According to EBRI, coinsurance reduces use of inpatient care and specialist physician office visits more than copayments do. (Photo: Shutterstock)
Not all of an employer's health insurance plan participants are the same. As a general rule, 20% of the population accounts for about 80% of health-care spending.
Recent research found that many high-cost claimants reach not only their deductible but also their maximum out-of-pocket limit. In essence, for these individuals, use of health-care services early in the year affects what they pay at the end of the year. Because deductibles often are satisfied early in the year by high users of health-care services, it can be argued that it is the end-of-year price that matters most in decision making.
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The Employee Benefit Research Institute compared the effects of copayments and coinsurance on use of health-care services.
"Why would we expect to find differences in behavior by whether an individual faces copayments or coinsurance after they reach their deductible?" the study's authors asked. "Prior studies often found that individuals are not forward-looking when it comes to prices for health care. The same may be true when it comes to type of cost-sharing. Before an individual reaches their deductible, they will know what the price of health care is if they face copayments after reaching their deductible.
"Copayments are well-defined and known before health-care services are used. Coinsurance is less well-defined when it comes to knowing the price of a health-care service in advance of using the service. The uncertainty of coinsurance relative to the certainty of copayments may mean that coinsurance has a differential impact on use of health-care services compared with copayments."
The study reached three general conclusions.
1. Coinsurance reduces use of inpatient care and specialist physician office visits more than copayments do.
2. However, while most employers already use coinsurance for inpatient care, only 44% use coinsurance for office visits. This suggests that employers seeking to manage use of health-care services and spending, especially among high users, may consider moving from copayments to coinsurance for office visits as a way to do so.
3. Coinsurance reduces use of inpatient care and specialist physician office visits more than copayments.
In contrast, copayments reduce use of primary care office visits more than coinsurance. Otherwise, copayments and coinsurance had about an equal effect on the use of the other health-care services examined. Most employers already use coinsurance for inpatient care, although less than half use it for office visits.
"If an employer is seeking to manage use of health-care services and spending — especially among high users of health-care services — moving from copayments to coinsurance for specialist office visits could provide a viable alternative," the authors concluded.
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Alan Goforth
Alan Goforth is a freelance writer in suburban Kansas City. In addition to freelancing for several publications, he has written a dozen books about sports and other topics.
