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Haren, M., McConnell, K., & Shinn, A. (2009). Increased patient cost-sharing, weak US
economy, and poor health habits: implications for employers and insurers. American
Health & Drug Benefits, 2(3), 134-141.
Healthcare Economics
Increased patient cost sharing
Introduction
As economy declines, the rate of accessing healthcare is also affected. In the healthcare
provision there are various stakeholders that work together to ensure that proper healthcare is
provided to the patients. There is usually increase patient cost sharing during times of economic
crisis. Furthermore, changes in regulations, affects the financing of healthcare. Competitive
markets also contribute in the restructuring of the healthcare service delivery systems. Therefore
understanding economic approaches has become one of the appropriate strategies in
understanding the changes and need for change in the healthcare. The purpose of this paper is to
explain how increased patient cost sharing impacts on the healthcare delivery. Furthermore, the
paper delineate on how economic factors impacts on the healthcare delivery.
Background and significance of the topic
The issue of increased patient cost sharing is one of the most debatable issues in various
countries. Various countries constitutions have provisions that states that health is a right and
HEALTHCARE ECONOMICS 2
every citizen has the right to access to quality healthcare. However, this is not the case in most
countries. The high cost of accessing to healthcare services has deterred many people from
accessing to this fundamental service. There are various factors that have contributed to this
situation such as the legislations, competitive market and other stakeholders with vested interests
(Haren, McConnell & Shinn, 2009, p. 131). Various studies gave been carried out by different
researchers aimed at finding out the relationships that exist between the costs that various
healthcares provide. One of such studies was done by Zitter Groups in 2008 in which they sort
to investigate the relations between the insurer and employer in line with how they cooperate in
creation of their health care designs (The Zitter Group. (2008). Therefore, it is a very important
topic as it seeks to identify this relationship and how various stakeholders can cost share the
costs of healthcare service to improve the provision of health services.
Stakeholders
In the provision of healthcare services and specifically in terms of increased patient cost
sharing, various stakeholders have different stakes. These stakeholders include government,
insurers, healthcare providers, employees and employees. In the patient cost sharing all these
stakeholders play a crucial role. For instance, the government plays a fundamental role in
providing guidelines and frameworks of charging accessibility to health facility. Furthermore,
government has the responsibilities of ensuring that the economy is performing well to ensure
that the cost of accessing the healthcare services is regulated. Government also sets laws and
legislations that provide a direction on the way costs are charged. Another stakeholder is the
insurers; these provide medical cover to employees. They have the role of ensuring that they
charge competitive prices to employers to ensure that many employees are covered. Employers
are also a stakeholder in cost sharing. They cover their employees and therefore, relate with
HEALTHCARE ECONOMICS 3
insurers. They are likely to increase employee medical cover when insurers increase their cover.
Employees are yet another stakeholder with stake in cost haring. With the increase in costs of
accessing medical care, many employees will not seek medical attention hence impacting on
their health.
Increase patient cost sharing is one of the major problems that face many American
populations. According to the benefit design index statistics, economic implications have tended
to shift patients costs by increasing in copayments and deductibles. Another cost containment
strategy that is often used by employees is charging premiums (Haren, McConnell & Shinn,
2009, p. 131). Both the insurers and employers may use these strategies to retain their profits.
For instance, in 2007 and 2008, it is estimated that more that half of the employers and three
quarters of insurers increased their deductibles and premiums (Goldman, Joyce, & Escarce et al.
2004, p. 2344). In addition, approximate of two third of insurer and half of employers still
believe that they need to increase further the patient cost sharing. This increase affects
employees and individuals who are required to spend a lot of money in seeking healthcare
services (David, 1995, p. 163). Passing too many costs to employees leads to reduction in
adherence to medical treatment and therefore employees’ health deteriorates and finally affects
productivity.
Economic asserts through the law of demand and supply that, if the price of a product or
a service increases, the demand falls (Nyman J. (2002, p. 23). It does not therefore surprise
someone that increased patient cost sharing decreases the utilization of health services. Many
people especially those with low income will not be able to access to proper health services.
This is attested by the RAND health Insurance Experiment that found out that increase patient
cost sharing decreased utilization of health services (RAND Health. 2008).
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Because of the high cost charged by insurance company’s and economic crisis that hit the
US economy, many of the citizen estimated to 25 million adults aged between the age of 19-64
years were underinsured which was a 60% increase compared to 2003 (Cunningham & Felland,
2009). According to the common wealth Fund, cost shifting to the members has been one of the
reasons that has tremendously increased the number of underinsurance instances. The premiums
charged by insurers consume 5% or more of a family income for an estimate of 41% of
underinsured households Americas (Haren & McConnell, 2009, p. 70). Therefore, because of
this high rate of underinsured and uninsured, many Americans are unable to access to or seek
optimal health.
The willingness of the patients to pay to the insurer for the services is deterred because of
the level of income of an individual. A wiling individual who has no money to take insurance
cover cannot be able to pay the cover even if they show interest in paying. The subsequent
increase in cost of insurance is driven by the current medical and pharmaceutical technologies
that are expensive than the old ones (Heisler, Langa, Eby et al. 2004, p. 626). Therefore,
employers are put under pressure to increase their payment, which leads to increase in the
employee deductible. The major problem is that employee salaries and wages are not increased
to ensure that they cover for these increased charges. Therefore, it deters many employees to
access to good medical care. Innovation designs such as consumer directed health plans and
value based benefits designs, which focus on prevention healthcare can help to reduce the
increased patient cost sharing (Mahoney, 2008, p. 4). This will be achieved because; people will
be educated on how to ensure that their health is well kept. However, the challenge is that many
are not informed hence; the designs may not be productive.
Conclusion
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It is imperative that new solutions are implemented to ensure that increased patient cost
sharing is managed well and that all the citizens are able to access to heath service. This can be
attained, through collaboration of all stakeholders to find appropriate solutions. For instance,
preventive healthcare approach should be encouraged to ensure that the cycle of costs shifting to
patients decreases to reduce costs of accessing to healthcare services. Investment should be
aligned to improving healthcare as opposed to treating the sick people.
References
Cunningham, P., & Felland, L. (2009). Falling behind: Americans’ access to medical care
deteriorates, 2003-2007. Center for Studying Health System Change. Tracking Report.
No. 19. www.hschange.com/CONTENT/993 . Accessed January 21, 2009.
David, C. (1995). Cutting costs and improving health; Making reforms work, Incremental
reforms, P. 161-173.
Goldman, D., Joyce, G., & Escarce, J et al. (2004). Pharmacy benefits and the use of drugs by
the chronically ill. JAMA, 291:2344-2350.
Haren, M., McConnell, K., & Shinn, A. (2009). Increased patient cost-sharing, weak US
economy, and poor health habits: implications for employers and insurers. American
Health & Drug Benefits, 2(3), 134-141.
Haren M., & McConnell, K. (2009). Patient cost-sharing on the rise: results from the Benefit
Design Index. Am Health Drug Benefits. 2009;2:70-77.
Heisler, M, Langa, K., & Eby, L et al. (2004). The health effects of restricting prescription
medication use because of cost. Med Care, 42:626-634.
HEALTHCARE ECONOMICS 6
Mahoney, J. (2008). Value-based benefit design: using a predictive modeling approach to
improve compliance. J Managed Care Pharm. 2008;14(6 suppl. 3-8.
Nyman, J. (2002). The Theory of Demand for Health Insurance. Palo Alto, CA: Stanford
Economics and Finance;
RAND Health. (2008). The Health Insurance Experiment: a classic RAND study speaks to the
current healthcare reform debate. 2006.
The Zitter Group. (2008). Benefit Design Index. Spring 2008. Data on file at the Zitter Group.