Ezra on patient incentives

Maggie Mahar wrote yesterday on perverse incentives for physicians that drive up costs; Ezra Klein writes today in American Prospect about perverse incentives for patients.

This again offers Bush & co. an opportunity to take real facts and twist them so they'll become ammunition for their class warfare against the middle class. C'est la vie, I suppose. Iron can be used for good — plowshares, say — as well as being potential death dealers as swords. We shouldn't turn our backs on the stuff.

Klein writes that RAND's 15-year study showed that "gold-plated" healthcare coverage that gave 40 percent more care than basic coverage offered no better outcomes.

This is actually an argument in favor of single-payer. Denver Dave of HC Talk has mused that the average person, when thinking about single-payer, pictures U.S. healthcare being a finite entity that he or she has a part of through his or her insurance. If we split the pie differently in order to give some of that healthcare to people who have none now, that seems to mean that he or she would have less.

The RAND study shows that less can be better. What's more, the study also showed this: "The only exception was for the poor, whose health outcomes were hurt by cost-sharing and improved by more generous plans."

Further showing that denying healthcare to the poor (and increasingly to the middle class) is foolish, Klein links to this:

The New England Journal of Medicine... compared Medicare patients who faced heavy cost-sharing for pharmaceuticals with those who had nearly unlimited benefits. The seniors with cost-sharing cut back on pharmaceutical spending (and thus, use) by about 31 percent. The results? More visits to the emergency room, more hospitalizations, and higher rates of death. And the upshot of all this is that the costs incurred by the deterioration in health completely erased the savings from the cost-sharing.

Klein agrees with cost-sharing by patients except for chronic conditions where generous care has been proven to pay for itself and more.

"One-size-fits-all high deductible policies associated with Health Savings Accounts (HSAs) require costly tax breaks for the most affluent while unnecessarily increasing financial and health risks for low- and moderate-income families," Klein writes. He instead likes a plan from his favorite economist, Jason Furman at the Hamilton Project, who has come up with a system that he claims could save 30 percent immediately by charging co-pays adjusted by income.

Of course the only realistic way to do that would be through a single-payer system.