What is Value-Based Insurance Design (V-BID)?
March 5, 2014
It is no news that our healthcare system needs an overhaul. In recent posts, we’ve looked at some of the things that plague the system and what are some major contributing factors. But now it is time to talk possible solutions. In the next few weeks, we will be examining various reform efforts to help promote higher quality care at lower costs.
An effort that has been coming up more and more in terms of payment reform is Value-Based Insurance Design (V-BID). The basic idea behind it is this: your out-of-pocket expenses are based on the value of the medical goods or services to your health rather than price. Or in other words: encourage good behaviors (i.e. taking life saving medicines) and penalize the bad ones (unnecessary tests).
So let’s break this down: You have diabetes and you need to purchase insulin every month. You have a choice. You either:
- buy the insulin and take it as prescribed every month keeping you healthy thus reducing overall costs (good behavior)
- do not purchase insulin to save money and cause harm to your health thus adding an increase to overall costs through future complications (bad behavior)
The insulin is essential to your health, but as the current system stands, you are required to pay out-of-pocket for that medicine every month until your deductible is met regardless of how critical it is. For many, that is no small expense considering the number of high deductible plans and when presented with a choice of providing for their family or paying for expensive medication, many will choose the former. So today with most insurance plans, you are essentially being penalized for taking an active role in your health by needing to pay out-of-pocket for expensive services and goods.
Studies have shown that as out-of-pocket costs rise, people tend to spend less on their healthcare regardless of how important it is to their overall well-being. V-BID looks to change that by encouraging these good health behaviors and penalizing the bad ones. So in the case of purchasing insulin, since you are practicing good behaviors by taking medication that is required for you to stay healthy and alive, your insurance plan would cover that expense completely or at a very reduced cost.
Last Friday, the Center for Value-Based Insurance Design’s Director, A. Mark Fendrick, briefed Congress on the benefits that V-BID could offer to Medicare recipients. It would be one way to help increase the health care quality for those recipients while working to decrease costs to those that utilize high value care. This briefing is a step forward in the promotion of healthcare payment reform and it could bring change to your care in a very positive way.
Is this something you would like to see move forward? Join the conversation on Twitter with #inquireVBID
To learn more about V-BID, visit the Center for Value-Based Insurance Design’s website.