The Big Problem With High Health Care Deductibles

When Bernie Sanders released his long-awaited health care plan last month, it was light on the details. But it did include one major, crowd-pleasing promise: Under his Medicare-for-all proposal, no American would ever have to pay a deductible or co-payment to receive health care again.

Deductibles and other forms of cost-sharing have been creeping up in the United States since the late 1990s. A typical employer health plan now asks an individual to pay more than $1,000 out of pocket before coverage kicks in for most services. The most popular plans on the Affordable Care Act exchanges require customers to pay several times as much. Even Medicare charges deductibles.

People tend to hate these features, but they were not devised to be cruel. Rather, they were fashioned with economic theory in mind

Deductibles and co-payments are intended to make patients behave more like consumers in other parts of the economy. People who have to pay the full cost of magnetic resonance imaging on their knee, for example, might be more likely to shop around and pick the $500 one instead of the $3,000 one. Perhaps, they’ll decide to give their minor knee pain two weeks to see if it gets better on its own, and skip the M.R.I. The hospital offering the $3,000 M.R.I. might lose enough business that it will lower its price.

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Jeffrey R. Ungvary President

Jeffrey R. Ungvary