Controlling Health Care Spending: More Patient 'Skin in the Game?'
13 Indiana Health Law Review 348 (2016)
16 Pages Posted: 18 Nov 2016 Last revised: 6 Dec 2016
Date Written: September 20, 2016
While health care cost inflation slowed during the past few years, it has started to pick up again, and policy makers have good cause for concern about future increases in health care spending. Moreover, even if future increases moderate, policy makers rightly worry about the already high levels of U.S. spending. The need for effective cost containment strategies in health care persists, even though the Affordable Care Act appears to have had some success at containing health care costs.
Health care spending reforms can focus on physician and hospital practices or on patient behavior, and popular reform proposals include both approaches. For example, rather than paying physicians and hospitals in terms of the quantity of care that they provide and encouraging the provision of too much care, private insurers and government programs are turning more and more to forms of reimbursement that are based on the quality of care delivered. Insurers often adjust physicians’ compensation based on whether they screen their patients for cancer or high cholesterol, administer recommended immunizations, or achieve good control of blood sugar levels for their patients with diabetes. The Affordable Care Act addresses patient behavior by requiring insurers to cover important kinds of preventive care for free. That way, people will not be discouraged for financial reasons from seeking early care that can keep them healthier and avoid the need for hospitalizations and other expensive treatments.
In this article, I consider an increasingly common strategy that insurers use to influence patient behavior — giving people more “skin in the game.” When medical treatment can be obtained at very low cost, people may be too quick to seek it when they feel sick, visiting their physicians when they would do just as well by staying home. Hence, insurers have raised deductibles and co-payments and shifted the costs of care to patients in other ways in the hope that people will become more conscious of the costs of their care. Although concerns about patients seeking too much care are important, common strategies for giving patients more skin in the game have been poorly conceived. There is room for skin-in-the-game strategies to contain high health care spending, but only when they are properly designed.
Keywords: Health Care Spending, Cost Containment
JEL Classification: H51, I13
Suggested Citation: Suggested Citation