In the 1990’s, due to rising healthcare costs, private health insurers began offering products with out-of-pocket costs in the form of co-pays and deductibles, referred to as Consumer-Directed Health Plans. In the early 2000’s, health savings accounts were added and High-Deductible Health Plans were matched with them. The idea was to shift more of the up-front costs of care to patients to encourage them to be “wiser consumers.” This was called having “skin in the game.”
Studies, including the landmark RAND Health Insurance Experiment, found that shifting the up front cost of care to patients caused them to seek fewer medical visits; however, once patients did seek care, it had no impact on the cost of care that they sought. It also found that patients reduced usage of both effective and non-effective care. In other words, out-of-pocket costs reduced the utilization of health services but did not make patients “wiser consumers.”
A new study conducted by the National Center for Health Statistics found that the percentage of people enrolled in high-deductible health plans, particularly for those who purchase health insurance through their employers, has grown considerably since the Affordable Care Act became law. The study found that patients with high-deductible plans were significantly more likely to report difficulties paying medical bills and were more likely to avoid or delay health care.
Shifting the cost of care to patients and their families leads to self-rationing of care. Rationing care based on one’s ability to pay, rather than on one’s health needs, is the cruelest form of rationing.
Out-of-pocket costs such as co-pays and deductibles create more bureaucracy in our already heavily bureaucratic system, reduce the usage of necessary and effective care and create financial strain for patients and their families.
That is why HR 676: The Expanded and Improved Medicare for All Act, does not contain cost-sharing for patients. The health system is funded up front through taxes and is free at the point of service. The administrative savings and lowering of healthcare prices inherent in single payer healthcare systems offset the need for cost sharing.