Payer coverage of FDA-approved drugs

Many people think that once a treatment is approved, your insurance automatically covers the treatment.  However, that is no longer the case.  Some health plans may keep certain drugs off of formularies.  Others health plans have drugs on formulary but may require step edits (failing another drug first before moving to the novel treatment) and…

Can single payer systems work?

Much of the discussions of the pros and cons of single payer systems are ideological.  Single payer advocates will say they are fair, potentially can leverage economies of scale, and more equitable.  Single payer opponents will argue that they are inefficient, and restrict choice. An interesting paper from Tomoki Fuji (2018), shows that the answer…

Estimating the price elasticity of demand through value-based formulary designs

In 2010, Premera Blue Cross (Premera), a large nonprofit health plan in the Pacific Northwest implemented a value-based formulary design for its beneficiaries.   In essence, enrollees could purchase high-value treatments for low copayments and low-value treatments for higher copayments.  Can we use this change from more standard to value-base formulary designs to estimate the price elasticity…

Precision Benefit Design

A recent viewpoint from Fendrick and Shope (2018) argues for the need for Precision Benefit Design. Successful implementation of precision medicine will need to address several system-wide challenges, including administrative complexities, the creation of new financing models, and aligning provider- and patient-focused initiatives. The enormous clinical potential of precision medicine sheds light on the critical…

Managed Competition in 2018

Alain Einthoven is the father of managed competition.  In a recent Health Affairs article, he and Laurence C. Baker look ]at managed competition in California and ask whether the standard conception of managed competition needs to be altered. Before we get to the article, we first need to ask a basic question: what is managed competition?  The…

The big tech innovation from Amazon-Bershire Hathway-JP Morgan joint venture could be…

Narrow networks?  That is one proposition from Bill Gurley, a general partner at Benchmark Capital, in an article from Business Insider.  Berkshire Hathaway vice chairman Charlie Munger, prefers the Kaiser model. “If the whole nation had Kaiser Permanente care, the average quality of the care would go way up and the cost would go way down,”…