A new report released by the Kaiser Family Foundation says that higher co-insurance reduces health care use and lowers health spending, but does not adversely affect the health of the average person. The report uses findings from the seminal 1970s RAND Health Insurance Experiment along with recent data to shed light on policy debates about appropriate cost-sharing levels. Prepared by Jonathan Gruber of the Massachusetts Institute of Technology, The Role of Consumer Copayment for Health Care reviews the potential for income-related limits to balance incentives for reduced use of services.
The primary conclusions of the report are that higher co-insurance reduces healthcare use and lowers health spending; patients of average health and income see no adverse health consequences when they are in a plan with co-insurance compared with those in a plan with no co-insurance; and high-risk patients, especially those in the low-income bracket, realized important health benefits when enrolled in plans with no co-insurance. “The results are surprisingly robust and hold across many subsamples of the data: rich and poor, sick and health, adult and child,” concludes the report. “The one clear negative impact on health occurs only for those who are at high medical risk, particularly if they are also of lower income.” But given the huge treatment advances that have been made in the last 30 years, reduced care today may have more serious consequences for health outcomes than was true in the 1970s, cautions the report. On the other hand, “treatment is general has become much more expensive and intensive, so it could also be that the care that is reduced by cost sharing is still on the flat of the effectiveness curve.”
