Saturday, July 14, 2012

Skin in the Game 

I am a regular reader of the columns of David Brooks, house conservative of the New York Times editorial pages. 

A recent Brooks piece was devoted to the Republican alternative to Obamacare, a key element of which was the need for patients to have skin in the game.  In Brooks’ words,“If they are going to request endless tests or elaborate procedures, they should bear a real share of the cost.” 

I think there is a case to be made here, but one a little more subtle than that.  The way I would put it is this:  Providers are not likely to work very hard at improving efficiency unless they are under economic pressure to do so.  During the managed care era of the 1990s, economic pressure was applied by insurance companies and while it worked, patients did not like the restrictions involved and revolted against it.  So it appears that if effective economic pressure is to be applied, the cooperation of patients is required; i.e., they will need to have skin in the game. 

The so-called tiered health insurance policy now being sold in Massachusetts is one way of doing that.  That policy is offered at reduced rates and offers patients complete free choice of providers.  But if they use designated expensive ones, their co-pays and deductibles are substantially higher. 

Predictably, there have been a few complaints by patients who found themselves wanting to use the expensive providers but didn’t want to pay the higher amounts.  But as a general matter, the tiered policy experiment seems to be working. 

Clever minds can probably come up with other acceptable ways to give patients skin in the game.  They ought to be encouraged to do so.

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