Value-Based Insurance Design

For many health insurance plans, regardless of the clinical indication, out-of-pocket amounts for patients are the same for many health care services. Research, however, indicates that static out-of-pocket fees lead to underuse of high-value services and overuse of interventions with little or no clinical benefit.

This article explores value-based insurance design (V-BID), which acknowledges the importance of cost-sharing, but aligns patient contributions with the intervention’s potential for clinical benefit. This allows patients to make treatment decisions based on the service and its value. This article explains what V-BID is and its progression from idea to practice.

Recent research has demonstrated that patients use services with high clinical benefit less often when it costs them more. Recent V-BID demonstration projects show that V-BID is “feasible, acceptable to employees, and produces clinical and economic returns,” (Mahoney 2008). Growing evidence and education of V-BID’s potential merits in both addressing quality improvement, and cost containment and advocacy work ensured its inclusion in the Patient Protection and Affordable Care Act (PPACA).