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Cost-Sharing: Effects on Spending and

Outcomes

Briefing by

Katherine Swartz, PhDHarvard School of Public Health

February 3, 2011

Agenda

Why a review now? Methodology overview Guiding questions Principal conclusions Implications

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Why a Review Now?

No comprehensive study of cost-sharing since the RAND HIE

Significant changes in health insurance and medical care since HIE

Health care spending > 20% federal budget and growing faster than GDP need to slow spending

Patient cost-sharing a policy-tool?3

Methodology Overview

Evaluations of natural experiments preferred

Problems with analyses using cross-sectional data

Measuring responsiveness to cost-sharing – need for clarity

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Questions Guiding Synthesis

Effects on distribution of spending and total spending?

Effects on health outcomes? Do responses differ by SES and health

status? Effect on different types of services? Effects on use of prescription drugs?

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Distribution of Health Care Spending, 2007

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Source: Adapted from Kaiser Family FoundationNote: Dollar amounts shown are the annual expenses per person in each percentile

Effects on Distribution of Spending and Total Spending

Not clear how distribution would be affected

Reductions likely to come from healthy half of population – increasing share of spending by top 10%

Unlikely to significantly slow total spending given advances in medicine

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Effects on Health Outcomes

No study since HIE on effects on health of general population –> long-term effects not known

Few studies have had good control groups or good measures of health outcomes

Increased cost-sharing for Rx for elderly and poor increased hospitalizations, deaths, spending

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How Do Responses Vary by SES and Health Status?

Poor people disproportionately affected Poor people shift types of services used,

which may increase total expenditures Not known if race & ethnicity affect

responses when income is controlled People in poor health respond differently

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Effects on Use of Different Services

Preventive services: reduction Emergency departments: reduction, but no

adverse health outcomes Mental health & substance abuse

treatment: use very sensitive to cost-sharing

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Effects on Use of and Spending on Prescription Drugs, 1

Decline in use and spending Mixed evidence: switch to less expensive,

close drug substitutes? Greater reduction for non-essential drugs

and drugs for asymptomatic conditions than essential drugs

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Effects on Use of and Spending on Prescription Drugs, 2

Chronically ill reduced drug use but then had increased use of more expensive care

Long-term effects of reduced use of essential drugs (esp. chronic) not known

Medicare Part D plans: increased use of drugs, lower OOP expenses; but drop in use when expenses reach doughnut hole

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Overall Conclusions, 1

We do not know if cost-sharing would reduce growth in total health care spending

Disproportionately shifts financial risk to very sick

Affects people differently depending on their income and health status

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Overall Conclusions, 2

Most people do not distinguish between essential and non-essential health care services or prescription drugs

Low-income people at greater risk for poor health outcomes due to increased cost-sharing

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Policy Implications, 1

Not necessarily an effective policy tool for slowing health care spending

Caution needed re: low-income people, chronically ill people

Annual max on OOP spending tied to family income could limit financial risk

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Policy Implications, 2

Increased cost-sharing for people with chronic conditions could result in higher spending, especially for Medicare

Better targeting at less beneficial or non-essential services would improve efficiency and perhaps health outcomes

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Project Information

Web site: www.policysynthesis.orgE-mail: synthesisproject@rwjfmail.org

ContactsRWJF: Brian QuinnSynthesis Project: Sarah Goodell