Date Published: February 16, 2010
Publisher: Public Library of Science
Author(s): R. Scott Braithwaite, Cynthia Omokaro, Amy C. Justice, Kimberly Nucifora, Mark S. Roberts, Joshua A. Salomon
Abstract: Using a computer simulation based on US data, R. Scott Braithwaite and colleagues calculate the benefits of value-based insurance design, in which patients pay less for highly cost-effective services.
Partial Text: Health plans, employers, and policymakers are looking for more effective approaches to control health expenditures. Reductions in health expenditures can arise from lowering either the costs or the quantities of health services . While new initiatives have the potential to lower costs (e.g., increasing efficiency with health information technology), controlling quantity is likely to remain an essential component of any expenditure-control strategy. Strategies to reduce health service quantity in the US have typically targeted providers (e.g., preauthorization review) more than consumers (e.g., cost sharing). However, because health care costs continue to increase beyond the US economy’s growth rate and targeting providers is often expensive and inefficient, increasing attention is focusing on approaches to lower consumer demand for health services, such as cost sharing.
We evaluated two groups of scenarios involving broader diffusion of VBID. In the first group of scenarios, because cost sharing is a common attribute of medication coverage, we examined the effect of applying VBID to pharmacy benefits for all persons with health insurance in the US. In the second group of scenarios, we assumed that broader diffusion of VBID extends not only to pharmacy benefits, but also to other health care services (e.g., devices, procedures, etc.). Our rationale for performing this second, more hypothetical group of scenarios is that value assessment methods in other countries (e.g., UK, Canada, Australia, Germany) use the same tools for assessing the value of non-pharmaceutical services that they use for assessing the value of pharmaceuticals , and there is no theoretical rationale for using distinct methods. Therefore, VBID principles have the potential to be applied more broadly across health care services in the US. We define “cost sharing” as any copayment or deductible that is linked to a particular health service. Therefore, this definition does not include other types of payments (e.g., patients’ share of insurance premium) or the indirect effects of employer health expenses on wages.
First, we use our mathematical model to make inferences about the value of current US health care spending. Second, we describe the results of analyses that systematically apply VBID but restrict its scope to pharmaceuticals spending. Third, we describe our results, systematically applying VBID to all health care spending regardless of service type.
Our results suggest that the majority of health spending in the US health care system goes toward low-value services. Therefore, broader diffusion of VBID has the potential to raise life expectancy of the US population by as much as 0.44 life-years without increasing health care costs. Notably, these benefits could occur with little or no change in the overall proportion of health expenses that are paid out-of-pocket, and without increasing the amount of cost sharing as high as current levels for tier-4 formulary drugs . Limiting VBID to pharmaceuticals reduces the potential gain, but it is still meaningful (0.03 to 0.05 life-years), and comes without a corresponding increase in health care costs.