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How Not to Control Health Care Costs

Though we have a new health care law that expands access to health care for millions of Americans, its provisions to control the rising cost of health care are modest. As a result, the nation will still need to address the problem of health care expenses that  have been increasing faster than wages and that consume a larger share of GDP each year. One set of reformers argue for having patients pay directly for a greater portion of their health care expenses, thus encouraging them to better monitor their health and use medical resources more judiciously. However, a recent study in the New England Journal of Medicine suggests that having patients pay higher out-of-pocket fees for doctors’ visits can backfire, at least for elderly patients.

study of elderly patients on Medicare examined the impact of asking patients to pay higher co-pays. Compared to patients whose co-pays were unchanged, patients whose co-pays nearly doubled went to the doctor less, but were more likely to be hospitalized and spent more days in the hospital with each admission. The study concludes that higher co-pays can result in higher health care costs and worse health outcomes.