Under the theory of moral hazard, it is postulated that insured people overuse health care services and that patients themselves are a leading cause of health care inflation. If they would just have more "skin in the game" through enough cost-sharing (co-payments, deductibles and other restrictions), it is assumed that costs could be reined in.
But as I discussed in a lengthy article four years ago, this theory has been fully discredited over the years as a cost-containment tool in U.S. health care. (1) (Geyman, JP. Moral hazard and consumer-driven health care: A fundamentally flawed concept. Intl J Health Services 37 (2): 333-51, 2007) Instead of cutting health care spending, cost-sharing leads many patients to delay or forego necessary health care, resulting in later diagnosis of illness and higher costs down the road, together with decreased quality and outcomes of care.
Overall health care costs are not reduced. Cost-sharing just shifts more costs to patients and families at a time when these costs are already unbearable for many. Meanwhile, the real drivers of health care costs continue unimpeded -- perverse incentives within the medical marketplace that encourage physicians, other providers, hospitals and other facilities to deliver more services, whether appropriate or necessary or not; lack of price controls; blatant profiteering by Big PhRMA, investor-owned hospitals and medical supply companies; introduction of new technologies with lax requirements to document their effectiveness; and excess bureaucracy of our 1,300 private insurers.
Although it is now clear that cost-sharing will not fix our cost problems, and will just make patients sicker and increase the numbers of preventable hospitalizations and deaths, the policy-making community continues to bark up this tree. In fact, all the present trends indicate that increased cost-sharing, promoted especially by the GOP and many willing Democrats, will be imposed across the board in both private and public programs.These examples illustrate the extent of this continuing trend:
- High-deductible plans with increased co-payments for visits and drug prescriptions and greater restrictions on network providers.
- Efforts to increase cost-sharing in private Medicare plans, including Medigap and Medicare Advantage programs.
- The Obama Administration's "surrender in advance" proposal to introduce new co-payments for home health services for new Medicare beneficiaries (Office of Management and Budget. Living Within Our Means and Investing in the Future. The President's Plan for Economic Growth and Deficit Reduction. September 2011).
- Draconian Medicaid cutting services and increasing cost-sharing (e.g. Arizonans below the federal poverty level must make co-payments to gain access to care, causing many to forego care, a practice recently rejected by a the 9th U.S. Circuit Court of Appeals., Reinhart, MK. Copays break law. The Arizona Republic, August 25, 2011)
- Despite the widespread and increasing use of cost-sharing over many years, health care inflation remains completely out of control.
- Physicians push the buttons for health care services much more than patients.
- The enormous costs of the multi-payer financing system are wasteful and unsustainable, and could readily be controlled by shifting to a single-payer financing system.
- Blind ideological support of "market competition" as the answer to our cost problems when that is the main part of the cost problem, since real competition does not exist in health care markets (e.g. more consolidation all the time, wide latitude to set prices, little transparency, etc).
- Intent to dismantle Medicare and convert it into a voucher-based welfare program while at the same time opposing cost controls of private Medicare programs and negotiated drug prices that are so effective in the VA.
- Forcing increasing cuts of an already underfunded Medicaid program while promoting for-profit privatized Medicaid programs that offer worse medical care (McCue, MJ, Bailit, MH. Assessing the financial health of managed Medicaid managed care plans and the quality of patient care they provide. The Commonwealth Fund, June 15, 2011) and further gouge the most vulnerable among us.
- Opposition to reforms of Wall Street abuses, where moral hazard of high-risk and exploitive investment practices continue unchecked. (Browning, ES. Fed faces old foe as hazard returns. Wall Street Journal, August 29,2011: C1)
- Failure to even consider a single-payer, not-for-profit Medicare for all program that would assure universal coverage for our whole population with increased choice, more efficiency, fewer disparities and improved quality of care, all at less cost than employers, patients and families are now paying.
- Calling for a more limited role of government until big banks and other private institutions face bankruptcy, then begging for bailouts and minimal follow-up regulation.
- Calling the Obama Administration's recent proposal for minimal tax rules for those making more than $1 million a year "class warfare" as if the GOP hasn't been waging such a war for many years. (Knowlton, B. Republican lawmakers equate Obama tax plan with 'class warfare'. New York Times, September 19, 2011: A 19)
Adding up all these examples of GOP duplicity and hypocrisy (to which many Democrats unfortunately yield), we have to ask when logic, common sense, evidence and fairness will take center stage for health policy makers and legislators? The way things are going could well be called legislative malpractice.