Scrimping On Medical Out-Of-Pocket Expenses While Splurging On Luxury Items

Is it good or bad to ask patients to pay for a portion of their health care with their own money, i.e., "out of pocket?"

If you think it's good, you probably believe that consumers need to bear some of that cost and that markets can drive wise-decision making.  You like to quote the famous RAND study. 

If you think it's bad, you probably believe cost-sharing can cause persons to withhold needed care and paradoxically can cause unwise decision making.  You probably like to quote studies like this.

Which reminds the Disease Management Care Blog of a patient named Victor (not a real name), who refused to get his yearly diabetic A1c blood test because it was going to cost him $5.  He understood the importance of the test but thought the charge was simply too much. The exasperated DMCB knew the guy had a nice car and could afford it.  It figured, given a choice between foolish luxury and good health, this patient was being shortsighted.

This behavior isn't unknown to managed care executives, who know that many of their middle class and employed enrollees come from socioeconomic backgrounds that make it very possible to pay five lousy bucks for a blood test.  While it's an issue for indigent patients, if well off and rational patients "choose" to not invest in their own health, that's not the fault of the insurer, is it?

Which is why the DMCB found this New York Times article on consumer scrimping and indulging fascinating. In response to our "new economy," Americans are cutting back on common household staples and simultaneously splurging on luxury items. When it comes to items like household cleaners, shampoo and batteries, consumers are squeezing pennies.  Yet, the sales of high-end handbags, shoes and watches are going strong.

The conclusion of the Times' article is that the wear and tear of daily sacrifice results in an occasional need to indulge. Maybe persons think they deserve an occasional reward or just get tired of doing with less, but whatever the cause, this has important lessons for the pricing of health insurance deductibles, co-insurance and co-pays:

1) enrollees use completely different standards when it comes to willingness to pay for "necessities" versus paying for "extravagance." If it's a "necessity," patients like Victor will say no if the price point is too high.

2) just because enrollees could economically "afford" a relatively small fee for a medical service doesn't mean they'll perceive that they can afford it.  For Victor, $5 was too much.

Make sense?  Maybe not to the DMCB, but that's the reality of health care consumerism. Health insurers should pay close attention and wonder if it could be their fault.