Lost in the shuffle of competing plans for saving health care is the radical call by Democratic presidential candidates Bernie Sanders and Elizabeth Warren for “no more copays, no more deductibles” as part of their “Medicare for All” plans.
(The plans are actually misnamed, since regular Medicare has 20% copays with no cap — the opposite of what they are proposing — but I’ll leave that aside.)
Doing away with copays and deductibles would represent a complete reversal of U.S. health care policy. In the last decade alone, deductibles have risen 212%, which is about 10 times the rate of inflation or wages. And that’s exactly what federal law has encouraged. The Affordable Care Act capped annual out-of-pocket payments at $16,300 per year, but that is one-quarter of median family income — more than enough to bankrupt a family if illness strikes. When insurance leaves people unprotected against such large costs, it defeats the purpose of having insurance in the first place.
In this way, the Affordable Care Act reinforced this peculiar American policy of making health insurance incomplete — leaving insured individuals to pay substantial costs. This policy reflects a long-ingrained notion of personal responsibility: Nothing is supposed to come for free. This point has seemed about as controversial as the idea that banks should have locks on their doors. To do otherwise, to have a system of altogether “free” (fully insured) health care, would seem imprudent, irresponsible, and wasteful.
This sort of thinking particularly resonates in the West, Midwest, and South. Hailing from Arkansas, President Bill Clinton supported this cost-exposure consensus, once bemoaning that, “Too many of us have not taken responsibility. … Many of us who have had fully paid health care plans have used the system whether we needed it or not without thinking what the costs were.”
There is now a wealth of evidence about how copays and deductibles actually work. And it isn’t pretty.
In the 1970s, scientists fielded a remarkable experiment in which families were actually randomized to have large copays, smaller copays, or no copays. As predicted, those who had to pay some of the costs out of pocket spent less money on health care than those who got “free” care. Yet they seemed to cut back on care indiscriminately, avoiding both low-value care (like antibiotics for a viral infection) and high-value care (like insulin for diabetes). More recent research shows that patients primarily do what their physicians suggest. That’s not irrational, since that is why we go to doctors in the first place — they are supposed to be the experts.
Even with copays, patients are rarely able to effectively price shop for health care. A recent study out of Harvard found that when a physician recommended an MRI, patients would drive by, on average, six lower-priced providers to go to the one suggested by their physician.
Ultimately, policies with large copays and deductibles do not target wasteful spending with any precision. They just smite those who are unlucky enough to get sick. And they deny access to care for those who cannot afford the payments.
Policymakers have known about these problems for decades, and there are potential solutions. We could, for example, fully cover all high-value health care, for which we shouldn’t be using copays to discourage patients from consuming this essential care. We could also adjust copay caps for family income (which the Affordable Care Act did only in the individual market), perhaps even raising them for wealthy families to balance out the costs. Finally, we could try new mechanisms, such as premium rebates, which do not impinge on access to care.
These are admittedly technocratic reforms, tinkering around the edges, trying to make copays fulfill their theoretical promise. If Washington, D.C., was highly functional, these sorts of tailored reforms would work. But given Republicans’ utter retreat from serious policymaking on health care, perhaps Warren and Sanders have the right approach.
To get real and enduring change, we may have to turn away from substantial copays and deductibles and join the rest of the civilized world with complete health insurance. Rather than trying to get patients to second-guess their own doctors, the law should target the real drivers of wasteful spending — physicians’ conflicting interests, monopolies and market concentration of health care providers, and the lack of investment in rigorous science about what health care is truly valuable.
In this light, it is striking that moderates like Pete Buttigieg and Joe Biden are failing to really grapple with the problem of patient exposure to costs, which polls show is the single most important issue to voters, when they think about health care reform. After all, that is the issue that most directly affects their pocketbooks, at a time when they are most vulnerable and desperate. Nonetheless, the Buttigieg and Biden plans do nothing to address the growing copays and deductibles in employer-sponsored health insurance — the main source of coverage in America.
Sure, Americans may get to keep their insurance under a moderate’s reform plan. But that is the very same insurance that is failing to really secure our access to care and failing to protect us from financial catastrophe when devastating illness strikes.
Christopher T. Robertson, J.D., is professor of law and associate dean for research and innovation at the University of Arizona and author of “Exposed: Why Our Health Insurance is Incomplete and What Can Be Done About It” (Harvard University Press, 2019).