By Amal N. Trivedi, M.D., M.P.H., Husein Moloo, M.P.H., and Vincent Mor, Ph.D.
The New England Journal of Medicine
January 28, 2010

We examined the consequences of increasing copayments for ambulatory care in a large, nationally representative sample of elderly Medicare enrollees in managed-care plans. As compared with matched control plans in which copayments for ambulatory care were unchanged, Medicare plans that increased these copayments by an average of 95% for primary care and 74% for specialty care had a reduction in the number of outpatient visits but an increase in hospital admissions, in the number of days of hospital care, and in the proportion of enrollees who used hospital care. According to our estimates, for every 100 elderly enrollees exposed to this level of increased cost sharing for ambulatory care, there would be 20 fewer outpatient visits during the first year after the increase but more than 2 additional admissions for acute care and approximately 13 additional inpatient days in the year after the increase. The effects of copayment increases on the subsequent use of inpatient care were magnified for enrollees living in areas with low income and low educational levels, for black enrollees, and for enrollees who had hypertension, diabetes, or a history of acute myocardial infarction as compared with the effects observed for the entire study cohort.

http://content.nejm.org/cgi/content/full/362/4/320

Cracks in the moral hazard foundation:
https://pnhp.org/news/2007/september/cracks-in-the-moral-hazard-foundation

Comment:

By Don McCanne, MD

This is an important study. It demonstrates, once again, that requiring already insured patients to pay more out of pocket if they access care can have a detrimental impact on both their health and on total health care spending. This is the opposite of what we should be striving for as we attempt to reform health care. Yet Congress and the administration are including this ill-considered policy of cost sharing in the unfounded belief that it would be a harmless method of slowing health care spending.

In order to reduce premiums for private insurance plans offered by the proposed insurance exchanges, the current legislation calls for plans with actuarial values 50 to 100 percent lower than typical employer-sponsored plans (with limited exceptions). These lower values are achieved partly by requiring patients who need to use health care to pay an even larger amount out-of-pocket in the form of deductibles, copayments, and coinsurance.

Those who defend cost sharing usually cite the RAND HIE – an experiment that supposedly demonstrated that patients were not harmed by not receiving care that required out-of-pocket spending – the moral hazard argument. One problem with that study was that it was limited to the relatively healthy workforce, their young, healthy families, during a short, healthy interval in their lives. The conclusions of the study do not have external validity for an entire population, with all their ills, covered in a universal program. The study was further flawed by the fact that participants were allowed to drop out at any time and return to their prior insurance, and the cost-sharing wing did so at an eighteen-fold rate over the control wing. These individuals, many of whom were no doubt facing higher costs, were excluded from the results of the study. How can they possibly claim that the cost-sharing group fared no worse than the control group? (See the “Cracks in the moral hazard foundation” link above for further information.)

The problem of ever-increasing health care costs must be addressed, but assessing financial penalties (cost sharing) against individuals for having  accessed necessary health care is one of the very worst ways to do it. This and other studies demonstrate that it can actually increase total health care spending, not to mention impairing health outcomes.

A single payer system – an improved Medicare for all – uses much more effective policies to control health care spending while removing financial barriers to the care that patients need. Aren’t you tired of hearing the President and members of Congress tell us that single payer is the program that would work, but we’re not going to do it?

Increased Ambulatory Care Copayments and Hospitalizations among the Elderly

By Amal N. Trivedi, M.D., M.P.H., Husein Moloo, M.P.H., and Vincent Mor, Ph.D.
The New England Journal of Medicine
January 28, 2010
We examined the consequences of increasing copayments for ambulatory care in a large, nationally representative sample of elderly Medicare enrollees in managed-care plans. As compared with matched control plans in which copayments for ambulatory care were unchanged, Medicare plans that increased these copayments by an average of 95% for primary care and 74% for specialty care had a reduction in the number of outpatient visits but an increase in hospital admissions, in the number of days of hospital care, and in the proportion of enrollees who used hospital care. According to our estimates, for every 100 elderly enrollees exposed to this level of increased cost sharing for ambulatory care, there would be 20 fewer outpatient visits during the first year after the increase but more than 2 additional admissions for acute care and approximately 13 additional inpatient days in the year after the increase. The effects of copayment increases on the subsequent use of inpatient care were magnified for enrollees living in areas with low income and low educational levels, for black enrollees, and for enrollees who had hypertension, diabetes, or a history of acute myocardial infarction as compared with the effects observed for the entire study cohort.
http://content.nejm.org/cgi/content/full/362/4/320
Cracks in the moral hazard foundation:
https://pnhp.org/news/2007/september/cracks-in-the-moral-hazard-foundation

This is an important study. It demonstrates, once again, that requiring already insured patients to pay more out of pocket if they access care can have a detrimental impact on both their health and on total health care spending. This is the opposite of what we should be striving for as we attempt to reform health care. Yet Congress and the administration are including this ill-considered policy of cost sharing in the unfounded belief that it would be a harmless method of slowing health care spending.
In order to reduce premiums for private insurance plans offered by the proposed insurance exchanges, the current legislation calls for plans with actuarial values 50 to 100 percent lower than typical employer-sponsored plans (with limited exceptions). These lower values are achieved partly by requiring patients who need to use health care to pay an even larger amount out-of-pocket in the form of deductibles, copayments, and coinsurance.
Those who defend cost sharing usually cite the RAND HIE – an experiment that supposedly demonstrated that patients were not harmed by not receiving care that required out-of-pocket spending – the moral hazard argument. One problem with that study was that it was limited to the relatively healthy workforce, their young, healthy families, during a short, healthy interval in their lives. The conclusions of the study do not have external validity for an entire population, with all their ills, covered in a universal program. The study was further flawed by the fact that participants were allowed to drop out at any time and return to their prior insurance, and the cost-sharing wing did so at an eighteen-fold rate over the control wing. These individuals, many of whom were no doubt facing higher costs, were excluded from the results of the study. How can they possibly claim that the cost-sharing group fared no worse than the control group? (See the “Cracks in the moral hazard foundation” link above for further information.)
The problem of ever-increasing health care costs must be addressed, but assessing financial penalties (cost sharing) against individuals for having  accessed necessary health care is one of the very worst ways to do it. This and other studies demonstrate that it can actually increase total health care spending, not to mention impairing health outcomes.
A single payer system – an improved Medicare for all – uses much more effective policies to control health care spending while removing financial barriers to the care that patients need. Aren’t you tired of hearing the President and members of Congress tell us that single payer is the program that would work, but we’re not going to do it?