Risky 'value-based' insurance lowers health costs, but with a gamble

Would you opt for a health insurance plan that offers free care for chronic conditions like heart disease and diabetes if it meant  paying through the nose if you ever needed to visit the ER or had to have a a hip replacement? Five insurers in Oregon believe that some people will be willing to take that risk, and are offering such plans in an effort to creatively reduce healthcare costs, reports Kaiser Health News.

The policies, which will be administered by Regence Blue Cross Blue Shield, are geared toward people with one of seven chronic conditions: asthma, congestive heart failure, diabetes, depression, heart disease, chronic bronchitis and emphysema. Such people would save money by getting doctor visits and prescription medication related to their condition at little or no cost. They also would have regular co-pays of between $10 and $20 for routine doctor visits, with an annual deductible of $250. Hospital care would cost a patient 20 percent of the total bill, with an annual cap set at $1,500 for individuals and $3,000 for families. 

However, should these folks ever need a knee replacement hysterectomy or other treatment or test that has been deemed "overused," such as cardiac bypass surgery, high-tech-imaging exams and emergency room visits, they would pay twice the amount of a normal co-pay, twice their normal annual deductible, and up to half the cost for a hospital or ER visit, with the caps remaining the same. 

Critics, including Kevin Volpp, director of the Center for Health Incentives at the University of Pennsylvania, believe such plans need to be more flexible. "There are relatively few procedures where you can say for everyone that ‘this is a low value,' " he said.

But Jack Friedman, CEO of Providence Health Plans, one of the insurers that developed such a system, believes that offering care via a "value-based insurance design" isn't just a fad.

"Frankly, that's where I think our healthcare system will end up," he said.

To learn more about these plans:
- read this Kaiser Health News article