Copayment reform in the past has tended to recommend either arbitrary, across-the-board cuts or to cut out-of-pocket expenditures for drugs for which there is evidence to suggest that their use can improve health outcomes or productivity. This second proposal, according to Buckley, gets into the whole issue of value-based insurance design (VBID), although, she adds, “BIO hasn’t yet looked into this issue.”
The National Business Coalition on Health, however, has. “The area that we call value-based plan design is still emerging,” says Dennis White, senior vice president of value-based purchasing. “We look at the variable value of various interventions, such as certain drugs and tests, and then adjust the out-of-pocket consequences for the patient accordingly.” White points to one health plan, HealthPartners in Minnesota, that is implementing VBID.
White admits, though, that VBID can be disruptive. “With pharmaceuticals, for example, it is common to have generics on tier 1, with the lowest out-of-pocket cost,” he explains. “However, there are some essential drugs that are not generics, such as insulin, which, if you don’t take, can get you in trouble.” So the theory, says White, is to recognize the relative value of these interventions and lower the financial barriers for those that are critical.
Although VBID may be gaining interest, Dana P. Goldman, PhD, the Norman Topping/National Medical Enterprises chair in medicine and public policy and director of the Leonard D. Schaeffer Center for Health Policy and Economics at the University of Southern California, has his concerns about the concept. “If you take it to its logical extreme, it says you will pay a lot of money if you are healthy, but if you get a little sick, then you will pay less money. Imagine a health plan that says, ‘We charge sick people nothing, but healthy people pay a lot.’”
Who really pays for healthcare? An update
Nationally, it is estimated that workers with employer-sponsored health insurance pay for about 40 percent of their healthcare. This number may be deceiving, however. In an article published in JAMA
in March 2008,*
Ezekiel J. Emanuel, MD, PhD, and Victor R. Fuchs, PhD, suggest that regardless of who seems
to be paying for healthcare, it’s you and me — employees and taxpayers — who, in the end, pay for it all. “Employers do not bear the cost of employment-based insurance; workers and households pay for health insurance through lower wages and higher prices. Moreover, government has no source of funds other than taxes or borrowing to pay for health care.”
Ezekiel and Fuchs noted that over the last 30 years, premiums have increased by about 300 percent, and corporate profits per employee have increased 150 percent before taxes and 200 percent after taxes, after adjustment for inflation. The average wages for workers in non-agricultural industries decreased by 4 percent (inflation adjusted) during the same time period. Their assessment: “Rather than coming out of corporate profits, the increasing cost of health care has resulted in relatively flat real wages for 30 years.” The authors concluded that, “Not only does third-party payment attenuate the incentive to compare costs and value, but the notion that someone else is paying for the insurance further reduces the incentive for cost control. Getting Americans invested in cost control will require that they realize they pay the price, not just for deductibles and copayments, but for the full insurance premiums, too.”
In an interview with Biotechnology Healthcare, Fuchs elaborated on this. “The problem is that employees and Medicare recipients think they are getting something for nothing, but, in the end, they will pay higher taxes or higher premiums, or experience lower wages,” says Fuchs, who is Henry J. Kaiser, Jr. professor of economics and health research and policy, emeritus, at Stanford University. “This is the pernicious part of the whole thing.” As such, he says, reducing copayments won’t provide much of a benefit. “As it is now, there is typically one uniform copay, regardless of the kind of service or product being offered. However, you can make a very strong case that some preventive services and products should have no copay, and others should have a much higher copay. For example, if you want a brand-name drug rather than a generic, then the copay should be larger.”
White thinks research in this area, needs to focus on the relative spectrum of value for the various stakeholders — patients, physicians, health plans, and employers. He notes that some plan designs are beginning to lower co-insurance levels contingent upon patient behavior, such as filling out health risk assessments, attending coaching sessions, adhering to clinical guidelines, and having periodic medical examinations — though he admits there are challenges involved. “Someone has to track it,” he says.
“What we are starting to see that makes a bit more sense is to have plan designs where the effect is on the out-of-pocket premium share,” White says. “People can participate in one plan [with lower employee contributions toward the premium] if they follow the rules. If they don’t follow the rules, they go to another plan, which will cost more.” So far, according to White, guideline adherence hasn’t made its way into premium setting, though he says it should, “because people who do the right thing aren’t going to cost as much in the long run.”
The idea of stressing adherence to evidence-based care may resonate with biologics manufacturers pressed to demonstrate the value of their wares to those who are skeptical about their costs. One potential problem with this approach, White acknowledges, though, is that premiums are governed by demographics and claims history.