Why cost sharing should be abandoned

Down With the Copay

By Natalie Shure
Jacobin, October 6, 2017

In the week preceding the release of Bernie Sanders’s Medicare for All bill, the Vermont senator’s office was flooded with calls — so many, in fact, that the legislative aides on the other line often guessed callers’ purpose before being prompted. At issue was whether the single-payer health care system Sanders’s bill envisions should include copayments, out-of-pocket payments for health services at the point of care.

For the single-payer advocacy group Physicians for a National Health Program (PNHP), the answer was a resounding “no.” So upon discovering that copays remained in Sanders’s penultimate draft, they sprang into action. After a week of open letters, tweets and appeals from like-minded organizations, Sanders ultimately struck copays from the bill’s final version.

Earlier versions of Sanders’s bill probably included copays for doctors visits and prescription drugs for the same reason that economists like them: they drive down health care usage and costs. After all the attacks branding Sanders’s relatively pedestrian social-democratic platform as fantastical promises of ponies for all, perhaps Sanders’s legislative aides believed meager copays gave their proposal an air of seriousness.

But the obliteration of copays isn’t a bug in the thinking behind Medicare for All — it’s the feature.

“Cost-sharing” features like copays, coinsurance, and deductibles are major manifestations of market logic in the US health-care system. If we want to overturn for-profit health care’s rebranding of “patients” as “consumers,” we have to eliminate financial barriers at the point of care.

The cliched justification for charging copays is to relieve doctors’ offices of the burden of patients showing up at the first sign of a sniffle. (Never mind that we observe no such behavior among the wealthy, for whom copays are no barrier.) But we do know that even meager copays make people seek less care, and that the poor suffer worse health outcomes as a result.

“I spent my entire career taking care of low-income people, and trust me — a copayment will keep people away from a doctor. I’ve seen it again and again in my practice,” Dr. Steffie Woolhandler, the co-founder of PNHP, told me over the phone. “It’s a huge amount of money for a low-income person.”

While several countries with universal health care systems do charge copayments at the point of use, they don’t tolerate the amount of poverty that we do in the United States. No other wealthy country does. In a grotesquely unequal society, a copayment doesn’t create “better consumers” of care — it helps us scrimp by shoving the most powerless out of the system.

Over decades of bending over backwards to accommodate the internal contradictions of the private health insurance industry, few made the one point that really mattered: we never built an insurance system that strove to guarantee universal health care; we built one that strove to protect capitalists’ profits. We can build one based on addressing all people’s health care needs right now.

Medicare for All could create a universal health-care system designed to provide health care for everyone. The logic of the market has no place in such a system. Winning a truly universal system means zero deductibles and zero copays.


Physicians for a National Health Program, August 23, 2017

Dear Senator Sanders:

We are writing to express our concern about elements of your draft single payer legislation, especially the inclusion of copayments for medically-necessary care.


Copayments undermine the goal of eliminating financial barriers to care, a goal that is at the heart of our single-payer advocacy. Copayments, even relatively modest ones, deter patients from seeking needed medical care.

For instance, in the Rand Health Insurance Experiment, compared to persons with entirely free care, those with copayments (as low as 16% of costs) reduced their use of essential and low-value medical services to a similar degree. Among non-poor adults, copayments reduced the use of “highly effective” care for acute conditions such as chest pain, urinary tract infections and fractures by 29% and “rarely effective” care (e.g. for a cold) by 22%. Highly-effective care for chronic conditions fell by 15%, and for acute-on-chronic conditions fell by 21%. For non-poor children, copayments reduced highly-effective care (e.g. for ear infections and strep throat) by 15%, and cut well-child visits by 21%. Cost sharing reduced prescriptions for several potentially life-saving medications such as insulin, asthma inhalers, and beta blockers by about 50% and oral contraceptive use by 25%. While the Rand Experiment was too small and too short to detect the expected deleterious outcomes of these shortfalls in care, it documented that copayments resulted in significantly worse control of blood pressure, a key cause of heart attacks, kidney failure and strokes.

More recent studies confirm the health-endangering effects of out-of-pocket charges for care. Among persons with employer-paid coverage, raising out-of-pocket charges cut care much more for those in poor health. When Medicare added new copayments, outpatient visits dropped but hospitalizations rose. Among insured post-heart-attack patients, eliminating medication copayments increased compliance, and (for minority patients), led to a 35% reduction in major complications such as recurrent heart attacks. Similarly, among insured school-age children with asthma, those with higher copayments used fewer medications but had a 41% greater risk of asthma-related hospitalization. For nearly one- third of lower-income asthmatic children with high-cost-sharing coverage through the Kaiser Health Plan, parents reported delaying or avoiding outpatient visits, and 14.8% reported non-adherence to medications because of cost. The low income group in the study included those with family incomes up to 250% of poverty, some of whom would be hit by copayments under the proposed legislation. In that study, 15.6% of all parents (including those with higher incomes) reported borrowing money or cutting back on necessities to pay for their children’s asthma care.

Paradoxically, the reduction in care-seeking because of copayments may fail to cut system-wide utilization, instead shifting care from sicker and lower-income persons to the healthy and wealthy. When lower-income patients avoid care, doctors and hospitals fill the empty appointment slots and beds with less price-sensitive patients, an example of supply-sensitive demand.

International evidence indicates that cost-sharing is neither necessary nor particularly effective for cost control. Canada, which outlawed copayments and deductibles in 1981, has seen both faster health improvement and slower cost growth. Notably, Canada experienced no surge in care when it abolished copayments. Similarly, in the U.S. there was no overall increase in doctor visits or hospitalizations when Medicare and Medicaid were first implemented in 1966; care shifted from more affluent and healthier persons to those who were sicker and poorer. Scotland, which has eschewed patient payments—even going so far as to abolish parking fees—has costs about half those in the U.S. Strikingly, the U.S. has the world’s highest health care expenditures despite its extensive patient cost sharing.

The inclusion of copayments would also undermine the breadth of support for single-payer reform. Many Americans would see no improvement in their current coverage. In 2014, about 28% of Americans incurred no out-of-pocket costs, and 84.3% had out-of-pocket costs of less than $1,000. For them, the proposed coverage would not reduce out-of-pocket costs, at least in the short run. About 5% of those with employer coverage—about 8 million people—currently have plans with zero deductibles and zero copayments. They would have worse coverage under the proposed reform.

Finally, retaining copayments would substantially diminish the administrative savings achievable through a single-payer reform. In order to implement copayments, the single payer insurer would need to track individuals’ changing incomes, family status (to calculate their income relative to the poverty level) and their copayments to date (to ascertain whether they’ve exceeded the out-of-pocket cap), and make that information available in real time to every hospital, clinic, lab, doctor's office, etc., in the U.S. Providers would need to collect the copays, and bill patients unable to pay at the time of a visit.


In sum, Physicians for a National Health Program cannot endorse or wholeheartedly advocate for a reform that includes copayments for medically-necessary services. While we would welcome the proposed reform as a useful step forward in advancing health justice, the persistence of copayments would unacceptably compromise the legislation’s ability to improve health and foster equality in care. We urge you to reconsider the inclusion of copayments.


David U. Himmelstein, M.D., Co-founder PNHP
Carol Paris, M.D., President, PNHP
Steffie Woolhandler, M.D., Co-founder, PNHP

References available at link:



By Don McCanne, M.D.

It is irrefutable that deductibles, copayments, and coinsurance cause patients to forgo beneficial health care services, and that often results in physical suffering and sometimes death. For those who cannot avoid health care, financial hardship is frequently a consequence.

A health care financing system should be designed to assist patients in getting the health care they should have by removing financial barriers to care. Since cost sharing has the opposite effect, it should be abandoned as a policy designed to reduce health care spending. There are other much more patient-friendly policies in a well-designed single payer system that are more effective in containing health care spending.

It is a specious argument that people who do not need health care will seek health care anyway simply because it is free. Some say that it would reduce low-value care, but what is low-value care? When a patient is legitimately concerned about his or her health but then doesn’t require any therapeutic intervention other than reassurance, is that low-value care? No. We want patients to come in to reassure them and ourselves that there isn’t anything more serious that requires medical intervention.

The letter by Himmelstein, Paris and Woolhandler provides an excellent explanation as to why cost sharing should be rejected - why individuals should be approached as patients rather than as consumers.

Their letter also demonstrates that it is imperative that we all continue to speak up with the truth about health care reform. Important people are listening.

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