HSM and Fuqua School of Business professor Peter Ubel discusses the impact of a system that determines out-of-pocket expenses for patients based not on the cost of care, but on its value, defined as “health care outcomes achieved per dollar spent.”¹ Ubel critiques value-based insurance design plans for being asymmetrical, noting that although this design would reduce copays for high-value services in order to promote their use, it should simultaneously increase copays for low-value services to discourage their use. Unless Congress approves of both methods, Ubel is concerned that copay reduction will do little to reduce overall health care expenditures. Many however, including providers and pharmaceutical companies, may support this asymmetrical approach since a reduction in copays would mean doctors see more patients and pharma sells more medications. Some also see the asymmetry as a protection against 3rd party payers abusing the system by increasing copays solely to increase net revenues. Regardless of the position one takes on the issue, Ubel’s main concern is that lowering out-of-pocket costs for some services without increasing them for others would result in increased health care expenditures for the nation.
¹Porter, M. (2010). What is value in health care? New England Journal of Medicine, 363(26), 2477-2481. DOI: 10.1056/NEJMp1011024