CAN IT SAVE MONEY AND IMPROVE PATIENT

Chronic diseases account for three-quarters of all U.S. health care costs and two-thirds of all U.S. deaths.i Recent efforts by health care purchasers to control spending have focused on paring back benefits or shifting costs onto patients, including those with chronic diseases. This strategy reduces employers ’ and government’s share of health care costs and, theoretically, makes patients more sensitive to price. However, cost sharing imposes disproportionate burdens on vulnerable groups, namely the poor and those with chronic conditions. Such patients are indeed sensitive to price and respond by skipping needed treatment. Evidence for this effect can be drawn from the RAND health insurance experiment which showed that patients randomized to a high deductible plan used 25 to 30 percent fewer services than those in a comprehensive, free care plan.ii Other studies have shown that finan-cial barriers to chronic disease care, such as copayments and coinsurance, lower drug compliance and increase use of expensive hospital services.iii In fact, one study found that 33 to 69 percent of medication-related hospital admissions in the United States are due to poor adherence and cost $100 billion a year.iv In fact, a somewhat counterintuitive approach—reducing or eliminating patient cost-sharing for chronic disease care for certain patients—may be a more effective way to both improve patien