Dual choice health insurance policy: a proposal and a cost analysis

The central issue in the current health care reform is cost. No health care reform can be successful without putting a rein on cost while maintaining a high quality of health care service. We believe one approach to solving the cost and quality issue is to allow patients the option to choose resources that are currently underutilized. Traditional health insurance plans offer consumers limited choice in that coverage is often denied when patients choose complementary and alternative medicine (CAM) treatments, even though the economic and social cost of treating certain conditions with alternative medicine may be more favorable than with conventional medicine. This article proposes a Dual Choice health insurance plan that would cover the cost of alternative medicines for certain medical conditions in the first stage. Should the alternative treatment turn out to be less effective, patients have the option to switch to conventional treatment in the second stage. Not only does this policy provide patients with more choices than in traditional plans, it will also likely provide significant cost savings while taking into account uncertainty regarding the effectiveness of CAM. By virtue of the wider choice offered to patients and lower cost, which is illustrated by a 2x2 effectiveness matrix, the authors think that insurance companies will be successful offering such an innovative insurance plan and will even out-compete companies offering only traditional plans. Furthermore, there will be substantial benefits that go beyond the cost savings. With both cost savings and patient welfare being central in the health care reform being proposed by the Obama administration, the dual choice plan offers considerable benefits.