Consider value-based insurance design, and then consider Section 224 (c) of HR3200, "Encouraging the Use of High Value Services." The public health insurance option may modify cost sharing and payment rates to encourage the use of services that promote health and value."
The Pink Sheet points out a recent paper sponsored by the National Pharmaceutical Council as "adjust[ing] out-of-pocket costs based on an assessment of the clinical benefit value - not simply the cost - to a specific patient population." The overall goal is "getting more health out of every health care dollar."
And they continue:
“A shift to value-based insurance would provide some interesting opportunities for drug manufacturers to develop and present evidence of their products' value. A permanent comparative effectiveness research program, which is being considered as part of health care reform legislation, also could become an important source of information on value.”
ΔCOST
ΔQALY
and VSLY (Value of a Statistical Life Year)
and his main point is that the devil is in the details.
Lichtenberg believes that incorrect estimates of some or all of these key inputs are often used:
ΔCOST is frequently overestimated
ΔQALY and VSLY are frequently underestimated
And due to these estimation biases, health technologies that are truly cost-effective may often be rejected as cost-ineffective.
Per the recent debate over the utility of new cancer treatments, he makes a very interesting point -- that even though, over the past 30 years, the U.S. Mortality Age-Adjusted Rates for cancer have remained relatively constant -- (leading to such mainstream media headlines as Fortune Magazine's "Why have we made so little progress in the War on Cancer?” and NEJM articles like "The effect of new treatments for cancer on mortality has been largely disappointing” -- the often ignored reality is that 5-year relative survival rates, for all cancer sites, have increased from 50.1% in 1975 to 65.9% in 2000.
Lichtenberg cites two crucial studies, pointing out how health care economists must seriously reconsider the outdated estimates of a QALY:
Viscusi and Aldy: The value of a statistical life for prime-aged workers has a median value of about $7 million in the United States
Viscusi, W. Kip and Joseph E. Aldy, “The Value of a Statistical Life: A Critical Review of Market Estimates Throughout the World,” The Journal of Risk and Uncertainty, 27:1; 5–76, 2003.
and
Murphy and Topel: The value of a life year is $373,000.
Murphy, Kevin M., and Robert H. Topel, “The value of health and longevity,” Journal of Political Economy, 2006.
Attention must be paid. Hello Senator Baucus.