Benefit Design Working Group – 2022

OBJECTIVE:

Establish healthcare finance and payment models that reward improvements in the long-term care of patients. Incentivize innovative insurance and finance models that are designed to reward and encourage major breakthroughs in therapies and cures, while keeping the cost to patients low.

SCOPE:

• Purpose of healthcare insurance
  • Are premiums causing harm to patients, and how?
  • Is insurance needed for lower cost chronic conditions vs. rare diseases?
  • Is a subscription model for common health needs and many chronic conditions appropriate?
  • Is reinsurance a better option for catastrophic conditions?

• Insurance/Reimbursement
  • Formularies are driven by rebates, not safety/efficacy data
  • Financial risk should be based on the validity of clinical data
  • Reimbursement should be based on outcomes
  • Change contracting to net by contracting

• Explore innovative cost-saving models
  • Streamline administrative burden for providers and patients

• Anti-Kickback/Safe Harbor
  • Medical loss ratio abuse
  • Consolidation of health systems is creating a power shift; prescribers are being prescribed to
  • Power-dependent relationships throughout healthcare – providers have dependence on insurers

BACKGROUND:

Healthcare budgeting and reimbursement in the U.S. has not changed much since the 1960s. Policymakers have merely continued to build on top of an outdated system that is neither patient-focused, efficient, nor cost-effective. The lack of innovation and disruption means that America spends twice as much as other industrialized countries on healthcare as a share of our economy.

Traditionally, health insurance plans were designed to protect a patient from unexpected, high medical costs. Patients purchase health insurance to minimize their financial exposure to these healthcare costs and provide a critical safety net for catastrophic health events. However, with the advances in science and medicine, our ability to treat many conditions has improved and become more cost-effective over time.

At the same time, for many Americans, insurance premiums are a greater financial burden than other healthcare-related costs. In addition, high-deductible health plans are being purchased by more Americans than ever before, leaving them responsible for thousands of dollars in costs before coverage kicks in. Patient out-of-pocket (OOP) costs continue to rise year after year, including a 10 percent increase from 2020 to 2021. Further, the opacity of health insurance has made it impossible to understand how much anything costs and has diminished the patient’s ability to determine their financial responsibility for any health intervention.

This simply isn’t sustainable. We need to actively explore alternatives to the status quo.

“Value-based insurance design” aims to increase healthcare quality and decrease costs by using financial incentives to promote cost-efficient healthcare services and consumer choices. Health benefit plans can be designed to reduce barriers to maintaining and improving health or be designed to prevent access to healthcare considered unnecessary, repetitive, or of low value. However, “value” is not easily universally defined. Value is not just about price, it’s about results, access, process, knowledge, and choice for the patient and their family.

Medical innovation is unfolding rapidly and our current healthcare finance system is not designed to accommodate it. We must change our healthcare finance system to become more efficient, nimble, and responsive to that innovation.