Cost-Sharing: Effects on Spending and Outcomes

As health reform drives the largest expansion of health insurance since Medicare and policy-makers grapple with how to slow the increase in health care spending, cost-sharing—the division of health care costs between patients and insurers—is considered an important tool. This synthesis reviews the evidence on cost-sharing.

Key findings include: Research consistently shows demand for health care is price sensitive, but it is unlikely cost-sharing will significantly slow the growth of health care spending. Almost 50 percent of costs are associated with the 5 percent of the population facing serious medical conditions. Studies show these patients rely on their doctors to guide treatment decisions. Increased cost-sharing may shift the financial burden from insurers and public payers to patients. Patients are not able to discern between appropriate and inappropriate care in response to increased cost-sharing. For the average person, increased cost-sharing may not adversely affect their health, but for vulnerable populations, increased cost-sharing is associated with adverse health outcomes. Low-income populations are disproportionately affected by increased cost-sharing. People in poor health respond differently to cost-sharing changes than healthy people. Finally, cost-sharing is not well-targeted on low-value services making it difficult for patients to make appropriate decisions.