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Health policy — a question of philosophy or finance?

Here’s the health care consumerism dilemma in one neat, small, understandable package.
Advocates of consumerism in health care argue that forcing folks to pay for their care will make them better consumers, and thus reduce costs. Theoretically, that makes sense – if you have to pay for something you won’t get more than you need, and you’ll keep yourself healthier to keep your costs down.

Yet another study (yes, there are more than one) shows that when individuals are required to pay more for their drugs, they don’t take them as they should. This leads to all kinds of nasty physical and financial problems – e.g. more strokes, which cost lots of money to fix, when all the patient had to do was take their blood pressure meds.
This isn’t some schlocky faux-objective think tank, but the RAND Corporation. Here’s the money quote:
“The findings from studies focusing solely on the chronically ill are unambiguous,” Goldman said. “Greater use of inpatient and emergency medical services are associated with higher co-payments or cost-sharing for prescription drugs.”
At least as far as drug copays go, increasing consumers’ costs actually drives up health care costs. It’s not much of a leap to think individuals with high deductible plans will wait to go to their docs to see if those skin blotches just go away on their own. So much for theories.
Which leads to another question; if consumerism does not work to reduce total costs, why are its advocates such strident supporters?
Methinks it has nothing to do with finances, and everything to do with philosophy. And that ‘philosophy’ goes by such names as ‘libertarianism’ and ‘freedom of choice’ – a belief that each person should make their own way in the world under their own power.
I’ve no problem with advocates arguing for a position, as long as their arguments are not hidden behind false pretenses.
Before the hate mail from self-styled free marketeers comes flying in, know that I believe cost-sharing can help instill better buying behaviors. But the current huge deductible version of CDHP is doing more harm than good. If consumerism-driven reformers are really interested in addressing health care reform, they should carefully consider when, how, and why cost-sharing makes sense.
Because their current arguments don’t hold up.

6 thoughts on “Health policy — a question of philosophy or finance?”

  1. I’ve come to the same conclusion about CDHP and its advocates’ faith in high deductibles.
    For the sake of fairness, it should be added that not all the research on the impact of CDHP comes to the same conclusion. Aetna and United have done studies using their own early adopters, and have published results showing that ER use and some other avoidable medical expenditures went down, while use of maintanence drugs went up. What Aetna and United don’t make especially clear, however, is that these populations are not representative of the general CDHP pool. These are fully-employed people, including Aetna and United employees, who have been extensively educated on preventive care and who in many cases had first-dollar coverage for some meds.
    CDHP (in the best cases) is evolving to focus more on prevention, wellness/healthy lifestyles, information on cost and quality of care, and the targeted use of cost-sharing based on income and the value/cost-effectiveness of care.
    But we’re still a long ways from a sophisticated plan design that gets the alignment of incentives right. And the libertarian types who initially provided much of the “intellectual” support for CDHP can be expected to resist some of the essential corrections, such as indexing cost-sharing on income.
    What I hope they do not resist is the need to create a national organization to assess the value of drugs and procedures so that we can make rational and less-biased decisions about where to increase cost-sharing. With the ability to aggregate electronic medical records, we will have the ability to conduct inexpensive, large-scale, ongoing assessments of the efficacy and cost-benefit ratio for an enormous number of drugs and therapies. This information can be used to counter the sales reps, impact physician behavior, and impact patient behavior through variable cost-sharing. The sooner we get going on this, the better.

  2. Capitalism certainly leaves room for problems and inequities. The point is that it is the best of the choices.
    Although there a plethora of examples of socialisms failings, but it is enjoyable to note the current escheatment fiasco in California as yet another example of government gone crazy. The State is noted in the LA Times today as having been unable to find Willy Mays, Brad Pitt and the Mayor of LA before stealing their assets in the escheatment process. A government that cannot find Brad Pitt is hardly going to add value in the healthcare process.

  3. Brent, if you want to be taken seriously please make serious arguments.
    If what you said made sense, then we should not trust the government to do anything. We certainly shouldn’t rely on it to protect the nation in the form of the police and military. If they can’t find Brad Pitt, they surely can’t find Saddam Hussein.
    Obviously, government does some things well enough, and for some things there is no better alternative that developed nations have found to work. You will have to make your point in the case of health care by looking at actual government-run systems.
    In doing so, you will be sorely tempted to ignore the evidence of how these systems function as well as or better than our own. For the sake of truth and intellectual integrity, please do not succumb to that temptation.
    For example, don’t just look at wait times for elective procedures, but look at wait times overall (ER visits, ability to schedule same day appointments, etc.). The US is NOT better when you look at the full picture. Our wait times aren’t shorter, and our costs are more than two times higher than other developed nations.
    These are the sorts of things you would need to address to make a serious argument against “socializing” health care.

  4. “If what you said made sense, then we should not trust the government to do anything. ”
    I think it would be hard to name a more compelling expression of distrust toward government than the Bill of Rights.

  5. Stella,
    You don’t understand. Brent was questioning the competency of government. The Bill of Rights does just the opposite: it assumes that government is competent, and that competence is dangerous unless restrained.
    If you don’t think government can find your guns, you don’t need a second amendment preventing government from taking them, do you?

  6. “You don’t understand.”
    Aw shucks, if only I were as smart as you, I would agree with you and the sun would shine.
    The Bill of Rights most certainly does NOT assume the government is “competent”. It makes no assumption at all on that point. The Bill of Rights is there to protect us from our government, whether it is competent or incompetent. Either way, power concentrated in government is a danger to freedom. The hard part is discerning the line between freedom and repression, and different people see it differently.

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Joe Paduda is the principal of Health Strategy Associates




A national consulting firm specializing in managed care for workers’ compensation, group health and auto, and health care cost containment. We serve insurers, employers and health care providers.



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