Traditional Medicare and most for-profit insurance plans pay 80 percent of approved charges, with the insured person responsible for the balance. Most plans also require out-of-pocket deductibles and copayments.
The reasoning for this is that having people responsible for part of the cost of medical care should incentivize them to be cost-conscious in their health care spending, thereby holding down overall costs. This is often referred to as having “skin in the game,” a term that originated in the investment world.
Potential investors might be more inclined to put their money in a venture if the person promoting it also had some of his or her money invested, or “skin in the game.” That sounds like a good idea, but is it in health care, and has it worked?
Unfortunately, it has proved to be a bad idea and an economic failure.
Experience has shown that being responsible for part of one’s medical bills doesn’t reduce spending. Few people price-shop for their care. They either look for the “best” doctors and hospitals, or they have no options and take what’s available. Further, in most cases, prices aren’t available to the average patient. Very few hospitals can tell you what it will cost to have a hip replacement or ICU treatment for a heart attack. And if you’ve just had a heart attack or been injured in a car wreck or skiing accident, you’re not in a position to be shopping for the lowest-priced care.
Many who don’t have funds on hand for these up-front, out-of-pocket payments are harmed by this arrangement, as they are discouraged from obtaining care. Conditions that could be treated successfully and inexpensively often become untreatable or much more expensive to treat when treatment is delayed.
A Kaiser Foundation study also suggests that the administrative cost to bill for, collect and process these payments may exceed the revenues. Given all this, it’s likely that insurance with first-dollar coverage may result in better overall health outcomes at lower overall cost. Skin in the game isn’t such a good idea when the game is your health.
Will providing full health care insurance coverage to everyone actually improve our health? The National Academy of Medicine studied how we in the U.S. compare with 16 peer nations in death rates at various ages.
From birth to our mid-60s, we’re at or near the bottom. Our death rates are worse, meaning higher, than almost every other nation. But then something striking occurs: once we reach 65, our rankings improve, rapidly and dramatically. Within just a few years, we outlive our age peers in nearly every other nation.
What miracle accounts for this dramatic improvement in our health? Clearly, it’s when everyone finally has health care insurance, through Medicare. An even more striking result was seen in a Veterans Administration study: black patients fared worse than whites in the general population, but among veterans who had equal access to health care, health outcomes of black patients were 24 percent better than those of whites.
How many people were in those groups who died at a higher rate than foreigners? Harvard researchers calculated that around 45,000 Americans die each year as a direct result of not having insurance. The investigators were careful to determine that these deaths were not due to smoking, obesity, drugs or other personal habits. They were due to not having health care insurance and not being able to get medical care when needed. People who don’t have health care insurance have a 40 percent higher chance of dying. Period. They’re not bad or irresponsible people. They are your friends, your housekeepers and gardeners, your Uber drivers, ski instructors and musicians. They could be you.
This is a solvable problem. We can save enough money by moving to a single-payer system to provide full, complete health care insurance to everyone, with money left over. Ninety-five percent of households would pay less for full coverage than they currently spend for limited coverage. We can save lives, as well as money. Doing this can be less disruptive than continuing on the present course, and can be a boon for the economy.
Dr. George Bohmfalk practiced neurosurgery in Texas before retiring to spend half of each year in the Roaring Fork Valley. He is active in Physicians for a National Health Program, a physician-driven group advocating for a single-payer health care system.