Value-based insurance design (VBID) trims or eliminates patient co-payments to encourage the use of health care services of high clinical value. Commonly, although not exclusively, VBID focuses on prescription drugs—such as cholesterol and blood-pressure-lowering medications. The expectation is that paying for such coverage on a first-dollar basis will reduce severe conditions that are expensive to treat—such as heart disease—down the road.
A Jan. 21, 2010, report in the journal Health Affairs, "Evidence That Value-Based Insurance Can Be Effective," provides support for such tactics. Researchers led by Michael E. Chernew, a professor in the Department of Health Care Policy at Harvard Medical School, found that "a value-based insurance design approach led to reduced use of nondrug health care services, offsetting the costs associated with additional use of drugs encouraged by the program. The findings suggest that value-based insurance design programs do not increase total system-wide medical spending."
The analysis indicates that the use of VBID at a large U.S. employer that was the unnamed focus of the study "broke even (or even saved money) from a broader employer and employee cost perspective," the report states. "Yet even if the quality-enhancing value-based intervention does increase employer medical costs, there are other potential savings, such as productivity gains, that could further offset the additional prescription drug spending associated with lower co-payments."
The researchers add, "Moreover, the intervention undoubtedly increased the value of medical benefits. If cost-neutrality from the employer perspective was required, this goal can be accomplished in ways that minimize harm to employee health. For example, co-pay increases could be implemented only for other less valuable clinical services. As the benefit design is more 'clinically nuanced' to encourage high-value services and discourage low-value ones, employer costs could be controlled and health improved."
The study concludes, "Employers face considerable pressure to control health care costs. ‘Across-the-board' increases in co-payments—a common and tempting way to lower employer costs—may lead to negative health consequences. Value-based insurance design, through its targeted co-payment changes, could mitigate those adverse effects at a low (or even negative) cost to employers and employees and thus be an important component of a broader cost-containment strategy."
Stephen Miller is an online editor/manager for SHRM.
Value-Based Insurance Design Sparks Increased Interest, SHRM Online Benefits Discipline, February 2009
Survey Reveals Shift to Value-Based Health Benefit Design, SHRM Online Benefits Discipline, May 2008
SHRM Online Benefits Discipline