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Benefit Design |
PROLOGUE
Improving The Design Of Health Insurance Benefits
Nothing is more central to health economics than the principle that health insurance coverage increases the use of health services or, alternatively stated, that we spend other people’s money more easily than we do our own. To this "moral hazard" has been attributed much of the growth in health care costs, and many economists have proposed to dampen inflation by reducing insurance coverage and increasing the patient’s share through copayments and deductibles. Needless to say, this economic focus on moral hazard and "overinsurance" does not fit well with many noneconomists’ focus on access to care and "underinsurance." The empirical literature suggests that both perspectives have merit, in that the United States suffers from a paradox of excess and deprivation—of generous coverage for some ineffective services and inadequate coverage for some highly effective services.
The contemporary "consumer-driven" emphasis in benefit design has embraced the economic perspective and sought to eliminate insurance coverage for all services below a substantial deductible. If consumers are informed about quality and clinical effectiveness, they should respond by shifting their utilization from low-value to high-value services. The empirical literature has documented, however, an unfortunate tendency for patients facing cost-sharing requirements to reduce their use of effective drugs. In recent years, insurers have begun to experiment with modified variants of benefit designs that combine high deductibles for most services with low or zero copayments for particularly appropriate drugs and preventive services.
Here we publish three papers by economists examining the effect of traditional and second-generation cost-sharing requirements. Richard Hirth and colleagues use cross-national data on patients suffering from chronic renal failure to quantify the impact of the high cost-sharing provisions facing U.S. patients, despite Medicare coverage for renal dialysis, compared with patients in other nations. Michael Chernew and colleagues report on a large employer’s shift from cost-based to value-based copayment tiers for drug coverage, highlighting the decline in patient nonadherence to clinically desirable drug regimens after copays were reduced. John Rowe and colleagues document the effect of Aetna’s HealthFund, which combines a "consumer-directed" high-deductible plan with first-dollar coverage for selected drugs and preventive services, to increase the use of appropriate services. Despite their different data and methods, the three papers are consistent in highlighting the vices of raising cost-sharing barriers to underused but clinically valuable services and the virtues of tempering first-generation "consumer-driven" insurance designs with a bit of moral hazard.
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HOPE–The People-to-People Organization |
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