Andrew Sprung reminded me that not all of the Exchanges can be easily spammed at the subsidy point.
@charles_gaba @bjdickmayhew I like California’s standard benefit design.https://t.co/1xW88R7Qw3 Easier to understand on-exchange.
— xpostfactoid (@xpostfactoid1) October 31, 2015
Covered California is what is known as an active buyer. They solicit bids for standard coverage packages and reject qualified but overpriced or low quality plans. Furthermore, they don’t allow for benefit design games to be played. For Zip code 90210, the base Silver plan without cost sharing assistance has a $2,250 deductible and then 20% cost sharing to an out of pocket maximum of $6,250. As I mentioned earlier in the week, there are three major components of a plan; plan design (HMO/PPO etc), network (big/narrow/integrated payer provider walled garden etc) and benefit configuration (deductible (embedded or aggregate) and co-pay/co-insurance.) Covered California as an active buyer basically takes benefit configuration out of the hands of insurers and standardizes it. This standard benefit configuration does two things. First it removes the ability of insurers to aggressively spam the exchanges by introducing isomorphic plans between Silver #1 and Silver #2. An insurer only has the ability to introduce meaningfully different plans by network and plan design so if they get Silver # 1 and #2, those positions are honestly achieved. Secondly, this reduces decision complexity for individuals as they are not trying to guess if a $3,000 deductible, 15% coinsurance is better for them than a plan with the same actuarial value that has a $2,250 deductible and 20% coinsurance. Now here is where I am stuck scratching my head, as Claire McAndrews makes an interesting point that I need to struggle through:
@bjdickmayhew (2nd tweet) like in CA, stndrd plans have low cost-sharing for primary care, actually most outpatient, instead of high deduct.
— Claire McAndrew (@claire_mcandrew) November 1, 2015
Standardized plan design simplifies decision making. Value based insurance design is not simple.
Right now Covered California’s Schedule of Benefits is seventeen lines of data with no specification that PCP visits for diabetes related conditions are no cost-sharing while day care crud visits have $45 co-pays. This is fairly simple communication for a simple plan design.
VBID attempts to push people to choose the highest and best value in treatment by offering to pay a maximum benefit for the preferred course of action, and then lower levels of benefits for less preferred courses of actions.
For instance, if someone comes in with an initial complaint of unspecified back pain, a VBID plan would pay full benefits for physical therapy and 75% benefits for surgery without three months of physical therapy. If after three months of PT, the patient is re-evaluated and then full benefits could be available for surgery if there were no observed improvements.
Oregon’s public employees have a VBID design and this is a brief description of the plan:
The changes will also eliminate the copayment for doctor visits for chronic conditions, create a deductible for some prescriptions but not for so-called “value” drugs that provide solid medical benefits at low cost….
This is complicated.
It is a good idea to make chronic conditions costless to treat from the patient point of view. I’ve argued this many times that this is the greatest problem with high deductible health plans in that it encourages people to drop care and empirically the dropped care is indiscriminately dropped without regard to the actual value of the care.
But it is not simple for an initial view of someone who is minimally connected to the insurance and medical system.
I’m struggling to see how combining standardized plans combined with VBID is a net simplification of the decision tree.
Monday Evening Open Thread
Yatsuno
Semi OT: Montana just became number 30! (Although I thought they would be 31)
http://talkingpointsmemo.com/livewire/montana-medicaid-expansion
Scamp Dog
VBID: value-based insurance design.
It took me a bit to figure that out, and I hope this will help other readers.
Ruckus
Richard
How can this be made simple? Not sure if it can. It’s a complex decision because many of us have different needs and resources. It’s also complex because it seems like insurance companies (or maybe the entire healthcare system) like it that way. it works in their favor. I like that CA makes the decisions easier, but that doesn’t necessarily make the choices better.
Politically Lost
I’ve been pretty deep in the healthcare system lately and have been reading your posts with interest. Fortunately for me, my wife’s insurance is more than outstanding. Anyway, wanted to thank you for the work you put in on this. And, to say that your Twitter name is absolutely the best ever.
Richard mayhew
@Politically Lost: I try with my twitter handle
Kay
I’m getting so many complaints about the cost of the insurance going up I’m afraid it’s going to be an issue in 2016 for Democrats.
Ohio is probably doing a horrible job, I don’t know, but people who bought on the exchanges are really complaining. They don’t want to switch plans all the time and they don’t know why the monthly premium is going up. I heard a horrible story today from a guy who couldn’t afford anything but the bronze plan initially, then the prices changed so the “silver” was almost the price of the bronze so he bought that, and his “silver” just went dramatically up. He’s exhausted. He doesn’t want to do this anymore.
Roger Moore
@Ruckus:
It seems to me that the current insurance situation creates the worst of both worlds for consumers: there are enough choices to be confusing, but many of the choices are essentially meaningless, so the complication doesn’t really benefit the consumer. Stripping away meaningless choices bares the essential ones so you can focus on the decisions that matter. It doesn’t guarantee that you’ll be happy with the available options, but it reduces the chances that you’ll get something wrong by mistake.
piratedan7
well alot of the old models are being challenged, as ideas on what comprises quality healthcare really is… I see two prongs of this debate, patient-centic metrics, i.e. what makes people healthier and using that as a goal (funny how that really isn’t the model these days) and the data driven metrics (call it fantasy-medicine) where you get a large batch of data and treatment options and work out ideas on what we’re treating and how successful is it in terms of cost-effectiveness. Many times you’ll see the latter masquerading as the former. Also, there’s a cusp of a whole new world opening up in treatment diagnosis and philosophy as genetics is making clinical strides into the industry where they can tailor make or design a treatment for you, once they analyze who you really are and what meds may or may not work for you. Try adding that up with the value added bean counters and medicine as we know it will soon be ramping up some major changes and I certainly don;t want the know-nothings to be the guys making the calls if they can’t even be honest about where life begins and the rights of women over their own bodies….
Ruckus
@Kay:
When I owned a business, eons ago, I had to make the decisions about health care every year and not just for myself. Almost drove me crazy. I finally found a broker who I told, bring me three plans, no more and one of them has to be one you’d buy for your self. Then tell me why that one over the others. And cost is important as I pay everything. (I said it was eons ago) That helped. Prices/product were all over the place and with no obvious reasoning. Richard has made some of that clear. But we are working in gray areas here and some states are worse than no help, they are going out of their way to screw their citizens. That people keep asking for it more and harder boggles the mind.
Ruckus
@Roger Moore:
We live in CA, a state that actually seems to want to help us make those decisions. But those decisions can only be so simple or have many fewer choices. The rest is up to us. And many people are not up to the task nor can we find easy answers to make the task better. If I didn’t have a choice that most don’t have I’d be there as well, trying to make sense of it all. And I’ve done this, although a long time ago.
Richard mayhew
@Roger Moore: I am stealing this for both a post and a 930 meeting tomorrow
jl
Thanks for useful post. Covered California seems to be adopting a Swiss approach of standardized plan, but standardized by metallic flavor.
I suppose adding soft price control, as in price bands for services with some variation due to diagnosis would be simple, or not? That is also the Swiss approach.
I think more complex than one would want, but more tractable than regulatory language trying to describe one or two or three ‘significant’ differences, or ‘major’ or ‘minor’ differences.
Roger Moore
@Richard mayhew:
You’re more than welcome to it.
Kay
@Ruckus:
I had to buy privately about 15 years ago and it was hard. I have a friend who made me a spreadsheet and I used that. I just think people didn’t plan on it being this complicated. The big selling point to me of the ACA is “security” and they don’t feel secure. I actually don’t have a relationship with a doctor, because I hate going and I treat them like plumbers or something, but a lot of people are really attached to one provider (which is good! They should have a relationship with the human being!) and I think the uncertainty scares them. The value to them is the security. Without that, it becomes less valuable- it was a big part of what they thought they were buying.
Mnemosyne (iPhone)
I am totally thinking out loud and I’m sure there are a million problems with this idea that I haven’t thought of, but I wonder if it might be useful to build networks around specific hospitals, which would give people a known factor to choose. They could then choose a doctor or medical group based on who has admitting privileges to that hospital.
Richard Mayhew
@Mnemosyne (iPhone): That actually happens all the time — see UPMC in Pittsburgh, Steward in Boston, Kaiser in California, Medstar in DC, Meridian in Michigan, Geissenger in Pennsylvania
And it can be a pretty good idea, look at the phrase “integrated payer providers” or “integrated delivery systems” if you want to bore yourself to tears on Google.
pseudonymous in nc
I’m with Roger Moore and Kay here. The assumption is still that you’re going to get bitten on the ass by your choice — and blamed for making a bad choice — and the only question is which cheek and how hard. The blaming is the worst bit. Some states are making the best of a bad setup, but it’s still a bullshitty marketplace where, frankly, there doesn’t need to be one.
Speaking personally: we’re in the weird situation of starting 2015 exchange plans this month, just as open enrollment begins, and so we got to see immediately that both of our plans are being jiggered about for 2016: one will cost more per month and cover less if it’s renewed (platinum to gold) and the other is a shitty bronze plan that’s going away entirely to be replaced by an even shittier one. So we’ve got six weeks to work out whether to stick or twist.