Skin in the game

Yesterday, I received a letter in the mail that took issue with my piece in CNN last week. One of the points made by the author was that if people had more “skin in the game”, they would not spend as much on health care.

This is a pretty common sentiment. It seems like many people think that out of pocket expenses are too low. They believe that if more of our health care spending was out-of-pocket, then we’d have lower health care spending overall.

If this were so, you’d expect that out of pocket payments would be low compared to other countries? Let’s see if that’s so, using OECD data and G8 countries (minus Russia), as I usually do:


In terms of per capita costs, the US has the highest out of pocket expenses. Notice I’m not even talking about premiums – this is out of pocket expenses above that. It’s what most people think of when they talk about “skin in the game”. We’ve got a lot.

But, some people argue that it’s not total amount that matters, but the percentage of health care costs that matter. Since the US spends more total, we should have higher out of pocket percentages per capita. But are our out of pocket payments as a percentage of total health care spending low?

We look pretty middle of the road to me.

I’m not trying to argue that our out of pocket expenses are too high. But these data make it hard to argue that our out of pocket expenses are too low. In other words, it’s not really apparent that we don’t have enough “skin in the game”. Nor is it clear to me that there’s some sort of easy-to-see relationship between “skin in the game” and overall health care spending.

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