Now That's Healthy Innovation

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I recently wrote that health-insurance companies needed to stop whining and start innovating. Apparently, UnitedHealth Group (NYSE: UNH  ) has done exactly that.

The company is offering members a $20 discount off their copays for refilling certain medications on time. The deal helps lower health-care costs for patients, but UnitedHealth isn't being completely altruistic in offering the discount. Patients who stay on their meds are less likely to incur other, more costly complications. Offering a discount should increase the number of patients who adhere to their drug regimen.

The insurer isn't footing the entire bill for the discount, though. Drugmakers that have drugs eligible for the discount, including GlaxoSmithKline (NYSE: GSK  ) , AstraZeneca, Eli Lilly (NYSE: LLY  ) , and Wyeth (NYSE: WYE  ) , are helping. Clearly, drugmakers have an incentive to keep patients on their drugs month after month, and the discount might help retain patients who would otherwise switch to a lower-priced generic. Earlier this year, Pfizer (NYSE: PFE  ) began a related deal where unemployed patients could get free drugs, essentially keeping them on a Pfizer brand until they were able to pay for their medications again.

Innovation like this will help health insurance companies like WellPoint (NYSE: WLP  ) and Humana (NYSE: HUM  ) compete against a government-sponsored public plan, should one get through Congress. Yes, the public plan could offer the same deal, but all insurance companies need to do is continue to innovate and stay one step ahead, pocketing the savings as profit.

This adherence-incentive program is a good first step. Keep 'em coming, guys.

UnitedHealth is a Motley Fool Stock Advisor pick. Pfizer, UnitedHealth, and WellPoint are Inside Value selections. Try any of our Foolish newsletters today, free for 30 days.

Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. The Fool owns shares of UnitedHealth and has a disclosure policy.

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