ObamaCare Clusterfuck: Narrow networks and high deductibles aren't bugs. They're features
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 [on to your shoulders; what Obama calls "skin in the game"] 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.
OK. Very good to know, though it sure would be nice to know who, exactly, is in those "policy circles"; I'd guess a ton of Flexians.
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.”
But "harm" to rent extraction, and what else matters?
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.
Meaning higher mortality among the poors, and greater profits later on with aftercare for those who catch the diseases immunization would prevent! It's a two-fer!
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 [although it's an excellent way to extract rents]. 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.
Right. And so what?
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.”
"Appropriate" in what sense? Why not just optimize for profit and have done with it? Profit, we can measure! (It's the old neo-liberal scheme of "Pick the metric, and the nudging will follow!")
In his op-ed, Carroll takes his argument in a political direction, pointing out the contradictions in newfound Republican complaints about high deductibles in “Obamacare” plans—it was conservative think tanks, after all, that pushed these plans for years as a solution to the cost conundrum. Undoubtedly, reporters will track the politics of the Great Cost Shift as it surfaces as an election issue for the 2014 midterms.
But the more challenging and arguably more relevant story is how consumers who bear the burden of the shift respond—and how their responses affect both their health and the healthcare system. Will spending go down? Will there be side effects? Is this another form of rationing care by price? And is that the choice the public prefers? There’s plenty to explore here.
Well, hopefully they'll respond not as "consumers," but as citizens!