Dear Science,

I know you're in favor of the public option, but hasn't private insurance reduced costs? I mean, we need to get health-care costs under control. Don't things like co-pays and deductibles—both inventions of the private insurance industry—at least help to keep people from coming in for unnecessary medical care? At least people have some reason to think before showing up at a doctor's office or emergency room with every sniffle. Aren't they more rational solutions to overutilization of medical care than, say, first-come-first-served waiting lists?

Rationally Penny-Pinching

Science is hearing much about "behavioral economics" as the lovely notion at the core of the (now gutted and insurance-industry-friendly) health-care reform bill passed in the Senate. And, indeed, things like even more deductibles and co-pays are part of the mix, as well as a threat to tax "Cadillac health plans" that are more generous and eschew such (dubious) attempts at cost control. The notion is this: People are rational, particularly when it comes to spending money. Thanks to the co-pay or deductible sharing the costs between insurer and patient, the individual can make a rational decision about whether a bit of medical care is really needed. The hideous term "moral hazard" gets thrown around when insurers are expected to cover all costs—meaning if the benefit were split from the payer, people would have no limit to the number of times they'd drag themselves to the doctor.

However, the more rigorous aspects of behavioral economics demonstrate that people are rarely that rational when making decisions about spending money. We often fall back on rules of thumb and biases that are based on past experience rather than objective pros and cons. Both co-pays and deductibles distort how we think about health care in ways that ultimately make things more expensive.

Over the long and medium term, spending on preventative care saves vast sums of health-care dollars. The annual visits—cholesterol and blood-pressure checks, harangues to eat better, exercise, and quit smoking—have been shown to work, to allow people to live longer, better lives that cost less to maintain. Even if a health-insurance plan doesn't apply co-pays or deductibles to such preventative care, the sour taste from having to pay out-of-pocket from previous (nonpreventative) visits provides a powerful framing and rule of thumb against the decision to take care of yourself before the looming catastrophe. The legacy of co-pays and deductibles is that Americans avoid going to the doctor when we should, waiting until we have no choice, and the interventions are costly and ineffective when we finally relent and seek care.

Framingly Yours,


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