As the tumultuous year of the Affordable Care Act comes to an end, one of the central storylines of health policy—the Great Cost Shift—is finally coming into focus. Consumers, even consumers who have insurance, are paying a larger share of their healthcare costs.
This shift has been in the works for years, but provisions in the ACA have made it more visible. And with the sometimes overblown controversies over various “shocks” to consumer wallets comes the question: Who should bear the burden of controlling medical costs? Is it hospitals and doctors who deliver the care; insurance companies that set premium rates; state insurance regulators charged with keeping those rates in check; employers who can steer workers to cheaper policies; Uncle Sam, who has the power to push back against providers—or is it patients themselves, who should comparison shop, go to the doctor less often, and take fewer medicines?
The answer, of course, depends on where you sit on the political divide, whose interests you hold closest to heart, and what you think insurance is for. But however you’re inclined to answer the question, it’s important that the media take note of the fact that insured patients are bearing more this burden and examine what the consequences of that shift are. Fortunately, some recent coverage has done that.
As I wrote on Friday, Time’ Kate Pickert recently examined the employer insurance market, where some 160 million workers get their coverage. She concluded that changes in the employer market—higher deductibles, higher coinsurance, and the eventual demise of “Cadillac plans”—mirror what we’re seeing in the individual-market policies on the new exchanges.
Then, in Sunday’s New York Times, Elisabeth Rosenthal touched on this topic in a noteworthy news analysis that summed up her year-long series, “Paying ‘Til It Hurts.” Obamacare’s patchwork efforts to rein in high prices involve making consumers pay more of the bill. But patients still often lack upfront access to pricing information, which makes it hard to be a smart shopper, Rosenthal writes. And, she adds, because the law does cap annual out-of-pocket costs in an effort to limit medical bankruptcies, critically ill patients aren’t likely to be price-sensitive by the time they need long-term hospitalization and end-of-life care—the biggest drivers of medical costs. It’s part of a landscape in which “American patients are stuck with bills and treatment dilemmas that seem increasingly Kafkaesque.” (The long-term care issue, by the way, has been all but ignored since Kathleen Sebelius pulled the plug on the CLASS Act in 2011.)
But it was a Dec. 18 Bloomberg View op-ed by Aaron Carroll, a professor of pediatrics at the University of Indiana and blogger at The Incidental Economist, that put the Great Cost Shift most squarely on the table. Carroll dove right into the number one market-based solution—the high deductibles and other out-of-pocket costs consumers face as a trade-off for cheaper premiums. And he acknowledged the famous (in policy circles) RAND study from the 1970s, a randomized controlled trial that “showed that people who have plans with high out-of-pocket costs spend significantly less on health care.” This is the core justification for the cost-sharing shift.
There’s just one problem. As Carroll reminded readers, “that study didn’t just find that people respond to higher costs; it also showed that they sometimes respond by making bad decisions.” They couldn’t discriminate between necessary and unnecessary care. He concludes that trying to reduce overall costs with increased cost-sharing “might actually do harm.”
Carroll strengthens his argument with several links to write-ups of research. There’s also a more recent RAND study—one the press largely failed to cover—that examined the relationship between high deductibles and healthcare spending and showed similar results to the first study. People in plans with deductibles of $1000 or more spent less on healthcare and consumed fewer services. But the cutbacks weren’t responsive to the details of the plans: patients with high-deductible plans used fewer preventive services, even though those services usually weren’t subject to the deductible. That meant, for example, fewer immunizations for children.
One way to look at this: shifting costs to patients might reduce overall spending, but it’s not clear it’s a good way to get better value for what we spend. That’s not even getting into questions about fairness to chronically ill patients who really don’t have a choice to consume fewer healthcare services.
And we shouldn’t forget the report just about a year ago from the National Association of Insurance Commissioners, in the context of a debate over shifting costs to Medicare patients, that concluded: “We were unable to find evidence in peer-reviewed studies or managed care practices that would be the basis for nominal cost sharing to encourage the use of appropriate physicians’ services.”