Testing The GOP’s ‘People Are More Cost Conscious With Skin In The Game’ Argument

Austin Frakt takes a good bite out of the GOP’s argument that people who spend more of their own dollars on health care tend to be more cost conscious than those who receive greater government support. Does having more “skin in the game” help lower federal health care spending? Frakt argues that the available data suggests that it does not:

Take employer-sponsored plans. They receive the equivalent of nearly a 40% tax subsidy, on average. Contrast that with Medicare, which covers about three-quarters of the premiums for Part’s B and D and the entirety of what would otherwise be a Part A premium. That is, even participants in the most government-subsidized part of the commercial market receive a much lower subsidy than do Medicare beneficiaries. Participants in the non-group market get even lower subsidies.

With that lower subsidization in the commercial market, we might expect — based on theory alone — more cost consciousness and a lower rate of increase in health care costs. Is that what we find? Not according the figures from the Kaiser Family Foundation.

Look:

The other problem with shifting more of the cost of coverage to the individual is that it could discourage preventive care utilization and create some serious cost-related access problems, forcing patients to skip expensive medications, avoid needed specialists, a recommended test treatment or follow-up, or not go to the doctor altogether. This kind of approach only fuels the growth in health care spending and actually misses the forest for the trees because it does very little to control the costs of the very sickest Americans who make up some 80 percent of health care costs. Giving people with multiple chronic conditions “more skin in the game” just won’t go very far in controlling spending.