Relative-value Health Insurance

Some customers would choose to spend more money for deeper coverage; others would choose to save money by purchasing shallower coverage and have more resources to devote to other valuable goods and services. If customers prove too risk averse to go without any coverage at all for treatments with ratings that suggest they are not very cost effective, insurance companies might sell policies that require higher co-payments for treatments ratings below a particular cut-off point rather than providing no coverage at all for such treatments. A system of RVHI would mean that patients would sometimes find, after becoming ill, that their insurance would not cover (or only provide limited coverage for) some potentially efficacious treatments when those treatments fail to satisfy the cost-effectiveness cut-off point specified by the insurance policy. But compare this admittedly unfortunate consequence to the problem with the current system: everyone with private insurance is effectively required to buy extremely deep insurance coverage, even when they might wish to spend their marginal dollars on other goods and services instead. A consequence is ever-increasing costs of medical care. The system works tolerably well for the very wealthy, the very anxious, and the very risk averse, but not as well for the rest of the insured population that might prefer to consume relatively less health care and relatively more of other goods and services. The availability of RVHI would not force anyone to purchase shallower health insurance than they have now; it would just afford the opportunity to do so. If RVHI would provide valuable options to consumers, why has the market not already offered it? The simple answer is that to facilitate such a market, some entity must provide the relative value ratings, which private parties would then use as the basis for their insurance contracts.Because we lack good information about the effectiveness of most medical treatments, creating the necessary information is a massive undertaking, and no single private entity is likely to have the incentive to create such an expensive public good. The government needs to provide the information necessary to facilitate the market. If youve read this far, you have probably identified several problems with RVHI. (If you havent, Im sure the comments to this post will do so in the near future!) In future posts, Ill try to describe some of these problems and explain why I think that they are not fatal to the proposal. I will also explain why RVHI, with all its flaws, is a better alternative than the leading proposals to control moral hazard in health care, such as consumer-directed health care and pay for performance for health-care providers. Ill also discuss how RVHI can fit with current law under the Affordable Care Act. If you dont want to wait for the blog posts, feel free to read more here ( Mich. Relative-value health insurance





Krauthammer: Obamas appearance with Galifianakis shows 'hes got a problem' selling health coverage





With just 20 days left to sign up for coverage under the Affordable Care Act, the Department of Health and Human Services said 4.2 million people had signed up through the end of February far short of the unofficial goal of 7 million by the end of March. Particularly troubling to the Obama administration is the lag in getting young adults to purchase coverage. Administration officials had hoped roughly 40 percent of enrollees would be in the 18 to 34-year-old range. But the latest report shows just a quarter of those who have purchased coverage are in that coveted demographic. Which is partially why President Obama went on comedian Galifianakis show, Between Two Ferns, on FunnyorDie.com to talk about health insurance. Krauthammer said the system was fundamentally flawed when it came to younger customers and the flaws would take more than marketing to overcome. You start with the fact that young people are averse to buying health insurance, because they have a sense of being invincible but it's worse with ObamaCare, he said. Krauthammer: Obamas appearance with Galifianakis shows 'hes got a problem' selling health coverage