Friday, June 27, 2014
What happens when we make patients pay more?
The answer comes from Japan, where the elderly become eligible for significantly lower cost sharing when they turn 70 (co-payment rates go down by 60-80%, and there are no deductibles in Japan). Here is what happens:
1. They consume more (for inpatient admissions and office visits the elasticity=-0.2); but
2. Their health status does not change; and
3. They pay less out-of-pocket (smaller co-payments more than offsets the bigger consumption).
BOTTOM LINE: Bigger co-payments can reduce utilization without adversely affecting health.
OK, here is the science, where are the politicians?