Sunday, October 8, 2017

The Purpose of Copays

I've railed in the past against health insurance deductibles (at least here and here). I'm not sure I've mentioned copays as much, because compared to thousands of dollars in deductibles, they haven't affected me as much, and when I first encountered them in the 1980s, they were (to me) truly minor amounts of money.

But Natalie Shure writes a perfect takedown of the premise behind copays, which I originally saw shared on Boing Boing. Copays are all about decreasing health care cost in one area, only to move it to another — usually publicly funded — area, such as emergency rooms. With, of course, overall worse outcomes for the patients, since they didn't get the timely care they needed that would have headed off the emergency room visit. Not to mention the way copays and deductibles create new market opportunities for private insurance with "gap" coverage and financiers with Health Savings Accounts.

Shure explains how much of an outlier our country is, and the effect copays have:

While several countries with universal health care systems do charge copayments at the point of use, they don’t tolerate the amount of poverty that we do in the United States. No other wealthy country does. In a grotesquely unequal society, a copayment doesn’t create “better consumers” of care — it helps us scrimp by shoving the most powerless out of the system.

Once state Medicaid programs began charging copays in the 1970s, the new fees were associated with patients dropping out of health care plans. In some cases, there was a demonstrable impact on health: in 1975, California’s MediCal program reduced doctors’ visits with copays, only to have those savings offset by higher hospitalization rates.
I especially liked the introductory paragraph from the Boing Boing post:
The basis for the health-insurance copay is that the 99% need to be disincentivized from "abusing" their health-care and going to the doctor for frivolous ailments (if this was really a thing, we'd have sliding-scale copays that charged rich people astounding sums to see the doctor, to ensure that everyone's incentives were properly aligned).
I never thought of this point myself, but it's clearly correct: if copays are meant to deter frivolous use of coverage, then why don't the rich have to pay a lot more? They aren't deterred by $20 here or there.

The answer is obvious: Because copays are not about deterring rich people, they're about depriving the poor and middle class of so-called "Cadillac" coverage, which is reserved for the wealthy.


By the way, am I the only one who took forever to catch onto the definition of the jargon word "coinsurance" we are all now expected to understand when we purchase health insurance? 

I assumed it applied to people who had coverage from two sources, such as Medicare and a gap plan, or the VA and an employer. You know, where "co" means something shared between two similar types of payers (two health insurance plans). 

But noooo. It's just a made-up word that means “you personally pay the difference.” You, the patient, pay that “coinsurance” portion. It’s not insurance at all.

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