Cost-sharing in managed care is a sword with two very sharp edges. Increasing patient contributions, such as copays, cuts down on unnecessary and inappropriate procedures, and therefore saves the health care system money. On the flip side, it also reduces compliance with needed care—which can then raise costs. So then, should we embrace it or discard it?
According to Mark Pauly, the Bendheim Professor from the Department of Health Care Management at the Wharton School, University of Pennsylvania, cost-sharing is worth arguing about, for the very reason that it could be used so powerfully for good or ill. Pauly presented his views on the subject at the Tenth Annual Marshall J. Seidman Lecture in Health Policy, sponsored by the HMS Department of Health Care Policy.
While Pauly warns that politics will drive most decisions in cost sharing, he believes that the best solution will involve both physicians and insurers working together. In order to set a truly meaningful cost-sharing rate, insurers need to understand the health status of patients, and they cannot do this without physician input. In addition, patients do not always appreciate the value of a particular treatment that they are prescribed. In such cases, it is important to implement “value-based cost-sharing,” that is, charging patients more for procedures whose value is in question, but charging less, or nothing at all, for interventions proven to work.
According to Joseph Newhouse, HMS professor of health care policy, “How to set cost-sharing amounts so as to get the best clinical results remains a challenging task, and much is yet to be learned.”
