Andrew Sprung reminded me that not all of the Exchanges can be easily spammed at the subsidy point.
— 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.