Value-based insurance design: embracing value over cost alone

The US healthcare system is in crisis, with documented gaps in quality, safety, access, and affordability. Many believe the solution to unsustainable cost increases is increased patient cost-sharing. From an overall cost perspective, reduced consumption of certain essential services may yield short-term savings but lead to worse health and markedly higher costs down the road--in complications, hospitalizations, and increased utilization. Value-based insurance design (VBID) can help plug the inherent shortfalls in "across-the-board" patient cost-sharing. Instead of focusing on cost or quality alone, VBID focuses on value, aligning the financial and nonfinancial incentives of the various stakeholders and complementing other current initiatives to improve quality and subdue costs, such as high-deductible consumer-directed health plans, pay-for-performance programs, and disease management. Mounting evidence, both peer-reviewed and empirical, indicates not only that VBID can be implemented, but also leads to desired changes in behavior. For all its documented successes and recognized promise, VBID is in its infancy and is not a panacea for the current healthcare crisis. However, the available research and documented experiences indicate that as an overall approach, and in its fully evolved and widely adopted form, VBID will promote a healthier population and therefore support cost-containment efforts by producing better health at any price point.