Value-Based Insurance Design: Does It Push Consumers Out Of The Healthcare Equation?

Last week, I attended an interesting teleconference produced by the University of Michigan’s Center for Value-Based Insurance Design.  The university produced this event to educate the online community about an interesting reform proposal designed to improve health and medical outcomes by encouraging consumers to favor high-quality, high-value medications and treatments.  In a nutshell, Value-Based Insurance Design (VBID) would require third party payers (insurance companies, employers and government) to design “value-based benefit packages that adjust patients’ out-of-pocket costs for health services on an assessment of the clinical benefit to the individual patient, based on population studies [clinical trials].”

At this point, some may be wondering, what does this have to do with consumerism?  A lot actually.  Most importantly, VBID’s supporters believe that consumers should shoulder the full cost load of “nice-to-have” treatments like some medical devices and drugs (e.g., the latest glucose pump or anti-impotence medication).  “Essential” treatments like blood pressure medications should be provided to consumers at no or very little cost – whether they are generic or an expensive branded medication. 

This certainly sounds attractive, but there are many difficult questions that VBID’s supporters must answer, including:

1.    Who decides which studies are valid?  This is a key question because there is a lot of argument about the results of clinical trials – and not just when they are produced and interpreted by pharmaceutical companies.  For example, a few years ago, the government released the results of a major study (ALLHAT) looking at the efficacy of expensive (ACE inhibitors, calcium channel blockers) blood pressure medications versus generics (beta-blockers, diuretics).  The government interpreted the trial to indicate that all those with high blood pressure should receive diuretics as initial therapy.  Not everyone agreed.  The study authors were roundly criticized and some physicians decided to ignore the results of the trial. 

2.    What about difficult to treat diseases like cancer?  Using the logic of VBID's proponents, a third-party payer might decide to require that a patient with cancer pay the full cost of an experimental therapy designed by his or her oncologist.  This is because the evidence may not show that a particular medication will benefit them.  However, the physician may believe that anecdotal and clinical experience suggests otherwise.  

VBID is an interesting concept that deserves some thought.  Do you believe that basing all medical decisions on “evidence-based” medicine (or clinical trial results) is the best way to reduce costs?  In this scenario consumers (and some individual physicians) would have very little to say about the types of care they believe they need.  If a treatment is shown to benefit a large number of people it will be covered.  If not, patients would be asked to bear the full cost.  I’m very interested to hear what you have to say about this issue. 

Learn More

Consumer Driven Healthcare, August 2007: Value-based insurance design. VBID, much like CDH, attempts to align clinical and financial incentives. Vol. 6, No. 8:97-100

The Wall Street Journal, May 8, 2007: "New Tack on Copays: Cutting Them," Employers, Insurers Bet That Covering More of the Cost of Drugs Can Save Money Over the Long Term for Chronic Conditions