Relative Value Health Insurance

Interesting post in The New York Times blog The Upshot on the notion of relative value health insurance.

Consider the latest technology for treating prostate cancer: the proton beam….Per treatment, this therapy costs at least twice as much as alternative approaches, but is no more effective. Many health plans cover it and other therapies of low or uncertain value because they pay for anything that physicians deem medically necessary even when evidence suggests otherwise. And, without even knowing it, Americans pay for it in higher premiums.

It doesn’t have to be this way.  If plans could compete on the basis of the therapies they cover, consumers could decide what they wish to pay for. This sounds complicated, but it need not be.

Health plans could define themselves at least in part by the value of technologies they cover, an idea proposed by Professor Russell Korobkin of the U.C.L.A. School of Law….

Someone who wanted proton-beam cancer treatment coverage could have it by selecting a platinum policy and paying its higher premiums. Someone who did not want to pay higher premiums for lower-value care, in turn, could choose a bronze or silver plan. This gives a different, but more useful, meaning to the terms “gold,” “silver” and “bronze” than they have in the new insurance exchanges today.

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