Financing Vaccines in the 21st Century Assuring Access and Availability (2004) / Chapter Skim
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6 Conclusions and Alternative Strategies
6 Conclusions and Alternative Strategies
Pages 145-182
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From page 145... ...
At present, these two goals are addressed through a fragmented system of separate programs: payments by some private health care insurance plans (which distribute the costs to consumers and employers through premiums) , personal out-of-pocket payments, public vaccine purchase programs (such as Vaccines for Children [VFC]
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From page 146... ...
In addition, health care providers are increasingly concerned about the inability to recover payment for their costs of purchasing and administering vaccines to children and adults. Privatesector providers, who currently administer over 80 percent of childhood vaccines, continue to refer patients to public health clinics for vaccinations, creating missed opportunities that can delay or prevent immunization and reduce overall immunization rates for vulnerable populations.
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From page 147... ...
and achieving future immunization goals are threatened by predictable financial pressures in the coming decade as new and more expensive vaccines are added to the recommended schedule for children and adults. Immunization rates for adults aged 65 and older have improved (66 percent for annual influenza and 50 percent for pneumococcal vaccine in 1999)
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From page 148... ...
Higher vaccine prices can be expected to exacerbate such problems as uneven distribution patterns, delays in the vaccine price negotiation processes for federal and state contracts, and continued fragmentation in the scope of vaccine benefits included in public and private health plans. An increased
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From page 149... ...
Persons who face such financial barriers are less likely to receive routine immunizations in their medical homes and may fail to receive certain immunizations at all. Although most large public and private health plans include vaccine benefits, signs of slippage are occurring within the scope of vaccine benefits offered by small businesses and other large subscribers, such as public employee health plans.
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From page 150... ...
, Section 317, Medicare, and multiple private health insurance plans. These administrative barriers can result in missed opportunities for immunization and frequent referrals of underinsured patients to public health clinics for routine vaccines, which in turn ultimately contribute to shortfalls in immunization rates.
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From page 151... ...
In addition, the committee sought to design a strategy that would maintain a reasonable budget for vaccine purchases for children and adults in the public and private health sectors. The committee evaluated dozens of proposals for changes to the immunization system that had been developed by congressional committees, professional and industry associations, government agencies, advocacy groups, and experts before focusing its efforts on seven alternative strategies (including the current system)
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From page 152... ...
6. Create an insurance mandate that would require public and private health plans to cover all recommended vaccines.
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From page 153... ...
Advantages There are some advantages to maintaining the current system. In nearly a decade of experience, VFC has been successful in enhancing public insurance coverage among children and improving their immunization rates.
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From page 154... ...
VFC Purchase Block Grc Description Federal entitlement Continuation of Federal government In lieu of that provides free central features of purchases all states reck vaccines to participating VFC entitlement. recommended vaccines funds for public and private and gives vaccines to immuniz.
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From page 155... ...
Funded Block Grant Vouchers Mandate Mandate nment In lieu of vaccine, Health care providers All public and private All public and states receive federal purchase vaccines health plans are private health plans 1 vaccines funds for for uninsured required to reimburse are required to cines to immunizations persons and receive health care providers reimburse health ribution (amounts based on reimbursement from for costs of all care providers for amount of current the federal recommended replacement costs VFC purchases)
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From page 156... ...
Who pays Public sector: Federal for it? government and some states purchase vaccines; administration fees are paid by Medicaid, SCHIP, and state budgets.
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From page 157... ...
reimbursed by supplemented by possibly partial cover vaccine costs, health plans or discretionary contribution by the supplemented by federal vouchers. state funding.
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From page 158... ...
Eliminates crowd-out. Reduces referrals to the public sector.
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From page 159... ...
the public sector. Creates multifaceted market for vaccine purchases; encourages producers to compete in wide range of market configurations.
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From page 160... ...
vaccine S1 Disadvantages The two principal disadvantages of the current VFC system are its reliance on government purchase of vaccines and its fragmentation of vaccine financing. As noted earlier, government purchase, which is growing as a share of the total vaccine market, tends to discourage industry invest
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From page 161... ...
The government price negotiation process itself leads to delays, inefficiencies, and uncertainty about reimbursement among clinicians. The eligibility limitations of VFC increase the burden on clinicians for eligibility determination; create funding inequities between entitlement
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From page 162... ...
Moreover, VFC does nothing to help high-risk adults who are either uninsured or underinsured. The separation of vaccine purchases and fees further fragments funding, and results in referrals even of covered children to public-sector clinics.
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From page 163... ...
(1999) studied the effects of a new universal purchase vaccine program in North Carolina on immunization rates by insurance status.
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From page 164... ...
Disadvantages The principal disadvantage of this approach is the continuation and expansion of the government purchase system. If government were to utilize its additional monopsony power to reduce prices, such action could lead to further shortages, exacerbate market exit, and choke off R&D.
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From page 165... ...
In those states that have implemented their own versions of universal purchase arrangements, however, significantly higher childhood immunization rates have not been achieved as compared with states that rely exclusively on the current less-than-universal federal government purchase programs.6 Other concerns include the erosion of long-standing community and health plan relationships that have evolved as a result of the mixed public-private system; the continued separation of vaccine purchases and fees; and the potential windfall to health plans, which might not adjust premiums immediately despite the elimination of vaccine costs. Alternative 4: Federal Block Grant Description/Design Options Under this approach, states receive annual grants for immunization from the federal government.
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From page 166... ...
For example, states could find a wide range of vaccine prices based an their size and negotiating clout, resulting in an inequitable cost burden across states and exacerbating disparities in immunization rates. In addition, despite regional differences, infectious disease control may be better suited to management by regional or national authorities.
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From page 167... ...
By adopting very different approaches, states could lose the ability to draw useful comparisons or to coordinate effectively in case of regional outbreaks. Alternative 5: Public Vouchers for Vaccine Purchase Description/Design Options As in alternative 4, the voucher approach devolves vaccine purchasing from the government to insurers, states, and providers.
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From page 168... ...
The federal government would no anger purchase vaccines or negotiate vaccine prices, except perhaps for vaccines with only a single seller. State governments could elect to purhase vaccine supplies for resale to physicians in the state, especially if the state believed it could negotiate a favorable price.
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From page 169... ...
Many design details would have to be addressed, including eligibility; enrollment systems; and computer linkages for cards, doctors' offices, and reimbursement centers. Particularly challenging would be determining a voucher price that would balance providing sufficient return on investment to the vaccine industry to encourage continued supply and investment in R&D; protecting taxpayers from exorbitant increases in vaccine prices; and avoiding significant increases in patient cost sharing, which can present a barrier to immunization.
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From page 170... ...
One tier would include vaccines with strong spillover effects because of the highly infectious nature of the diseases they prevent. The mandate would apply principally to these vaccines.
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From page 171... ...
The government's market share in vaccine purchases would decrease under this alternative, reducing the monopsony power of the government and its ability to negotiate steep discounts. The committee views this lifting of pressure on prices positively in terms of investment in production
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From page 172... ...
Insurers purchase vaccines directly and receive reimbursement at the subsidy rate. Health plans are required to reimburse their providers the full replacement cost of the vaccine up to the subsidy amount, plus the full administration fee.
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From page 173... ...
Under a subsidy approach, individual providers or health insurance plans would purchase vaccines and would then be reimbursed by gov
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From page 178... ...
explains, if a subsidy formula allows prices to rise to the level of the calculated societal benefit, no benefit will remain for the consumer. The calculation of societal benefits and of subsidy amounts based on those benefits presents a variety of technical challenges and could require politically difficult legislative decisions regarding key assumptions used in the calculations.
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From page 179... ...
Vouchers would both encourage vaccine industry investment and improve access by relieving clinicians of the burden of checking eligibility requirements for vaccine purchases. But using vouchers as the principal mechanism for financing immunization for children and eligible adults would require the creation of an enormous administrative infrastructure for a relatively small benefit.
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From page 180... ...
180 FINANCING VACCINES IN THE 21ST CENTURY system's practicality, acceptance, cost, and effectiveness. Conversely, a demonstration of changes in the federal purchasing system would not succeed because the desired market effects on pricing and industry investment could not be tested in selected locations.
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From page 181... ...
The final net benefit amount divided by the number of people to be vaccinated is the calculated societal benefit on which the subsidy would be basest. Issues and controversies abound in the calculation of these values.
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