Quote-of-the-day mailing list
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Subject: qotd: Burdening patients who need care the most
Date: Mon, 10 Jun 2013 12:32:39 -0700
From: Don McCanne <email@example.com>
To: Quote-of-the-Day <firstname.lastname@example.org>
Economic Policy Institute
May 8, 2013
Increased health care cost sharing works as intended
It burdens patients who need care the most
By Elise Gould
A number of different health care policy proposals that have emerged in
recent years share a common goal: make households directly pay for a
larger share of most health expenditures by encouraging higher
deductibles, higher copays, or higher co-insurance rates. The rationale
of such proposals is that too-generous insurance policies (either those
provided by employers or public insurance such as Medicare) distort the
prices consumers face, and that removing this distortion would allow
patients to choose their health care more wisely, hence slowing health
care cost growth.
This brief argues that this is a flawed strategy for health care cost
containment. The health care market is unlike other markets; thus,
forcing increased cost sharing on American households is a deeply
inefficient strategy for trying to contain health care costs. Forcing
Americans to pay a higher share of health costs will not induce them to
shop around and compare prices when they are experiencing chest pains or
their child is suffering from an asthma attack. Further, consumers of
health care are in no position to second-guess their doctor when she
tells them an MRI is better than an X-ray (and hence worth the higher
price) to diagnose a condition. Lastly, unlike other markets, prices of
health care services faced by consumers bear very little relation to
providers' cost to supply these services. Hence, these prices provide
little to no information for consumers looking to judge the relative
efficacy of various health care interventions.
In addition, increased health cost sharing is unlikely to make American
health care more affordable to those currently unable to afford it, and
will instead likely place the largest burdens on those who need care the
Most cost-sharing proposals lead to higher out-of-pocket medical costs,
hitting those who require a high degree of medical care especially hard.
The short-term cost savings achieved as patients respond to increasing
out-of-pocket burdens may be realized by reducing medically necessary
health care—a penny-wise, pound-foolish result.
Most cost-sharing proposals are poorly targeted for containing overall
system costs. They miss the expensive cost drivers. Any cost containment
would be driven by reduced medical care, not reduced prices.
* Not all moral hazard is inefficient
* Cost sharing can lead to medically and economically inefficient decisions
* Cost sharing is a poorly targeted cost-containment device
Comment: A major objective of health care reform was to slow the
intolerable escalation in health care spending. Most of the pilot
initiatives included in the Affordable Care Act (ACA), such as
accountable care organizations and bundled payments, will likely have
very little impact on our national health expenditures. But one
important policy approach - the subject of this EPI brief - began before
ACA was enacted and is probably responsible for most of the slowing in
health care spending that was not directly due to the recession.
That policy is placing a financial burden on individuals who need care,
especially through higher deductibles, but also through other forms of
cost sharing. The impact of this policy is expressed well in the title
of the brief: "Increased health care cost sharing works as intended - It
burdens patients who need care the most"
Talk about a flawed policy! We are attempting to cover as many people as
possible considering the limitations of ACA, and yet, at the same time,
we are expanding the use of policies that keep patients away from care
that they should have - by erecting these financial barriers. We are
increasing the spending on private insurance plans while reducing the
spending on health care by preventing insured people from getting the
care they need!
How many times do we have to say it? Many other nations provide first
dollar coverage - not charging any fees when health care is accessed -
yet they have been much more effective in slowing cost escalation. You
do not have to expose patients to potential financial hardship to bring
costs under control.
This is one of the most important flaws of ACA (and there are many of
them). It not only allows, but it actually encourages, through low
actuarial value plans, the expansion of these financial disincentives to
obtaining health care. If you read the full EPI brief, you will
understand better why we must abandon this approach. Unfortunately, the
author provides only a couple of feeble suggestions as to alternative
approaches, but you will not find in the brief what we really need to do.
It is astounding that when it comes down to the obvious - that we need a
well designed single payer national health program - so many
knowledgeable people in the policy community choke up. Let's let them
know that it is okay to say it: WE NEED A SINGLE PAYER NATIONAL HEALTH
I guess we really don't have to shout. But we should explain to our
colleagues and the public at large the reasons contained in this EPI
brief explaining why cost sharing is harmful to our health and how it
leads to financial insecurity. Then we can explain, in a calm voice, how
we can fix this by improving Medicare (partly by including first dollar
coverage) and then providing it for everyone. Naw. They're not
listening. We'd better shout.