Value Based Health Insurance

December 31, 2010, 1:11 PM

There is a growing trend in the health insurance industry to move toward what has been termed a value based health insurance model. The value based model, while still in its early testing stages, encourages individuals to utilize services when the clinical benefits to the patient associated with those services exceed the cost, while discouraging individuals from utilizing (or over-utilizing) services from which the health benefits to the individual do not justify the cost for those services.

This model, which has been tested with some level of success, operates to provide incentives or carrots to insureds for certain high value services. For instance, an insurance plan may offer reduced cost co-pays (or eliminate co-pays altogether) for certain items such as prescriptions for medications for chronic conditions or for screening or preventative services which the insurer believes are of high value to the consumer. Early study results have shown an increase in patient compliance with medication regimens when co-pays are reduced or eliminated. On the other hand, in order for a value based model to operate effectively, the insurance plan would need to specify certain services which were not high value to individuals and would provide disincentives or sticks with regard to such services. For example, a plan may determine that sleep studies are being over utilized by plan participants and institute an additional $100 co-pay requirement to receive such services.

This is a fascinating new health insurance model and one that commentators suggest that the American public at large may be ready for and willing to accept. It should be interesting to monitor the development of this new value based health insurance model. --Aaron J. Ambrose