It's the Politics, Stupid: Why More “Skin in the Game” Will Not Help Control US Healthcare Spending

Abstract

Purpose – To assess the claim of moral hazard proponents that individuals insulated from paying for the health care they use tend to demand more, often unnecessary, services, or engage in unhealthier behaviors than they otherwise would, collectively driving up demand and increasing health care spending (HCS).

Methodology/Approach – To test the hypothesis that moral hazard increases rather than decreases HCS, I apply a multivariate analysis to examine data from 21 OECD countries over a 20-year period, using out-of-pocket spending (OPS) as a proxy for moral hazard and as the key variable predicting HCS, controlling for other potential drivers of spending.

Findings – OPS is independently associated with HCS, yet in the direction opposite to what moral hazard theory predicts – about $13 higher HCS per additional $10 OPS (p = 0.000).

Research limitations – As with other cross-national studies, limitations include (1) inability to assess differences in health care delivery and quality within and across countries; (2) differences in the measurement and availability of variables across countries; (3) lack of access to data of potential significance, and (4) hard to evaluate cross-national political and cultural differences with implications for health policy.

Policy implications – At least in the United States, unless a fully publicly financed system to cover medically necessary services is implemented, the policy goals of extending adequate health insurance to a national population and controlling HCS nationally will not be met.

Originality/Value of Paper – Most research on moral hazard in US health care has drawn from comparisons within rather than among national health systems. Therefore, the originality and value of this cross-national study lies in its ability to identify variables that could not be included in single nation studies and which have the ability to inform policy and political action.

Citation

Chaufan, C. (2020), "It's the Politics, Stupid: Why More “Skin in the Game” Will Not Help Control US Healthcare Spending", Kronenfeld, J.J. (Ed.) Race, Ethnicity, Gender and Other Social Characteristics as Factors in Health and Health Care Disparities (Research in the Sociology of Health Care, Vol. 38), Emerald Publishing Limited, Leeds, pp. 163-179. https://doi.org/10.1108/S0275-495920200000038013