Asking patients to have “more skin in the game” can work, but not through high-deductible plans. Nearly 30% of the 150 million people in employer-based health insurance plans are now responsible for the first $1,000 or more of their healthcare costs. Most individual plans sold on the Obamacare exchanges have high deductibles.
Vice President-elect Mike Pence and Seema Verma, the designee to run the CMS, imposed small “personal responsibility” payments on the poor who get their care through Indiana's Medicaid program. More states will probably take that path during the next administration.
The economists' logic for making patients price-sensitive is that they will introduce market discipline to the delivery of healthcare services. Over time, as demand inevitably falls, it will force down the price of care.
Unfortunately, the logic doesn't apply to healthcare that is not discretionary, i.e., most of healthcare. Anything sudden like a heart attack or broken bone requires immediate attention. Shopping around, or going without care, simply isn't an option.
Moreover, patients in an emergency have very little say over what care gets delivered and little information to make an informed decision. The absence of price transparency is only the first problem.
Will you have the drug-eluting stent as part of the percutaneous coronary intervention to unblock your artery or do you prefer the cheaper bare metal stent? How about medical management? Have you considered CABG? It's pricier, but you're less likely to wind up back in the hospital.
Are you prepared to make those choices when you're flat on your back in the hospital?
Making informed decisions on complicated medical matters is beyond the skill set of most Americans—including college-educated Americans. Most people want choice about what oncologist they see when diagnosed with cancer. But few want the responsibility of choosing their chemotherapy regimen or want to make that choice based on price.
Even among discretionary services, there is a fatal flaw in a pure “more skin in the game” approach. The famous Rand study of the 1970s, which has been affirmed many times, showed that people when given more financial responsibility for their care will cut back on services. But they cut back necessary services like preventive screening just as often as they cut back on unnecessary care.
There is an alternative. Health plans and the government can use higher co-pays as a guide to better decision-making. Medicare is about to launch a major pilot project using this approach, dubbed value-based insurance design or (V-BID).
Under V-BID, the insured patient pays higher co-pays for services deemed low-value. They're either not necessary or there are less expensive alternatives that work equally well. They also pay lower co-pays for services deemed high-value—like preventive cancer screenings given an 'A' or 'B' grade by the U.S. Preventive Services Task Force.
Most drug plans already work that way. And it can work in the rest of healthcare, as a new study of a major public employer's V-BID health plan in Oregon shows.
The plan increased patient cost-sharing by $100 to $500 for sleep studies, endoscopies, advanced imaging services and spine surgeries—all deemed low-value services by the plan. When compared with a similar group of large employers, use of those services fell 12% on average.
V-BID plans have their own problems. Some low-value services, including those in the Oregon plan, are high-value for certain patients. V-BID plans need a way to give physicians power to waive higher co-pays in those circumstances.
The rapid spread of nonnuanced high-deductible plans is already causing extensive harm to family and provider finances. Left unchecked, they will undermine patient well-being.
Every employer, government agency and insurer rushing into high-deductible plans needs to revisit that decision, especially now that there is mounting evidence that the V-BID alternative can work just as well at holding down costs.
