Cost-sharing reduces likelihood of receiving effective care
Kaiser Commission on Medicaid and the Uninsured
March 2003
Health Insurance Premiums and Cost-Sharing:
The Impact on Low-Income Populations
Cost-sharing has a disproportionate impact on low-income people. A number of the research studies have used data from the RAND Health Insurance Experiment (HIE) - a randomized, controlled experiment supported by the federal government in the 1970s that remains the most comprehensive, rigorous study of cost-sharing, health care utilization and outcomes that exists. Analysis of RAND data showed that low-income children in cost-sharing plans had only a 56% likelihood (85% for higher-income children) of receiving highly effective care for acute conditions relative to those with no cost-sharing (Lohr et al, 1986). Similarly, low-income adults in cost-sharing plans had a 59% likelihood of receiving highly effective care relative to those with no cost-sharing. Higher income adults in cost-sharing plans fared better - they had a 71% likelihood of receiving highly effective care.
Conclusions
Research shows that premiums can discourage enrollment in health insurance programs and cost-sharing disproportionately affects low-income people, reduces the use of beneficial, cost-effective services, preventive care and prescription drugs and can result in worse health outcomes. Limiting access to services through cost-sharing, particularly outpatient care, may result in higher costs overall, if more expensive services, such as hospital care, are used instead. In view of the greater health needs and limited resources of low-income individuals, these findings warrant caution as policymakers consider the use of premiums and cost-sharing in public programs for people with modest or low incomes.
Fact sheet: http://www.kff.org/content/2003/4072/4072.pdf
For the full report: http://www.kff.org/content/2003/4071/4071.pdf
Comment: Much discussion regarding controlling health care costs has centered around the theory that patients waste resources by obtaining care that they don't really need, and that they wouldn't do so if they had to share in the costs of that care. But this report confirms that studies have shown that cost-sharing reduces the likelihood of receiving "highly effective" medical care. This impact is severe for low-income individuals, but it is important to realize that it negatively impacts higher-income individuals as well.
Other studies have confirmed that over-utilization is a very real problem. But in the physician-patient relationship, it is the physician who has the knowledge and expertise to decide on optimal use of our resources. The patient is not deliberately seeking ways to over-utilize the system, but rather is turning to the physician for the best advice on health care. A better approach to over-utilization (and under-utilization, also a problem) is to have an integrated system which can identify provider outliers. Then a corrective educational process can be instituted. Punitive measures would be considered only for those providers who fail to respond to the educational process.
We need policies that contain costs through mechanisms that do not prevent people from accessing effective health care. Rather than erecting financial barriers in the form of financial disincentives, we can corral costs through global budgeting. The funds would still end up in the hands of the providers, but, in an integrated system, patients would receive the care that they really need.