An Rx for Reform: VBID

Value-based insurance design (VBID) can help reduce healthcare costs and improve outcomes.

VBID reduces copayments for procedures and medications that meet evidence-based criteria for benefit and raises copayments for those that don't. The implications are enormous, especially for patients with diabetes.

The cost of treating diabetes in the U.S. amounts to more than $200 billion each year. (Associated Press/Novo Nordisk)

The least compliant diabetes patients are twice as likely to be hospitalized than the most compliant and their healthcare costs are nearly double. Each dollar spent on medication saves $7 in medical costs. (Medco study)

Patients with diabetes are significantly more likely to take medications for secondary prevention when their copayments are lowered, according to new study presented at the Society of General Medicine annual meeting. It provides solid evidence for the effectiveness of VBID. (Learn more at

Advocates of VBID believe that the concept could make a significant impact in the Medicare population. Nearly 70 percent of Medicare spending comes from the 23 percent of the nearly 26 million beneficiaries who have 5 or more chronic conditions. Almost 20 percent of Medicare Part D recipients either delay or decline fulfilling prescriptions because of cost.

Imagine if we made the medications with the best evidence-based performance available at an affordable cost, so patients could be more compliant. The University of Michigan Center for Value-Based Insurance Design has been an advocate for this type of reform since 2005. Now policymakers are taking action.

Congressman John Dingell introduced legislation that includes provisions for modifying cost-sharing and payment rates that would encourage the use of services that are most effective in demonstrating value and promoting health.

Our healthcare system has many chronic conditions. Improving its health will require a bold and consistent treatment plan. VBID is one prescription that shows great promise.

—Tom DeSanto

Image: University of Michigan Center for Value-Based Insurance Design logo

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