More Health for the Money

More Health for the Money

Value-Based Insurance Design is one of the few health care reform ideas that has very strong bipartisan support.

Fifteen years ago, Mark Fendrick noticed a peculiar phenomenon in his primary care medicine practice. When he urged patients to undergo cancer screenings or follow treatment regimens for chronic diseases, "they always had excuses." Key among those excuses was that they couldn't afford the recommended services —because, as Fendrick discovered, in their effort to contain costs, insurance companies were making people pay more for everything. That's when the light went on. "Even when they were insured, people weren't embracing essential, high-value health services," he says. "This has huge implications for spiraling health care costs, because over half of the trillions of dollars Americans spend annually on health care goes to chronic disease."

With economist Michael Chernew, his then–U-M colleague, Fendrick, who has a joint appointment in the SPH Department of Health Management and Policy and the U-M Medical School, came up with the concept of reform proposals based on "clinical nuance." In lay language, this means that instead of a one-size-fits-all system, select services—such as insulin and eye exams for diabetics, or behavioral therapy and drugs for schizophrenics—should be provided at little or no cost to patients. A person with diabetes who manages her condition is likely to cost providers less in the long run than a diabetic who doesn't adhere to prescribed treatments and behaviors. The relatively small expense of providing key services is more than offset by the subsequent cost savings that come from preventing expensive complications.

Fendrick and his colleagues call their concept Value-Based Insurance Design, or V-BID, and it's having a national impact. Former U.S. Senator Tom Daschle has termed V-BID "one of the prime illustrations of achievement in innovation today." Fendrick worked with members of Congress in both parties to include V-BID concepts in the Affordable Care Act. V-BID concepts inform segments of the ACA that call for the elimination of patient cost-sharing for over 40 preventive services, including cancer screenings and immunizations, as well as smoking-cessation and obesity counseling. According to the U.S. Department of Health and Human Services, some 54 million Americans have already benefited from lower cost-sharing related to the V-BID portion of the ACA.

"It's one of the few health care reform ideas that has very strong bipartisan support," Fendrick notes.

Across the country, private and public payers, including the U.S. government itself (through its Federal Employees Health Benefit Plan) are adopting V-BID principles. Both Maryland and California have officially incorporated V-BID into their health insurance exchange proposals, and at least 16 other states—nine with Republican administrations and seven with Democratic—have expressed interest in V-BID concepts.

"Our whole strategy," says Fendrick, "is to involve, engage, and incorporate V-BID into much larger and more substantial health care reform proposals, such as payment reform, health care transformation—things like patient-centered medical homes and accountable care organizations—and delivery infrastructure, including health information technology and electronic medical records." V-BID has the capacity to help these and other health reform initiatives achieve their goals of quality improvement and cost containment more quickly and robustly, Fendrick says. He adds, "It's like peanut butter and jelly. Each is good on its own—but when you bring them together, something magical happens."

For more on V-BID and the U-M Center for Value-Based Insurance Design, visit their website.