Monday, 5 February 2007
Value-Based Insurance Design
A team of researchers from Harvard and the University of Michigan have created a new idea for the healthcare system. They call it value-based insurance design, or VBID.
VBID was developed by University of Michigan professor Mark Fendrick, M.D. and Harvard professor Michael Chernew, Ph.D. It aims to change the current healthcare system’s structure by focusing on the individual value of health services to certain people. VBID works by evaluating how health benefits should relate to insurance costs.
Value-based insurance design allows people who would benefit the most from certain medical procedures and drugs to pay the least. For example, diabetics would have a lower copayment for drugs that prevented serious diabetes-related problems. And people in their 50s would pay little or nothing for colonoscopies to treat polyps that could become cancerous.
”It makes absolutely no sense to have the all patients pay the same for medical services that may have enormously different health effects. Costs should be lowest for those for whom the evidence of benefit is strongest — and vice versa, with higher costs for services where the proof of benefit isn’t strong,„ said Fendrick.
Currently, insurance plans charge patients the same out-of-pocket costs regardless of the potential health benefit. This causes some people to avoid medical care in order to save on out-of-pocket costs. This in turn can small health issues turning into to serious medical problems that require more expensive care.
”The financial impact of a VBID program will depend on the level and precision of the targeting,„ Dr. Chernew said. ”Most services provide significant value for a subset of patients. The better the system is at identifying those patients, and the more responsive those patients are to copayment changes, the more likely the system will be to achieve a high financial return.„
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