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‘Complete’ health insurance improves access and prevents financial hardship

January 22, 2020

Topics: Quote of the Day

By Christopher T. Robertson
STAT, January 20, 2020

Lost in the shuffle of competing plans for saving health care is the radical call by Democratic presidential candidates Bernie Sanders and Elizabeth Warren for “no more copays, no more deductibles” as part of their “Medicare for All” plans.

Doing away with copays and deductibles would represent a complete reversal of U.S. health care policy. In the last decade alone, deductibles have risen 212%, which is about 10 times the rate of inflation or wages. And that’s exactly what federal law has encouraged. The Affordable Care Act capped annual out-of-pocket payments at $16,300 per year, but that is one-quarter of median family income — more than enough to bankrupt a family if illness strikes. When insurance leaves people unprotected against such large costs, it defeats the purpose of having insurance in the first place.

In this way, the Affordable Care Act reinforced this peculiar American policy of making health insurance incomplete — leaving insured individuals to pay substantial costs. This policy reflects a long-ingrained notion of personal responsibility: Nothing is supposed to come for free. This point has seemed about as controversial as the idea that banks should have locks on their doors. To do otherwise, to have a system of altogether “free” (fully insured) health care, would seem imprudent, irresponsible, and wasteful.

There is now a wealth of evidence about how copays and deductibles actually work. And it isn’t pretty.

In the 1970s, scientists fielded a remarkable experiment in which families were actually randomized to have large copays, smaller copays, or no copays. As predicted, those who had to pay some of the costs out of pocket spent less money on health care than those who got “free” care. Yet they seemed to cut back on care indiscriminately, avoiding both low-value care (like antibiotics for a viral infection) and high-value care (like insulin for diabetes). More recent research shows that patients primarily do what their physicians suggest.

Even with copays, patients are rarely able to effectively price shop for health care.

Ultimately, policies with large copays and deductibles do not target wasteful spending with any precision. They just smite those who are unlucky enough to get sick. And they deny access to care for those who cannot afford the payments.

To get real and enduring change, we may have to turn away from substantial copays and deductibles and join the rest of the civilized world with complete health insurance. Rather than trying to get patients to second-guess their own doctors, the law should target the real drivers of wasteful spending — physicians’ conflicting interests, monopolies and market concentration of health care providers, and the lack of investment in rigorous science about what health care is truly valuable.

In this light, it is striking that moderates like Pete Buttigieg and Joe Biden are failing to really grapple with the problem of patient exposure to costs, which polls show is the single most important issue to voters, when they think about health care reform. After all, that is the issue that most directly affects their pocketbooks, at a time when they are most vulnerable and desperate. Nonetheless, the Buttigieg and Biden plans do nothing to address the growing copays and deductibles in employer-sponsored health insurance — the main source of coverage in America.

Sure, Americans may get to keep their insurance under a moderate’s reform plan. But that is the very same insurance that is failing to really secure our access to care and failing to protect us from financial catastrophe when devastating illness strikes.

Christopher T. Robertson, J.D., is professor of law and associate dean for research and innovation at the University of Arizona and author of “Exposed: Why Our Health Insurance is Incomplete and What Can Be Done About It” (Harvard University Press, 2019).



By Don McCanne, M.D.

Should a person be automatically exposed to financial penalties merely because of having to face the misfortune of suffering illness or injury, especially when those penalties may impair access to the health care needed, in addition to suffering the insult of financial hardship? Of course not, yet that is precisely what deductibles, copays and other cost sharing of health insurance does.

Yet some say that we need cost sharing to reduce moral hazard – the tendency of individuals to take more risks exposing them to illness or injury if they know that the consequent medical expenses will be covered by others. Really? It’s okay to break a leg as long as the medical costs are covered by insurance? It’s okay to acquire AIDS as long as insurance covers it? It’s okay to suffer the grief and infirmities of obesity (as if that were preventable) as long as mental and physical consequences are covered by insurance? Is threatening a person with cost-sharing financial penalties really a means of ensuring personal responsibility that would prevent behavior that could have medical consequences? Further, is it just to penalize the majority of individuals with illness or injury when their medical misfortunes were not due to a failure of personal responsibility? This last point is the most compelling reason of all to eliminate deductibles, copays, and coinsurance. It’s just not fair.

Professor Robertson refers to “complete” health insurance as that which eliminates substantial copays and deductibles – complete because it replaces today’s incomplete insurance “that is failing to really secure our access to care and failing to protect us from financial catastrophe when devastating illness strikes.”

Time to make our health insurance complete while we bring in everyone and make it affordable for each of us through progressive financing.

PNHP supports policies that improve our health care system for the benefit of all of us, with special attention as to how health care is financed. PNHP, as an organization, does not support any candidates for political office. We advocate for optimal policy, and it is the candidates themselves who select the policies they support.

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About the Commentator, Don McCanne

Don McCanne is a retired family practitioner who dedicated the 2nd phase of his career to speaking and writing extensively on single payer and related issues. He served as Physicians for a National Health Program president in 2002 and 2003, then as Senior Health Policy Fellow. For two decades, Don wrote "Quote of the Day", a daily health policy update which inspired HJM.

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