Writing for the New York Times' "The Upshot," health economist Austin Frakt and Harvard professor Amitabh Chandra explain why health plans should be ranked on the value of the technology they cover—not the hospitals in their network.
According to Frakt and Chandra, health insurance is costly because most plans cover every available medical technology, including some therapies of low or uncertain value, because physicians have deemed such technologies medically necessary—sometimes despite evidence to the contrary.
How hospitals make the call on pricey, unproven technology
Frakt and Chandra argue that consumers could decide which services they are willing to pay for if plans competed based on the therapies they cover. To make this possible, policies could be defined based on the technology they cover. For instance:
- A bronze plan might cover hospitalizations, physician visits for emergencies and accidents, genetic diseases, and prescription drugs.
- A silver plan could cover the same services as the bronze plan, as well as treatments that a vast majority of doctors deem useful.
- A gold plan could cover the same services as the silver plan, as well as cancer therapies proven to improve outcomes.
- A platinum plan might cover all of the above, as well as experimental and unproven cancer therapies.
Survey: Consumers want coverage for experimental treatments
However, they note that ranking plans by the value of care they cover could be problematic for several reasons. For example, they note that insurers are unlikely to invest in research to determine the value of medical technologies, especially since the information would become known and used by all plans. Frakt and Chandra note that public investment in research could remedy this issue.
Frakt and Chandra also note that people will discard lower-tier coverage as they become ill and switch to a more comprehensive plan, which would increase expenses and premiums. But limiting plan changes to the enrollment period would prevent consumers from suddenly switch their plans in the event of an illness, they argue (Frakt/Chandra, "The Upshot," New York Times, 6/9).
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