How does cost sharing in health insurance impact efficient healthcare decision-making? Our research explores the broader impact on patients.
U.S. health insurance increasingly relies on patient cost sharing (e.g., co-insurance, deductibles) to prevent potential overuse of healthcare services—a concept known as “moral hazard.” While this approach can reduce immediate spending, it may also discourage use of necessary care, worsen patient outcomes and lead to potential increases in health care cost overall—raising questions about its overall efficiency.
Johnson and Johnson’s systematic review examines the empirical evidence for so-called “skin in the game” cost sharing and explores whether alternative strategies, like value-based insurance designs (VBID), can better align healthcare spending with value.
We found limited published evidence that blunt cost sharing policies lead to more efficient healthcare decision-making, yet they add a substantial burden to patients in the form of foregone treatments, financial loss and medical debt. This suggests a continuing need to develop innovative insurance benefit designs that prioritize clinical and economic value while providing access to needed treatments.
This research was funded by Johnson & Johnson Innovative Medicine and conducted in collaboration with Prof. A. Mark Fendrick of the University of Michigan Center for Value-Based Insurance Design and researchers at Precision Health, led by Dr. Jim Baumgardner. For full details on the study design, methods and limitations, see: Graf M, et al. Economic evidence on cost sharing and alternative insurance designs to address moral and behavioral hazards in high-income health care systems: a systematic review. J Mark Access Health Policy. Published online November 14, 2024. 2024;12(4):342-368. doi: https://doi.org/10.3390/ jmahp12040027