Moral hazard in insurance, value-based cost sharing, and the benefits of blissful ignorance

Many health plans have instituted more cost sharing to discourage use of more expensive pharmaceuticals and to reduce drug spending. To determine how changes in cost sharing affect use of the most commonly used drug classes among the privately insured and the chronically ill. Retrospective US study conducted from 1997 to 2000, examining linked pharmacy claims data with health plan benefit designs from 30 employers and 52 health plans. Participants were 528,969 privately insured beneficiaries aged 18 to 64 years and enrolled from 1 to 4 years (960,791 person-years). Relative change in drug days supplied (per member, per year) when co-payments doubled in a prototypical drug benefit plan. Doubling co-payments was associated with reductions in use of 8 therapeutic classes. The largest decreases occurred for nonsteroidal anti-inflammatory drugs (NSAIDs) (45%) and antihistamines (44%). Reductions in overall days supplied of antihyperlipidemics (34%), antiulcerants (33%), antiasthmatics (32%), antihypertensives (26%), antidepressants (26%), and antidiabetics (25%) were also observed. Among patients diagnosed as having a chronic illness and receiving ongoing care, use was less responsive to co-payment changes. Use of antidepressants by depressed patients declined by 8%; use of antihypertensives by hypertensive patients decreased by 10%. Larger reductions were observed for arthritis patients taking NSAIDs (27%) and allergy patients taking antihistamines (31%). Patients with diabetes reduced their use of antidiabetes drugs by 23%. The use of medications such as antihistamines and NSAIDs, which are taken intermittently to treat symptoms, was sensitive to co-payment changes. Other medications--antihypertensive, antiasthmatic, antidepressant, antihyperlipidemic, antiulcerant, and antidiabetic agents--also demonstrated significant price responsiveness. The reduction in use of medications for individuals in ongoing care was more modest. Still, significant increases in co-payments raise concern about adverse health consequences because of the large price effects, especially among diabetic patients.

Policies that increase patients' share of health care expenses decrease the use of discretionary health services but also may reduce the use of important preventive care such as mammography. We reviewed coverage for mammography within 174 Medicare managed-care plans from 2001 through 2004. Among 550,082 individual-level observations for 366,475 women between the ages of 65 and 69 years, we compared rates of biennial breast-cancer screening in plans requiring cost sharing for mammography with screening rates in plans with full coverage. We also performed a longitudinal analysis of screening rates in plans that changed from full coverage to cost sharing for mammography as compared with rates in matched control plans that did not institute cost sharing. The number of plans with cost sharing for mammography, which we defined as requiring a copayment of more than $10 or coinsurance of more than 10% for screening mammography, increased from 3 in 2001 (representing 0.5% of women) to 21 in 2004 (11.4% of women). Biennial screening rates were 8.3 percentage points lower in cost-sharing plans than in plans with full coverage, a difference that persisted in adjusted analyses (P<0.001). The effect of cost sharing was magnified among women residing in areas of lower income or educational levels (P<0.001 for each interaction). Screening rates decreased by 5.5 percentage points in plans that instituted cost sharing and increased by 3.4 percentage points in matched control plans that retained full coverage (P<0.001 for the adjusted analysis). Relatively small copayments were associated with significantly lower mammography rates among women who should undergo screening mammography according to accepted clinical guidelines. For effective preventive services such as mammography, exempting elderly adults from cost sharing may be warranted. Copyright 2008 Massachusetts Medical Society.