It will take a huge cultural shift to get patients to act more like savvy consumers (I am a doc BTW).


    • steve
      Chernew et al just published an interesting study in HA this year re: value based design. In short, they made the drugs cheap for targeted, chronic conditions; net costs were neutral–did not measure non-health benefits to company however (was a corporate based program).

      Will learn more as these experiments run, but in addition to low or no cost options, patient engagement and education will be the other primary lever, eg, in context of well designed DM or PCMH programs.