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The Cost of Low-Value Care
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The Cost of Low-Value Care

Since its inception in 2005, the University of Michigan Center for Value-Based Insurance Design (V-BID) has led efforts to promote the development, implementation, and evaluation of innovative health benefit designs balancing cost and quality. A multidisciplinary team of faculty, including A. Mark Fendrick, MD and Michael E. Chernew, PhD, who first published and named the VBID concept, have guided this approach from early principles to widespread adoption in the private and public sectors. The Center has played a key role in the inclusion of VBID in national healthcare reform legislation, as well as in numerous state initiatives. The basic VBID premise is to align patients' out-of-pocket costs, such as copayments, with the value obtained from health services and providers.
This article was collaboratively written by A. Mark Fendrick, MD, director of the V-BID Center, and several V-BID Center staff. The following infographic was created by V-BID Center staff.

The use of low-value care and the associated cost is a significant concern in the US healthcare system—the National Academy of Medicine (formerly the Institute of Medicine) indicated an estimated $765 billion of wasted healthcare expenditures in 2013. However, solutions to measure, identify, and eliminate low-value care are challenging and complex. To date, most efforts aimed at reducing low-value care, such as the Choosing Wisely Initiative, have been limited to areas where there is a high degree of consensus that the care rendered is low value.

Value-based insurance design (VBID) is an innovative approach that has the potential to simultaneously improve health and contain costs, while maintaining the sanctity of the patient-provider relationship and avoiding major structural changes to the employer-based private insurance system.1 VBID programs that align out-of-pocket spending with the value of medical services could both improve quality and control spending by increasing the use of highly effective interventions while decreasing the use of ineffective services. This "carrot and stick" approach has been discussed on a conceptual level2 and has received national media attention.3 However, most VBID programs have not explicitly designated low-value services, nor have they limited their use.

To learn more about how VBID can address the issue of low-value care, view the infographic below, and visit the Low-Value Care initiative page.


1. Chernew ME, Rosen AB, Fendrick AM. Value-based insurance design. Health Aff (Millwood). 2007;26(2):w195–203.

2. Chernew ME, Juster IA, Shah M, Wegh A, Rosenberg SN, Rosen AB, et al. Evidence that value-based insurance can be effective. Health Aff (Millwood). 2010;29(3):530–6.

3. Appleby J. Carrot-and-stick health plans aim to cut costs [Internet].Menlo Park (CA): Kaiser Family Foundation; 2010 Mar 11 [cited 2010 Aug 11]. Available from:

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