Thoughts on cost-sharing
Civitas, 23 July 2009
Twenty pounds to see your GP? The headlines are ablaze with the recommendation made this week by the Social Market Foundation in the report ‘From Feast to Famine: Reforming the NHS for an age of austerity’. The charge is suggested as a mechanism to constrain growth in demand for health care.
It’s interesting (although predictable) that the media have chosen that particular recommendation to highlight. Knocking on any one of those three founding principles of the NHS—universality, comprehensiveness, or free care at the point of delivery—is bound to get readers riled up. It is also why politicians have shied away from policies that would so much as touch any of these concepts for the past 60 years. But cost-sharing has a purpose, and with tightened budgets and escalating prices of treatment ahead, it may be time the NHS took a second look at the idea.
Cost-sharing essentially means that the patient pays some part of the cost of his or her treatment at the time of delivery, usually through one of three mechanisms: coinsurance (patient pays a percentage of the total cost), copayment (patient pays a fixed charge per service), or deductible (patient pays full costs up to a ceiling). The intention is that when patients are aware their healthcare transactions have a monetary value, especially one they are on some level responsible for themselves, it should decrease unnecessary demand and ultimately decrease system costs.
But what is unnecessary demand? In theory, those people with a minor cough or backache, perhaps someone simply seeking a sick note from work or school, or an anxious new mother who brings her child to the GP each time it sniffles, would all be persuaded to reconsider if they had to part with £20 in order to do so. The major drawbacks are probably obvious—what if these people are indeed truly ill and simply decide the charge is too much to pay? Although it was completed over two decades ago, the premier piece of research on the subject, the RAND Health Insurance Experiment (HIE), indicated these concerns might not be unfounded.
The HIE was a large-scale, randomised experiment conducted between 1971 and 1982. For the study, RAND recruited 2,750 families encompassing more than 7,700 individuals, all of whom were under the age of 65. Each family was assigned to one of five ‘free care’ or cost-sharing insurance plans. The poorest and sickest six percent of the sample at the start of the experiment had better outcomes under the free plan for four of the 30 conditions measured. Specifically, free care improved the control of hypertension. The poorest patients in the free care group who entered the experiment with hypertension saw greater reductions in blood pressure than did their counterparts with cost sharing, and the projected effect was about a 10 percent reduction in mortality for those with hypertension.
This potential to adversely affect the economically disadvantaged is well known, which is why most cost-sharing proposals should take ability to pay into consideration, and the SMF report does—suggesting families receiving tax credits should be exempt from all NHS expenditure. (They also suggest capping total annual out-of-pocket contributions at £100 for all individuals). As expected, however, the HIE showed a reduction in demand for all services in the cost-sharing groups, and in general, the reduction in service use had no adverse effect on participants’ health.
I do want to add though, that I think £20 is too high for a GP visit. In France, for example, co-pays are around 22 Euros, but patients then claim back 75-80% through their social insurance fund. Another way to look at it: Insurance co-payments in the U.S. vary by insurer, but for a GP appointment a patient will usually pay around $15 (some total contributions are capped, some are not). Average salary for a man in 2007 was $45,113. Average salary for a man in the UK was £27,500. Currency conversion aside, £20 per visit would clearly be larger percentage of income.
Right now the only form of cost-sharing in the UK is payment of prescription charges. It is true that the public contributes to NHS funding through substantial taxation, but this process leaves patients disconnected from and perhaps unaware of the monetary value of their healthcare transactions.
If the government were to try to build support for some form of cost-sharing, it would probably need to begin by publishing and justifying the percentage of salaries currently put toward the NHS. It might be helpful for us all to see just how much we are contributing to health care as it is and to consider whether or not we feel we are getting our money’s worth.
At present over 80 % of scripts are free to the patient- ie the vast majority are collected by patients who do not pay . If that threshold were applied to doctor charges a similar pattern, perhaps not quite so extreme, would emerge. Lots of not – so- well- off would be hit, many less deserving folk would not. To make it work you would have to have the courage to apply it to everyone, except small children, who could be exempted. It works well in Australia. I think we should accept the projected 10% mortality and implement it. Every system has drawbacks, we cannot be blackmailed by a theoretical risk.
Over 80 % of prescriptions are free to the consumer. ie the vast majority of prescriptions are taken up by people who are below the threshold for payment. If the same thresholds were applied to GP visits, a similiar pattern would emerge. The working not- very well- off would be hit, many who are less deserving would not. They would have to have the courage to apply it to all groups and accept the projected 10 % mortality. Small children could be exempt from payment. On that basis I think it could work.
Hello Laura,
I like the idea of a cap on any proposed charges to see the doctor. It would mean that those like myself with permanent medical conditions but still able/willing to work are not penalised for standing on our own mettle.
I would also like everyone regardless of circumstances to pay a small fee for their prescriptions say £3.00 this would raise some income for the nhs and people like myself, the working poor, would feel somewhat less victimised because everyone would now pay and contribute, albeit in a small way.
Hi Mike,
You’re right, monthly prescriptions are expensive. If charges to see a GP were implemented, I think that a) the government would first have to explain and justify how much each of us is contributing to the NHS as it is (and perhaps lower those contributions), and b) ensure there was a cap – as the SMF proposes, for example, at £100 total per year.
Laura
I have a problem with paying to see the doc.
It goes like this. Iam on monthly medication ad infinitum, each time i que up at the chemist i become depresed as i reach the counter the assistant asks “do you pay for your prescription?” “yes” i retort.
The assistant looks back in astonishment.
“No one else does” she adds.
So after many more visits i asked the chemist how many of his cutomers actually pay for their medication….? 3 was his reply. i would imagine that his customer base is in the hundreds, you can see that iam a one of a very small minority of paying cutomers.
Now apply the above scenario to the idea of paying to visit your GP
It Is clear that working people on low to average incomes would be penalised yet again, we would have to pay. While the majority would not.
What iam trying to say is that people like me, who work, but dont earn a lot of money are fed up of supporting the welfare state, via ever increasing government demands on our wage packet, to the point where there becomes no point in working as there is very little left of your earnings to make it worth while. And a career on state hand outs then becomes a better financial option.