Increasing copays and deductibles is usually the first choice when employers or public health programs look for ways to cut health care costs. MassHealth, for example, plans to increase prescription drug copays for low income people. But a comprehensive survey of research by Harvard’s Katherine Swartz for the Robert Wood Johnson Foundation’s Synthesis Project warns against this approach.
The study concludes:
- Patient cost-sharing is not necessarily an effective mechanism for significantly slowing health care spending.
- Cost-sharing is not well-targeted on low-value services.
- Caution should be used when increasing cost-sharing for low-income populations or the chronically ill.
Bottom line, for those concerned about savings: “Studies of programs for low-income populations found that increased cost-sharing did not result in program savings either because the subsequent mix of services used was more expensive or because there was an increase in adverse events, including hospitalizations
Roughly 5% of the population accounts for almost half of all health care spending, while the majority of the population is relatively healthy with little or no medical expenditures during a given year. Therefore raising copays for the healthy majority may decrease their use of services, but only moderately impact total spending
While increasing drug copays was found to have reduced inappropriate use of prescription drugs, there was also a reduction in the use of essential medication. People avoid the care they need, costing the system more over the long term. One study of elderly patients found that the chronically ill used more inpatient hospital care after cost-sharing increased. The result was a 122 percent increase in Medicare hospital spending.
For vulnerable populations, increased cost-sharing can have a negative impact. Those who are elderly or chronically ill had increased expenditures for emergency department visits, hospitalizations, and admissions to nursing homes when cost-sharing for prescription drugs was increased. People curtail their use of essential drugs which leads to an increase in emergency department use and hospitalizations. MassHealth needs to look closely at its copay proposal and weigh the impact on members’ health with the scant savings, or even increased expenditures.
-Paul Williams
