Using option-based contracts to improve health outcomes.

In this new scheme, entities may purchase individual insurance policies on separate medical products and services. We will explore how this may be implemented in clinical scenarios. Also, we will explore how this scheme may promote favorable clinical and economic outcomes. With this proposed scheme, instead of one insurance policy, an individual could select single policies on only those products and services needed for a particular patient. This individual, who could be a physician, employer, legal guardian, parent, spouse, or the member himself, would bear the financial risk for the patient’s health. As with existing insurance models, these individual policies would each have a premium and a future guaranteed price on the underlying product or service. Also, like current insurance models, these individual policies would have an expiration date. The separate medical product and service insurance policies would be sold directly by physician offices, diagnostic laboratories, and pharmacies. Each policy would oblige the entity to provide the underlying product or service to the policy buyer. Patients would purchase these policies in collaboration with a professional who was certified to assess their risk, ideally their primary care provider. Option contracts provide a flexible means of breaking health insurance into tradable components that can be sold directly through health practice entities. In this proposed medical options scheme, the asset may be a medication, a diagnostic procedure, a period of hospitalization, or a physician practice service.