Value Based Benefit Design

Here is an interesting link that describes value-based benefit design (http://www.commonwealthfund.org/Content/Newsletters/Purchasing-High-Performance/2009/June-18-2009/Feature-Articles/Its-All-About-Value-Based-Benefit-Design.aspx). In short, this means providing incentives to use specific types of care and not others. This type of benefit design could be used by a single payer or in a competitive market. in a competitive market there would be stronger incentives to find the best value-based insurance design to attract people to your plan to make the most money. If consumers understand what they are getting, this could create quite an array of choices that would make sense for different populations and allow people choices.

The interesting thing about value-based insurance design is that as we understand what really works (or doesn't work) for specific conditions we can design ever more specific benefits (inclusions and exclusions of what will be covered or what will be covered more generously) that are more specific to individuals. Some people may not find that appealing. Nevertheless, at a population level this could be very useful.

The link above gives a couple of examples. One is drug reimbursement to encourage generics. That is nothing new. Another is a set of incentives to encourage patients (and their providers who recommend procedures) to use minimally invasive surgery when the option is available. That would seem like an obvious choice for most patients. The key is that the doctors have to understand the incentives as well and review with the patients the options that they have and what each option will cost.

This example actually illustrates the value of either single payer or retention of something closer to our current system. If each plan or employer can pick and choose what it wants to encourage, that would allow lots of choice and allow people with the right information in easily understandable format to find the plan that is closest to their ideal. However, more options means more time that physicians would have to spend reviewing with each patient to make the right decision for the patient based on incentives. One set of rules might be easier.

Nevertheless, this is not something that has made the news as much but definitely something to watch for once we get beyond the debate of how many payers we will have.