It’s well publicized that people without health insurance tend to skip health care. Even those with insurance, but with co-pays, are reluctant to spend their money. On the other hand, insurers who marketed long-term care insurance found out that with insurance to back them up, the insured were more inclined to use LTC services including nursing homes.
“Free” or the appearance of being free is a powerful incentive. It can get people to buy things they don’t need. It can encourage use or remove financial concern for use.
People I’ve spoken with in the U.K. are confident their health care is free regardless of the high payroll taxes they pay all their working lives. This is reinforced in retirement when they pay no health care taxes, no premiums and no out-of pocket-costs.
Is it reasonable to assume that when it comes to something important like health care, removing any incentive to think about using services will have a powerful impact both on the patient and their provider of health care?
How people respond to high deductibles. Every study that has ever been done on the matter has come to the same conclusion: when people are spending their own money rather than insurance company money, they consume less health care. For example, a review of the literature published in Health Affairs finds that high deductibles reduce both doctor office visits and preventive care. Forbes
Our health care system is already faced with costs associated with unnecessary care, driven by being overly cautious, financial incentives and lack of concern for costs. What will eliminating all concern for cost do?
Proposals for a new health care system suggest we eliminate all out-of-pocket costs plus add dental, vision, hearing and long-term care coverage. Estimates vary as to how such coverage will increase utilization of services.
I suggest that utilization of health care services will increase substantially. First, there is accumulated demand. Then on an ongoing basis there will be no reason not to seek care for any reason. Experience shows that LTC has a significant risk especially considering our aging population. All of this does not mean better health care or better health.
What it definitely means is that in some manner the system must manage how Americans use health care. That’s something to think about, but has yet to be discussed by the M4A advocates.