A ‘skin in the game’ experiment

Do Americans use less health care when it costs more? That’s the question at the heart of debates over “skin in the game:” the idea that cost-sharing for medical services reduces utilization. A landmark study by the Rand Corporation in the 1970s found that even a modest level of cost-sharing led to patients using less health care. But some have pushed back against that conclusion using other data.

Now, a new journal article in Health Affairs adds a bit of a wrinkle to the body of evidence. It finds that reducing cost barriers to preventive medical services — essentially eliminating any skin in the game — does not increase utilization.

Recent changes to the Mayo Clinic’s health insurance plan created an interesting natural experiment for this. In 2004, the Minneapolis-based health care system got rid of co-pays for a few preventive services, including mammograms and colonoscopies. It also added in cost-sharing for speciality-care visits and outpatient care, among other things.

Four years later, the Mayo Clinic saw significantly lower use of the services that required cost-sharing. “A modest amount of cost sharing,” the Mayo Clinic researchers found, “had an important and sustained effect on health care use.” Here’s what that looked like for specialty care:

But, interestingly, eliminating cost-sharing for preventive services didn’t have the same effect. Mayo Clinic’s beneficiaries didn’t use more primary care services “even though the change made all primary care visits free to beneficiaries.” Instead, patients sought out the same amount of primary care that they had prior to the changes in cost-sharing.

While other research has suggested that adding co-pays reduces use of preventive services, this Mayo study indicates it might not work the other way around. Taking away cost-sharing doesn’t necessarily encourage more primary care use. Sticks, it seems, are more powerful incentives than carrots in this case.

The finding in the Health Affairs study could ripple nationally: One key way the health reform law looks to expand access to preventive care is by removing any cost-sharing for such services. That, the thinking goes, will reduce health care costs by treating health problems before they become more costly. This new study suggests that may not be the case, that patients may use the same amount of preventive services that they previously did, even if there’s no skin in the game required.