Date of Award

Fall 2018

Document Type


Degree Name

Master of Public Health (MPH)


Public Health

First Advisor

Andrew F. Coburn, Ph.D.


Value-Based Insurance Design, V-BID, high value health care, low value health care, healthcare, cost sharing, health plans, prescription drug, benefit plans, Medicare, Affordable Care Act, TRICARE


In 2003, the University of Michigan formally conceptualized Value-Based Insurance Design (V-BID) a new approach to develop cost sharing for health plans. VBID promised improvements to health care quality and control of increasing health care costs. Using V-BID, health plans assign cost sharing according to the clinical value of health care. Health plan participants pay low or no cost sharing for high value health care and higher cost sharing for low value health care. Accordingly, varying cost sharing in this manner should encourage the usage of high value health care and discourage the usage of low value health care. To be successful V-BID should apply across health care’s entire spectrum.

Between 2003 and 2010 a few health plans and insurers used V-BID to apply low or no cost sharing for prescription drugs for chronic diseases such as diabetes and hypertension. Documented studies on the effect of this application showed mix results; positive, negative, and neutral. This Capstone reviewed the use of V-BID and its effect on health plans starting in 2010. The methodology included a literature review of peer reviewed studies published between January 2010 and March 2018 as well as interviews with key informants with expertise in health plan design.

The study found health plans and insurers have not yet applied V-BID across the entire health care spectrum and continue to limit application primarily to high value prescriptions for chronic diseases. V-BID’s effect on health care costs and quality continues to show mixed results. This study found no documented evidence that health plans or insurers have applied V-BID to low value health care. While the Affordable Care Act requires health plans and insurers to apply V-BID to preventive care services, these services are high value health care. The Affordable Care Act provided little guidance for health plans and insurers to apply V-BID to low value health care. Although Congress authorized the application of V-BID for Medicare Advantage and TRICARE health plans, the authorization was limited primarily to high value prescription drugs. Conclusion: Limiting the application of V-BID to high value health care such as prescription drugs and preventive care will most likely limit V-BID’s promise to positively affect health care costs and quality to any significant degree. Suggestions to improve V-BID, including broader application to low value health care, are provided.



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