When a Co-Pay Gets in the Way of Health -by By SENDHIL MULLAINATHAN - 0 views
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Frederick Smith on 11 Aug 13'A few drugs - such as beta-blockers, statins and glycogen control medications - have proved very effective at managing hypertension, heart disease, diabetes and strokes. Most insurance plans charge something for them. Why not make drugs like these free? Not for everyone, but just the groups for whom they are provably effective. In traditional economics, such a policy creates waste. The basic principle is moral hazard: consumers overuse goods that are subsidized. But people don't always follow a cost-benefit logic. The problem is basic human psychology. Heart disease is silent, with few noticeable symptoms. You feel fine most of the time, so it's all too easy to justify skipping the statin. The problem here is the exact opposite of moral hazard. People are not overusing ineffective drugs; they are underusing highly effective ones. This is a quandary that ... call "behavioral hazard." We've found that co-payments do not resolve behavioral hazard. They make it worse. They reduce the use of a drug that is already underused. My proposal is targeted: Take drugs that are shown to be of very high benefit to some people, and make those drugs free for them. All co-pays should depend on measured medical value; high co-pays should be reserved for drugs and medical services that have little proven value. Why not focus instead on the behaviors - eating unhealthy foods or shunning exercise - that created the conditions we must now treat with drugs? [This]has some merit. But [it] fails the "perfect as the enemy of the good" test.