The following originally appeared at The Upshot (copyright 2014, The New York Times Company).
Most health care plans ask that you spend some money out of your pocket whenever you use the health care system. This is known as cost-sharing, and it exists because research has shown us that people are, in general, less likely to spend their own money than someone else’s. Cost-sharing works its way into insurance today through co-pays, deductibles and co-insurance.
Cost-sharing works for most people, because most people are healthy. Healthy people who use health care are often doing so inefficiently. They often don’t need the care they ask for, because they’re well. One way we use cost-sharing poorly, though, is that we apply it to all insurance beneficiaries equivalently. We treat them all the same, no matter how sick or healthy they are.
A study just published in JAMA Pediatrics looked at how children with asthma obtained care under different levels of cost-sharing, and how much stress their families were under financially because of their child’s illness. It’s important to understand that children with asthma, by definition, require care.
We want them to use the health care system. With respect to asthma, prevention and maintenance are far better than trying to treat a child already suffering from an attack.
What we see from this study is that families with higher levels of cost-sharing were significantly more likely to delay or avoid going to the office or emergency room for their child’s asthma. They were more likely to have to borrow or cut back on necessities to afford care. They were more likely to avoid care.
This isn’t a good outcome. We’re talking about children with a completely manageable chronic condition who are being hampered by cost-sharing. That’s not what cost-sharing is supposed to do.
But what may be counterintuitive for those who think government insurance is worse than private insurance is that families covered by Medicaid or the Children’s Health Insurance Program (CHIP) were able to get care for their children’s asthma more easily than many of those with private insurance. That’s because Medicaid and CHIP have very low levels of cost-sharing. Parents of children covered by these programs were less likely to delay or avoid care for their children than those who made less than 250 percent of the federal poverty line, but had private insurance.
The difference between avoiding care and obtaining it wasn’t due to being insured or uninsured. It wasn’t due to having government or private insurance. It was due to cost-sharing. And cost-sharing is highest among privately covered individuals at the lower end of the socio-economic spectrum.
A different, but complementary, study was published in The New England Journal of Medicine in 2010. In that study, researchers examined the changes in the use of health care between Medicare beneficiaries in plans that did and did not increase cost-sharing between 2001 and 2006. These were not huge amounts of money: Co-pays for primary care were $8.33 vs. $14.38, and co-pays for specialty care were $11.38 vs. $22.05.
The increases worked, though. Plans that raised co-pays saw 20 fewer outpatient visits per 100 beneficiaries. But, like children with asthma, Medicare beneficiaries are more likely to have chronic conditions. They’re more likely to require necessary care. Those who avoid care are more likely to get into trouble.
Plans that increased co-pays saw two additional hospitalizations and 13 more days in the hospital per 100 people. These increases were worse in older people who lived in low-income areas, and among those who were documented to have high blood pressure, diabetes or a history of heart attack. There’s every reason to believe similar negative consequences would be seen with children with asthma, as increasing out-of-pocket payments for medication has been shown to be associated with increased numbers of asthma attacks. Cost-sharing is bad for those who need care the most.
It doesn’t have to be this way. In France, co-pays are set by levels of sickness. Those who have chronic conditions have all of their co-pays waived. Even Singapore, beloved among conservative health care wonks because of its reliance on cost-sharing, makes exceptions for many with chronic illnesses. The rules do so explicitly to encourage them to seek care.
In the United States, we have adopted a system where those who use the most care pay the most out of pocket. That may seem “fair” in some way, but cost-sharing isn’t about fairness. It’s about reducing health care spending without negatively affecting health outcomes. It should be a scalpel. We’re using it like a club.
