On health care coverage and skin in the game

Given how often various Republicans et. al. have stated that their health care reform process won’t deprive people of their current coverage, I imagine one consequence will be a wide-ranging discussion of what it means to have health insurance in the first place. Those who put pen to paper to produce and implement the Affordable Care Act obviously had a framework for that definition in mind, so we got mandatory essential benefits and various protections against exclusions in addition to various levels of assistance to foster greater affordability. Now that the GOP has to produce similar legislation, which can actually be scored and measured, to undo that framework they too will have to define exactly what it means to have “coverage.”

I have a feeling that their definition will not be the same as we commonly interpret it. For most folks I believe having good health insurance is akin to what they receive, or would receive, through an employer. You have access to doctors, medications, and specialists for some amount of regularly paid premium and certain co-pays. There’s some level of expectation that, while perhaps not as generous as we’d like it to be, such coverage isn’t effectively worthless.

So will Republicans propose a replacement for the ACA that meets that characterization of not “effectively worthless?” I doubt it. One clue from this past week came from Tom Price’s hearing for his nomination to Health and Human Services. After pointing out how awful it is that too many folks face high out-of-pocket costs in marketplaces established by the ACA, he extolled the virtues of high-deductible plans—which by definition includes  high out-of-pocket costs—as something that should be ideally featured in a plan to replace the current law.

Yes, you read that correctly. As Sarah Kliff wrote about this dissonance:

Price went from bemoaning high out-of-pocket costs to, within minutes, talking about the benefits of high-deductible plans.

High-deductible plans, of course, have quite high out-of-pocket costs — they cause people to forgo care because of the cost. And that is a feature, not a bug. The whole point of deductibles is to tamp down overall health spending by putting some of the cost on consumers. This “skin in the game,” as health wonks like to say, should make people think twice about whether they really need that doctor’s visit.

Having a certain amount of skin in the game, in order to turn the problem of high health care spending into a individual consumer problem, is a conservative proposal that’s never really gone away. It’s something I’ve touched on numerous times before, but instead of reiterating those points I thought I’d share a piece from this week that nicely summarizes the idea and it’s limitations:

Those high-deductible or “catastrophic” plans work like this: you pay most of your own medical bills up to a specific amount — usually thousands of dollars — before your insurance kicks in. Price, and congressional Republicans say they’re a big part of what should replace Obamacare. And it’s not just the GOP who likes them; Democrats and employers have also embraced these plans. But here’s a complication: researchers do not know if high-deductible plans actually lead to good health care.


[Amitabh] Chandra’s research shows that even higher-income earners with more economic flexibility do not really shop for health care efficiently, even when they’re given a state-of-the-art computer program to compare prices. People on these plans tend to forgo all sorts of care, regardless of their own need and health status.


In health care research, a new consensus is forming, in part because of Chandra’s work: high-deductible plans with cheaper premiums work well for people who are generally healthy. But for those who are chronically ill or live on lower incomes, these plans can be a disaster. At any income level, in fact, they incentivize the consumer to cut back on care they may need.

These high-deductible plans, even if they’re paired with heath savings accounts to smooth cost-sharing, are not a good idea if your goal is to ensure that everyone gets the medical care they need. They are, however, a pretty good path to reducing the amount of money that government spends on health care for its citizens. Especially if you were able to claim, as a result, that no one ‘lost’ health coverage from repealing the Affordable Care Act, block-granting Medicaid, privatizing veteran’s insurance, and potentially touching Medicare. If that were their goal. Which it is.


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