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"Patients should pay more for their health care." Both Republicans and Democrats, including President Obama, promote policies to increase patients' costs as a solution to curbing the use of "inappropriate" health care services and controlling health care costs.  The President's plan for deficit reduction refers to this idea as creating incentives for the use of "high-value services." This notion, to increase cost-sharing on the part of patients receiving health care services, is sometimes dubbed "having skin in the game." But study after study has shown that increasing "skin in the game" actually keeps people from obtaining needed health care – including primary and preventive care that reduces the need for further, more costly, acute health care services. More "skin in the game" is not the solution to escalating health care costs. Moreover, it is a prescription for poorer health, especially for ethnic and racial minorities.

The Studies

A 2008 study of women in Medicare managed-care plans published in the New England Journal of Medicine concluded that relatively small copayments were associated with lower mammography rates among women who should undergo screening mammography according to accepted clinical guidelines.[1] In fact, biennial screening rates were 8.3% lower in plans with cost-sharing as compared with plans that offered full coverage for mammography services. Worse yet, the effect of cost-sharing was magnified among women residing in areas of lower income or education levels and particularly among Black women. As the study posits, "if patients consider preventive care to be discretionary or if they simply cannot afford out-of-pocket payments, then even modest cost-sharing may lead patients to reduce their use of preventive services, with potentially negative effects on health."[2] And the costs of copayments in this study were seemingly modest – the median was $20 – but the effects were significant.

The Health Insurance Experiment (HIE), a landmark study conducted by the RAND Corporation, was completed over two decades ago, in 1982.[3]  The HIE, conducted over the course of 15 years, remains the only long-term, experimental study of cost-sharing and its effect on service use, quality of care, and health.  It compared the provision of health care that was fully covered, with health care which required cost-sharing. The absence of cost-sharing led to improvements in hypertension, dental health, vision and serious symptoms, such as chest pain when exercising, bleeding (other than nosebleed or menstrual period) not caused by accident or injury, loss of consciousness, shortness of breath with light exercise or work, and weight loss of more than ten pounds (except when dieting). Of course, manifested symptoms such as these, if treated, would lead to more (and thus more costly) appropriate health care, not less.

The HIE concluded that cost-sharing can – in some instances – reduce the use of health care services. But reduction in use of services resulted primarily from participants deciding to go without care. Once patients entered the health care system, cost-sharing only modestly affected the intensity or cost of an episode of care. Thus, reducing access to less costly primary care – by requiring more "skin in the game – does not provide meaningful savings for more costly acute health care.  Preventive care, however, is known to reduce the occurrence of acute illnesses and avoid more expensive health care costs.[4] Discouraging the receipt of primary care by imposing cost-sharing increases the need for more costly acute care, and acute care costs are not reduced by requiring more "skin in the game".  

Advocates of more "skin in the game" claim that it will reduce the use of ineffective or inappropriate health care services. But the HIE concluded that cost-sharing reduced the use of both effective and less-effective care, and created no meaningful savings on more costly acute care.

The Reality of Current "Skin in the Game"

Workers who are covered by employer health coverage already have significant cost-sharing. For example, a Kaiser Family Foundation survey found that for 2011, 99% of covered workers have copayments for a primary physician office visit of $10 or more. And 77% of covered workers have copayments of $20 or more.[5]   And these copayments generally increase for "specialist" visits.  Further, a specific co-pay cannot be properly analyzed in isolation.  Since people and families are responsible for many co-payments, one has to consider the magnitude of all co-payments combined for which the individual is responsible.  How much more "skin" can patients be expected to have in the "game"?

Ironically, Medicare beneficiaries, at whom the increased cost-sharing policies are specifically directed, spend even more on out-of-pocket health care expenses than covered workers. A separate Kaiser Family Foundation report found that in 2006, nearly 70% of Medicare beneficiaries spent more than 10% of their income on health care costs, including premiums, cost-sharing for Medicare covered services and services not covered by Medicare; average out-of-pocket spending is more than 16%.  Moreover, 25% of Medicare beneficiaries spent more than 30% of their income on health care expenditures.[6]   These high percentages have a greater impact on the nearly half of Medicare beneficiaries who have incomes under $22,000 a year. Elderly Black, Latino and other racial and ethnic minorities have even lower incomes than those of white people.[7]  Increasing out-of-pocket costs for Medicare beneficiaries would, therefore, have a greater negative impact on Black, Latino and other racial and ethnic minorities, and as established in the cited studies, is likely to lead to individuals foregoing needed health care.

Health Inequity

Increased patient cost-sharing, in addition to discouraging receipt of needed health care for everyone, has a disparate impact on racial and ethnic minorities in the United States. The absence of health equity in access to health care and health outcomes for African American, Latino and Asian people, in particular, leaves large numbers of our country's population with sub-standard health. This is neither morally acceptable nor sound fiscal policy. The Urban Institute reported in September, 2009, that, by simply addressing racial and ethnic health disparities, overall national health care costs could be reduced by nearly $24 billion per year, including $15.6 billion in the Medicare program alone.[8]


For someone who is ill, trying to manage multiple chronic conditions, or dealing with a disability on a daily basis, the need for health care is not a game. High out-of-pocket costs impact Medicare beneficiaries in particular, and have a greater impact on racial and ethnic minorities whose overall income, on average, is lower than that of white people. More "skin in the game" will only increase the difficulties that these groups, and many others, except the most affluent among us, already have obtaining access to needed care. Increasing cost-sharing for beneficiaries is a bad idea for reducing the federal deficit.  It will demonstrably not result in significant health care savings.  The Center for Medicare Advocacy has proposed several solutions to reducing Medicare's cost that do not adversely affect beneficiaries. We will continue to explore options for improving Medicare and reducing costs that don't include "games," with or without skin.




[1] Trivedi, A. M.D. et al., "Effect of cost-sharing on Screening Mammography in Medicare Health Plans", N Engl J Med 358"4 (January 24, 2008) at 375.
[2] Id., at 376.
[3] The Health Insurance Experiment:  A Classic RAND Study Speaks to the Current Health Care Reform Debate, 2006 at
[4] See, for example, Maciosek MV, Coffield AB, Edwards NM, Flottemesch TJ, Goodman MJ, Solberg LI. Priorities among effective clinical preventive services: results of a systematic review and analysis. Am J Prev Med 2006;31:52-61
[5] Kaiser Family Foundation  Employer Health Benefits 2011 Annual Survey, at  As noted above, a copayment of $20 for mammographies resulted in an 8.3% decrease in the receipt of mammagraphies. Thus, a $20 copayment for a primary physician service is likely to have a similar effect and result in a reduced rate of receiving preventive care.
[6]  Kaiser Family Foundation, Program on Medicare Policy "How Much 'Skin in the Game' Is Enough: The Financial Burden of Health Spending for People on Medicare", June 2011 at 3.
[7] Kaiser Family Foundation, "Revisiting 'Skin in the Game' Among Medicare Beneficiaries.  An Updated Analysis of the Increasing Financial Burden of Health Care Spending from 1997 to 2005.  Data Update, February 2009 at Exhibit 2.
[8]Waidman, T. "Estimating the Costs of Racial and Ethnic Health Disparities", The Urban Institute,   September, 2009, at 3.




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