Do we want to optimize health insurance for the individual given her/his willingness to pay? Do we want to reduce poverty and inequity by prioritizing reduction of inequity in health? These are two questions that face the medical system within every country no matter how developed the country may be. The development of social health insurance, to provide medical care to those that cannot afford it at the expense of tax payers, needs to be controlled by value-based care and increased transparency, while only paying for treatments that have proven to be cost-effective.
As compared to the healthcare system in Mexico before and after Seguro Popular, the US government is not subsidizing medical care unequally. To put it more simply, the rich in the US may be receiving much more healthcare, but they are not receiving more government money to do so. Although healthcare subsidies are not favoring people who can more easily afford it, there is still a great need to improve the way healthcare is funded. One of the ways to further increase the equity within health insurance is through value-based insurance design. This does not create all medical treatment coverage as equal, and instead covers the care that produces the best results. The value of care greatly depends on who provides it, who receives it, and where it is received.
In a survey done by the Kaiser Family Foundation, it was shown that a majority of the public believe that it is very important that future healthcare policy includes aspects of the Affordable Care Act that gave protections for people with pre-existing conditions (Kirzinger). However, given that people in the United States spend disproportionately more on healthcare expenditures as compared two other countries, it is clear that the money available needs to be spent more effectively. Healthcare plans in developing countries have become increasingly comprehensive due to the availability of new technologies, now covering a breadth of services ranging from obesity counseling to the morning-after pill. Do all of these healthcare services offer the same amount of benefit to patients? Because healthcare costs are shared amongst everyone in the system, patients do not have to pay the true cost of each medical treatment, creating an incentive to use more of the services available even though they may not be necessary. This has led to many doctors cashing in on the system, favoring volume over value, and offering patients unnecessary treatments and procedures for their own financial gain. An example of a procedure that is commonly overused is the laser ablation of varicose veins. Many times, this is done through embellishing medical records with symptoms that are more extreme in order to justify treatment. A recently published study in the journal Value Health showed that laser ablation for varicose veins showed the third highest cost effectiveness as one of 7 treatments available.
In the same survey by the Kaiser Family Foundation, four in ten insured adults ages 18-64 say there has been a time in the past 12 months when they received an unexpected medical bill and one in ten say they received a “surprise” medical bill from an out-of-network provider in the past year (Kirzinger). This shows the need for the US healthcare system to be more transparent about the costs of care. Transparency is another way to combat the moral hazard that faces a social insurance system. If patients are not being surprised by the already insurance-subsidized medical bills, they will be less likely to seek medical care when they do not need it.
There are many ways to increase transparency. One of the best methods can be borrowed from our neighbors to the North. In Canada, there are many ways to view the costs of medical care, one of the easiest to use being the Alberta Medical Association Fee Navigator. On the site, it can be seen that varicose vein injections have reached their cap for the year and the amount that physicians are able to bill is not even available. This means that the AMA will not pay for this treatment for the rest of the benefit year… which ends on June 30th, 2019.
The AMA Fee Navigator can also give information on cost-effective treatment options. This tool allows us to very easily see what physicians are being paid and clearly shows what services they are incentivized to perform.
We are in the midst of election season and it is important that we advocate for legislation that leads to the most cost-effective treatments being delivered to patients. One of the metrics that is commonly used to evaluate the cost effectiveness of medical treatments and help control which procedures are covered by insurance is the cost per quality adjusted life year (QALY). One QALY is the equivalent of one lost year of healthy life. If someone had a disease that put them at 50% of their health for the last 5 years of their life and a drug could remove their symptoms and improve their quality of life for those years, the drug would add 2.5 QALYs. If the treatment cost $100,000 over those 5 years, then the cost per QALY is $40,000. In the United Kingdom, the National Institute for Health and Care Excellence sets a limit on average of $25,000, so this treatment would not be available in the UK. In the US, the drug Irinotecan has a cost per QALY of $50,000, yet it is still used for the treatment of metastatic colon cancer (Cohen). In conclusion, our social insurance can be improved and even expanded if the healthcare system moves to value-based care that focused on outcomes as opposed to treatments, transparency to prevent moral hazard and over treatment, and implementation of more strict reimbursement that removes coverage for treatments that are not cost-effective.
AMA, “Fee Navigator®.” Alberta Medical Association: Fee Navigator™ | Health Service Code 48.12: Aortocoronary Bypass of One Coronary Artery, 2018, www.albertadoctors.org/fee-navigator/hsc/48.12.
Cohen, J, et al. “Clinical and Economic Challenges Facing Pharmacogenomics.” Nature News, Nature Publishing Group, 10 Jan. 2012, www.nature.com/articles/tpj201163#t1.
Kirzinger, Ashley, et al. “Kaiser Health Tracking Poll – Late Summer 2018: The Election, Pre-Existing Conditions, and Surprises on Medical Bills.” The Henry J. Kaiser Family Foundation, 12 Sept. 2018, www.kff.org/health-reform/poll-finding/kaiser-health-tracking-poll-late-summer-2018-the-election-pre-existing-conditions-and-surprises-on-medical-bills/.
David Dallas-Orr, MBA, has a background in wet lab biochemistry research and medical device commercialization experience in the areas of orthopedic surgery and cardiology. He is currently pursuing a Master's in Translational Medicine at UC San Francisco and UC Berkeley in order to learn more about bringing drugs and medical devices from the research stage to making an impact in the lives of patients.