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17 April 2007 | Volume 146 Issue 8 | Pages 602-605
As the financial burden of cost sharing continues to rise, patients increasingly avoid necessary care, thereby contributing to the high morbidity and mortality of the U.S. population compared with that of other developed countries. The rationale for cost sharing is often based on the moral hazard argument, which states that individuals may overuse care if they do not share in its costs. We evaluate this argument in detail, using it to distinguish between appropriate and inappropriate settings for cost sharing. Cost sharing may be appropriate when health services are of low value (low ratio of benefits to costs), whereas it is inappropriate when health services are of high value (high ratio of benefits to costs). In practice, cost sharing is rarely linked to value, and therefore much of the cost sharing that currently occurs is inappropriate and harmful. Cost-effectiveness analysis is an objective method to estimate the value of health services and may be a way to systematically evaluate whether cost-sharing policies are appropriate. Systematic efforts to discourage inappropriate cost sharing may improve public health.
Author and Article Information
From Yale University School of Medicine and Veterans Affairs Connecticut Healthcare System, New Haven, Connecticut, and University of Michigan School of Public Health, Center for Practice Management and Outcomes Research, and Ann Arbor Veterans Affairs Medical Center, Ann Arbor, Michigan.
Grant Support: By grant K23 AA14483-01 from the National Institute of Alcohol Abuse and Alcoholism.
Potential Financial Conflicts of Interest: None disclosed.
Requests for Single Reprints: R. Scott Braithwaite, MD, MSc, Section of General Internal Medicine, Yale University School of Medicine, Veterans Affairs Connecticut Healthcare System, Mailstop 11 ACSLG, 950 Campbell Avenue, New Haven, CT 06516; e-mail, ronald.braithwaite{at}va.gov.
Current Author Addresses: Dr. Braithwaite: Section of General Internal Medicine, Yale University School of Medicine, Veterans Affairs Connecticut Healthcare System, Mailstop 11 ACSLG, 950 Campbell Avenue, New Haven, CT 06516.
Dr. Rosen: Division of General Medicine, Department of Health Management and Policy, University of Michigan School of Public Health, Center for Practice Management and Outcomes Research, Ann Arbor Veterans Affairs Medical Center, North Ingalls Building, 300 North Ingalls, Room 7E10, Ann Arbor, MI 48109-0429. PERSPECTIVE
Linking Cost Sharing to Value: An Unrivaled Yet Unrealized Public Health Opportunity
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