Transcript Patient Cost Sharing: Trends and

Providing Insights
that Contribute to
Better Health Policy
Patient Cost Sharing:
An Overview
Joy M. Grossman, Ph.D.
December 3, 2003
The New Cost Containment Frontier
 Shift from provider to consumer cost controls
 Levers include:
 Increasing employee premium contribution
 Reducing covered benefits
 Increasing cost sharing at the point of service
 Employers focusing on last option
 Lowers employer and employee premium
contributions
 Shifts costs to employees who use services
 Reduces total spending by making patients
more price sensitive
Recent Changes in Cost Sharing
 Increasing copays and deductibles
 Replacing copays with coinsurance
 Applying cost sharing to a broader array of
services
 Enhancing prescription drug tiering
 Increasing out-of-pocket maximums
 New products, e.g. consumer directed
health plans, tiered networks
Effects of Increased Patient Cost
Sharing
 Reduces both employer and employee
contributions to premiums by:
 Shifting costs on to those who use care
 Creating incentives to reduce use
 Current mechanisms don’t differentiate
between needed and discretionary care
 Can create financial barriers to needed care
especially for people who are low income or are
chronically/seriously ill
 Long term effects on health status unknown
Cost Sharing Innovations
 Reduce spending by giving patients
incentives to use appropriate care while
mitigating barriers to needed care
 Link cost sharing to patient’s choice when
there are options
 More effective services/treatment options
 Participation in care management programs
 Efficient providers
 Limit cost sharing for:
 Needed care
 Patients who “do the right thing”
Design Issues
 Is there adequate clinical and other research
to inform design?
 Are employers willing to pursue such
approaches?
 Will innovations be used for small employers?
Implementation Issues
 Can patients be provided with adequate
information to make appropriate decisions?
 How would more complex cost sharing affect
the physician’s clinical decision making
process? Can physicians steer patients
towards appropriate care?
 Would these innovations interfere with other
(mostly provider focused) quality improvement
efforts?
 Are such innovations too complex to
administer?
Broader Issues
 What are the limits to savings from cost
sharing innovations?
 Might there be a backlash from consumers or
providers?
 Who is liable for determinations of medical
effectiveness?
 Could risk selection be a significant
problem?
Providing Insights
that Contribute to
Better Health Policy
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