Health insurers learn spending more early on can mean savings in long run

Michael McBrayer of St. Paul needs to pay a lot attention to his health.

"I give myself shots multiple times a day, as well as controlling my diet and exercise," he said.

Ten years ago, McBrayer learned he had Type 1 diabetes. Now he knows he faces dire consequences if he fails to control his blood sugar.

"Kidney failure, blindness, heart disease — all those things are looming out there," he said.

For the past several years, McBrayer's health insurance has paid for everything he needs to keep his diabetes in check. He doesn't spend a dime on supplies.

Diabetes, high blood pressure and other chronic conditions account for the vast majority of health spending in the U.S. — more than 85 cents per dollar, according to the Centers for Disease Control and Prevention.

Some health plans are beginning to offer free maintenance care for people with chronic health problems, hoping that spending a little more early on will save a lot money in the long run.

Almost half of American adults have one or more chronic physical or mental health conditions, the CDC said. Spending on them adds up to some $2.3 trillion a year, and much of that expense is preventable.

Unmanaged diabetes, for example, can lead to limb amputations, kidney failure and expensive dialysis treatments or kidney transplants.

"We've been trying change the health care conversation in the United States from how much we spend to how well we spend," said Dr. Mark Fendrick, head of the University of Michigan's Center for Value-Based Insurance Design.

He said it makes both medical and economic sense to make properly managing chronic conditions affordable.

"I want the health insurance plan my patients have to charge my patients the least for the services that are going to make them healthier," he said. "Let's allow those to be covered on a pre-deductible basis, you're not leaving the patients paying 100 percent of the cost."

That may seem like common sense, but health plans have been running hard in the opposite direction. Consumers are on the hook for a rapidly increasing amount of their health costs — in large part to curb health costs.

But corporate buyers of health insurance are starting to realize that consumers may be putting off necessary care, said Mike Thompson, who runs the National Alliance of Health Care Purchaser Coalitions. The organization advises some 12,000 organizations that buy health plans for tens of millions of Americans.

"I think we're getting smarter as the evidence comes in as to how to be more surgical in how we apply those cost-sharing so that people are more prudent on discretionary care but are more compliant with the care they need and certainly the case they need to stay healthy," Thompson said.

One major obstacle to this approach, known as "value-based health insurance," is an IRS rule that does not allow free chronic condition maintenance care for the 20 million Americans with health savings account-qualified, high-deductible insurance.

The enhanced insurance benefit that pays for all McBrayer's Type 1 diabetes maintenance is paying off for state taxpayers, according to HealthPartners, his provider.

The insurer said McBrayer's program has helped quadruple the number of diabetes patients with optimal care, saving the state about $1 million on medical services since its inception almost 10 years ago, said executive Dan Rehrauer.

"We've shown that we've reduced hospitalization and emergency department utilization which is exactly what we want to see," he said. "You've got a healthy employee and that results in not ending up in the hospital and saving money."