Health Care Cost Sharing: How Real People Behave

Anti-HSA types often try to counter pro-cost sharing arguments by constructing elaborate hypothetical scenarios filled with arbitrary assumptions. These confections typically begin as Paul Krugman’s does in this op-ed:

Imagine what would happen if there were only one insurance company, and everyone was required to buy the same insurance policy …

But we don’t need to ”imagine” how people behave when they bear a higher portion of their health care costs. RAND did a decade-long study of the actual behavior of 7,700 patients in the real world. The Health Insurance Experiment showed that:

Participants who paid for a share of their health care used fewer health services than a comparison group given free care.

And what effect did this have on the overall health of these people?  

Cost sharing in general had no adverse effect on participant health.

The anti-market crowd has, of course, put a lot of effort into refuting the HIE study, usually focusing on marginal health improvements among the sickest of the ”free care” group. But their arguments have not been very convincing.

Consequently, they tend to pretend HIE didn’t happen, while doing battle with carefully-constructed straw men. But denial won’t change the facts: cost-sharing works.

Comments 1

  1. drmatt wrote:

    I actually enjoy the way you edit most everything to support
    your personal arguements. also published in the same study

    “The study suggested that cost sharing should be minimal or nonexistent for the poor, especially those with chronic disease.”


    “Indeed, subsequent RAND work on appropriateness of care found that economic incentives by themselves do not improve appropriateness of care or lead to clinically sensible reductions in service use.[3]”

    So basically the study said, free care to the poor, and that cost incentives do not lead to sensible reductions. HMMMM seems opposite or what you are implying.

    Posted 26 Nov 2007 at 6:41 am

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