Incentives Matter

The following is from AHIP’s HI-Wire Connection newsletter:

Co-pay incentives drive behavior change, reduce cost trends, and accelerate positive outcomes for Medicare Advantage (Part D) beneficiaries, according to the Center for Health Value Innovation:

The paper contends that, contrary to recently recommended policy changes by the Centers for Medicare and Medicaid Services that exclude incentives through copay or co-insurance for chronically ill beneficiaries and high-value medications that target chronic conditions, the effectiveness of such incentives in driving business-based results is documented: At Caterpillar, for example, generic statins for cholesterol management were moved to a $0 co-pay; brand-name statins, to $35 per month or no benefit paid, depending on the dose. The plan, which covers 90,000 people, saw increased medication compliance, contributing to a $750,000 per month savings to the company and $175,000 savings per month to employees.

Comments (4)

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  1. Ken says:

    This is the most important issue in health economics. Are we, or are we not, going to allow individuals to have good economic incentives with respect to the purchase of health care?

  2. Joe S. says:

    Why do we have to keep publishing papers and producing studies that confirm over and over again what the RAND Corporation established 30 years ago –incentives matter in health care?

  3. John R. Graham says:

    This kind of research is dangerous in the wrong hands. To say that Medicare Part D should willy-nilly adopt the practices of Caterpillar ignores the key variable that is held fixed in the study – namely, Caterpillar! There are all sorts of Caterpillar-specific cultural practices that we outsiders cannot observe that also contribute to outcomes. The last thing we need is for CMS to dictate a $0 co-pay for generic statins and $35 for brand-name statins across the board.

    The most dangerous thing in American health care is Barack Obama carrying a copy of the Dartmouth Atlas.

  4. Bart says:

    The same concept should apply to incentives for purchase of insurance. Just as lack of co-insurance encourages over-consumption of services, full reimbursement for premiums would encourage careless consumption of insurance products.