New Study Shows Applying Value-Based Insurance Design to High-deductible Health Plans Could Benefit Millions of Americans


WASHINGTON (May 8, 2014) – Millions of Americans could benefit from expanded coverage of preventive services under health savings account (HSA)-qualified high-deductible health plans (HDHPs), according to a new white paper authored by researchers at the University of Michigan Center for Value-Based Insurance Design and Harvard University Medical School.

Funded by the Gary and Mary West Health Policy Center, the study developed and priced hypothetical HDHPs that incorporated “value-based insurance design” (V-BID) principles to better meet the needs of chronically ill patients and those at high risk for developing chronic conditions. Chronic diseases – such as heart disease, stroke, cancer, diabetes, and arthritis – are among the most common, costly, and preventable of all health problems in the U.S. and cost more than $2 trillion a year, according to the Centers for Disease Control.

Currently, a person living with diabetes enrolled in an HDHP must pay out-of-pocket for medically necessary treatment such as blood pressure and cholesterol checks, eye and foot exams, and glucose monitoring services until the deductible is reached and insurance coverage begins. In the report, the researchers recommend that the IRS change its current narrow guidance on “prevention” for insurers and employers so that targeted secondary preventive benefits could be covered under the deductible in HDHPs. This would provide them with greater flexibility in designing plans better tailored to the needs of the chronically ill and those at risk.

“It is essential that insurance coverage not discourage patients with chronic conditions from seeking high-value, secondary prevention services,” said Joseph M. Smith, MD, PhD, FACC, chairman of the West Health Policy Center Board of Directors. “This study shows that applying value-based insurance design to high-deductible health plans will allow employers and health insurers to create products that have the potential to benefit millions of Americans who fit this profile. We look forward to sharing these findings, and the associated cost savings, with the Administration and Capitol Hill in the coming months.”

“Our goal was to find ways to enhance the ability of high-deductible health plans to improve clinical outcomes of the chronically ill while reducing costs,” said A. Mark Fendrick, M.D., Director of the University of Michigan Center for Value-Based Insurance Design. “We were pleased to discover that expanding the definition of ‘prevention’ to include evidence-based services that slow chronic disease progression and prevent related complications could potentially benefit millions of Americans.”

Leading researchers who contributed to the study include:

  1. Mark Fendrick, M.D., Professor of Internal Medicine in the School of Medicine and Professor of Health Management and Policy in the School of Public Health at the University of Michigan. Dr. Fendrick currently directs the Center for Value-Based Insurance Design at the University of Michigan. His research focuses on the clinical and economic assessment of medical interventions with special attention to how technological innovation influences clinical practice, benefit design, and healthcare systems.

Michael E. Chernew, Ph.D., Leonard D. Schaeffer Professor of Health Care Policy at Harvard Medical School.  Dr. Chernew’s research examines several areas related to controlling healthcare spending growth while maintaining or improving quality of care.  His work on consumer incentives focuses on V-BID, which aligns patient cost-sharing with clinical value. Dr. Chernew recently served as the Vice Chair of the Medicare Payment Advisory Commission (MedPAC), an independent agency established to advise the U.S. Congress on issues affecting the Medicare program.

Stephen T. Parente, Ph.D., Minnesota Insurance Industry Professor of Health Finance and Insurance in the Department of Finance in the Carlson School of Management at the University of Minnesota where he specializes in health economics, health insurance, medical technology evaluation, and health information technology.