Skin in the game

June 19, 2005

IT SOUNDS logical that patients with health insurance would be less likely to seek unnecessary tests and treatment if they had to bear some of the cost - had "some skin in the game," as Arkansas Gov. Mike Huckabee put it the other day.

In fact, co-pays and deductibles work well in employer-sponsored plans for middle-income workers to discourage overuse of specialists and frequent trips to the doctor's office.

Erecting such barriers in Medicaid, though, as the National Governors Association recommends, would likely cost more than it would save. Experiments in Oregon and elsewhere reveal that effectively denying access for impoverished patients to early treatment for injury and disease simply increases the odds that they will wind up in a hospital emergency room to receive the most expensive of all medical care.

The governors' embrace of this penny-wise, pound-foolish proposal mars an otherwise thoughtful attempt to address the skyrocketing costs of health care threatening to either shred the safety net serving 53 million people or bankrupt state governments.

Seeking deeper discounts from pharmaceutical manufacturers - not just pharmacists, as President Bush proposes - is an obvious improvement the governors say could save many billions of dollars. Tax credits to help employers maintain health benefits for workers could keep them off Medicaid rolls.

The governors are also correct that Medicaid should be spared the crushing burden of long-term care, which it now provides not only for the poor elderly but for much of the aging middle class.

Tighter rules are required to ensure that people who can afford to pay for nursing homes aren't transferring all their assets to relatives in order to stick the taxpayers with the tab. Meanwhile, greater tax incentives must be provided for long-term care insurance or other financing for end-of-life care.

Designing insurance packages to fit the varying needs of Medicaid beneficiaries - single individuals, families with young children or the elderly - also seems a sensible update. But setting premiums and co-pays should never be done with the notion that Medicaid beneficiaries have no "skin in the game." No one has more at stake.

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