The views expressed by contributors are their own and not the view of The Hill

It’s hard to be economically rational when you’re sick


We may be in the early days of a changing political ideology. For decades, politicians on both sides have espoused the belief that copayments and other out-of-pocket charges are necessary to reduce consumer demand for health care. The simple economic argument goes: If patients “feel” some of the health-care cost, those patients will make more prudent health-care choices and forego unnecessary care.

Recently, Food and Drug Administration (FDA) Commissioner Scott Gottlieb openly questioned these long-held cost-sharing principles. In his prepared remarks, Commissioner Gottlieb posited with regards to copayments on chemotherapy drugs, “Is a patient really in a position to make an economically-based decision?…Of course not.”

{mosads}While this exception to economically-rational behavior seems intuitive to many, it is a notable departure from the political rhetoric dating back to the beginning of Medicare. Democratic President Johnson expressed his concern that people would abuse the newly-formed Medicare benefit by demanding unnecessary treatment.


As a result, Medicare was installed with several cost-sharing features. Republican President Nixon was similarly committed to this ideology and advocated for deductibles and coinsurance mechanisms to encourage efficient use. In more recent history, Democratic President Obama maintained significant cost-sharing provisions — particularly in the high-deductible plans — in his expansion of health insurance.

In keeping with his predecessors, Republican President Trump campaigned with messages of increased dependence on health savings accounts and emphasized that consumers ought to be able to shop for the best prices on health-care goods and services.

Upon assuming the presidency, Trump persisted in this course, most publicly by cancelling the government cost-sharing subsidies and weakening the mandate that provides for birth control without copayments.

The strict uniformity of past ideologies make Gottlieb’s frank and divergent comments remarkable. His plain-language rejection of a sick person’s ability to rationally respond to economic incentives is novel in the political sphere, but intuitive to those who study patients.

Research dating back to the 1970s shows that increased cost-sharing predictably reduces consumer demand for health care. The trouble is that these reductions are generally indiscriminate — where patients forego necessary and unnecessary care at similar rates. Recent studies have shown similar behaviors even when patients are given tools to help them shop for health care more effectively.

It seems that exposing patients to more of the cost may save our system money in the short run, but the long-run implications are potentially devastating. If conditions like diabetes or high blood pressure are left unchecked in their more-treatable early stages, they morph into chronic diseases with costly and debilitating consequences. This is part of the reason why other countries have much lower patient cost-exposure, but also much more efficient health systems overall.

The vast majority of health spending is consumed by those unlucky enough to have very large expenses in any given year. The point of insurance is to spread those costs so they are not devastating to any individual. Cost-exposure undermines this primary function of health insurance, as it causes the sickest individuals to pay for their own care rather than having those costs spread through the insurance pool. As Gottlieb said, “sick people aren’t supposed to be subsidizing the healthy.” It is refreshing to see a dose of common sense from this former physician.

Commissioner Gottlieb’s public realization paves the way to consider alternative — and potentially more effective — forms of cost and use policies. After all, when your oncologist recommends a new off-label cancer drug that may save your life, who among us is ready to reject that recommendation on the basis of price?

One such alternative is increased reliance on “supply-side” controls that are intended to change the behaviors of physicians, hospitals, and commercial entities in health care. This strategy assumes that those supplying health care may have greater control over its efficient use than those demanding care. Many countries outside of the United States lean heavily on this strategy to successfully curtail costs, and current U.S. efforts towards “accountable care organizations” are a move in this direction.

While Gottlieb’s FDA has no formal role in insurance regulation and policy, we can only hope that his sentiments are shared by members of the administration who do. Maybe we will look back on the era before these early days of ideological change in disbelief — wondering how we once expected someone burdened by illness to make savvy economic choices as if they were buying a new smartphone?

Christopher Robertson, JD, PhD is professor and founding faculty chair of the regulatory science program at University of Arizona. Victor Laurion, MD is an independent researcher and former Resident Physician in the Departments of Emergency Medicine and Pediatrics at the University of Arizona.

Tags Copayment cost-sharing Donald Trump FDA Health care in the United States Health economics Healthcare reform in the United States Medicare Scott Gottlieb

Copyright 2023 Nexstar Media Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

More Healthcare News

See All
See all Hill.TV See all Video

Most Popular

Load more


See all Video