The “Skin in the Game” Myth

You’ve heard this conservative theory time and again:  Poor people are driving up the cost of health care by using too much of it.

Here’s how the conservative story goes.  Medicaid needs to be reformed to make the poor “pay” for more of their care.  If these people had “skin in the game,” if they had to pay for more of the cost, they wouldn’t use so damn much health care.

Right now, Medicaid includes co-pays for many services, but that’s not enough, the GOPers chant.  Let’s “reform” Medicaid by making people pay more for their services.  Even though Medicaid represents only a fraction (16%) of the health care market, they’d like us to believe that making the poor have some “skin in the game” will drive down the cost of health care for everyone.

But this theory doesn’t pan out in real life, as TIME columnist Stephen Brill explained on the Daily Show this week.

Brill tells the story of a man who had to pay–up front in cash–$13,700 for the infusion of a cancer drug.  He didn’t have any choice, he needed the medicine to live and the government had awarded a monopoly patent to one pharmaceutical company.  This drug was part of an $83,000 up front bill he had to pay before private insurance would be billed–just for the initial treatment.    That drug cost the drug company $300. The CEO makes over $11 million dollars.

Now let’s apply the Republican argument to this man’s story. Republicans will say, Stephen Brill explains, if this man had skin in the game, letting him know how much he he is paying for the cancer drug and making him pay too will help.  This way, the GOPers say, he can be a smarter consumer and maybe get that drug somewhere else.

But recall that the drug company has a monopoly patent on the drug. The guy has no choice over whether or not to buy the drug.  If he doesn’t take it, he dies.   And the U.S. doesn’t allow lower priced prescription drugs from other countries like Canada to be imported, like Schweitzer has proposed.  The drug still costs $13,000, and the Affordable care Act hasn’t done anything to control those costs or those profits.

This is a guy who had private insurance, not Medicaid.  And, Brill reminds us, he had $83,000 worth of “skin in the game.”  But when there are monopolies on drugs, there is no free market–and this concept falls on its face.  In Montana–and other states too of course–there are also monopolies on hospitals in most towns.  There’s only one hospital in town, and the hospital owns most if not all of the doctors–or is buying them up fast.  So how is this man supposed to negotiate for lower prices? 

Suppose you have one hospital in your town,  and you’re an insurance company, how are you supposed to negotiate lower prices?  The insurance company has “skin in the game” too–much more than everyone on Medicaid in Montana combined, but that’s not driving down costs.

So when the TEA Party and the Republicans try to make this argument, they must be called on it.  Yet they are using this myth to propose and pass “Medicaid reforms” in Arkansas, Iowa, Michigan, and others.   If the conservatives aren’t called out for the “skin in the game” myth, the cost of health care is going to remain high, and the only “reform” that will pass in the state legislature is that the poorest Montanans will be saddled with additional bills.

Stephen Brill is the author of “The Bitter Pill: Why Medical Bills are Killing Us” He’s writing a series of columns in TIME on health care, and working on a book about health care costs. You can watch his appearance on the Daily Show here.


57 Comments on "The “Skin in the Game” Myth"

  1. The hospitals tried to pass this in Montana last session, the extra payments from poor people go–you guessed it–to them. This is what happens when you let stupid people make policies.

  2. Would the repugs and their tea party puppets would prefer to have every city and town in this country look like Calcutta, India with scores of people on street corners begging for medical care?

  3. My exposure to ACA since it’s passage in 2009 helped me understand that “Obamacare” is a “skin in the game” insurance regime. The key element: each of us must be in the game to the tune of $6,250 + annual premiums, or $10,000 or so more for most of us. That is the industry’s way of discipline us not to use the health care system for routine matters. Consequently, the old problem of lack of preventive care is still with us. True, we can now enjoy an annual physical and some tests at policy expense, but god forbid something is wrong, as we enter into the spend-down before insurance kicks in. Most people will do what they did before – avoid primary health care as too expensive.

    I sampled a dozen policies on the Colorado exchange. All had incorporated the $6,250 threshold. More expensive “gold” and “platinum” policies charged higher premiums to delay to individual’s reaching this plateau. It was a fool’s bet. Gold and platinum must refer to the insurance companies’ profit margin on these policies.

    Predictably, Cowgirl focuses on attitudes of the other party in this matter, but this is obfuscation. Obamacare = Romneycare and, as another commenter reminds me, was first formulated by Heritage Foundation. Republicans and Democrats alike are in the pocket of AHIP, and are both playing the “skin in the game” game.

    • ACA not = Romney Care

      Rather, as you mention, there had been a progression

      And perhaps you have not seen

      Or been shown




      WHY IS THAT?

  4. Wyoming got an ‘F’ and Montana scores at the bottom for emergency care:

  5. Me, too, in2it. $11,000 a year, out of pocket, for “insurance.” I am a healthy 59-year-old who has paid out of pocket for medical, dental, optometric, and chiropractic care forever. I will eat the “penalty” which probably will equal the cost of a month & a half of premiums for “insurance” which would not even cover the cost of a visit to a physician’s assistant. In the meantime, I am planning on a visit to my friendly attorney to protect, in case of a catastrophic illness, what I can of the house & property that my husband & I have worked, collectively, 80 years to obtain. Oh, subsidy? NO, with SS (my husband’s, who is still working fulltime) & a small volunteer firefighter pension and my paid employment, we make too much money for a “subsidy”. Not that I would accept it anyway. In the meantime, I have asked my vet if he could treat me. No extra emergency room costs; no waiting for an appointment, and while he probably couldn’t diagnose cancer or something, I feel confident that he could set a broken bone. ACA is a bonus for insurance & drug companies; not for the average consumer.

    • Quite a few people leave this country and take up residence in Central America and Mexico (and Ecuador), access to good health care not a small factor. Your situation is not unusual, I am sure. I am fifteen months away from Medicare and counting. (Please note that Obama has managed to cut over a trillion from Medicare while in office, unnoticed by Democrats.)

      Regarding the penalty, Susan, you can absolutely bank on this: The framers of ACA were worried about issues of constitutionality in penalizing people for failure to buy private products. As it stands right now, IRS can collect the penalty by offsetting your refund, if you are due one, but cannot do anything else. They cannot place liens on your property nor affect your credit standing. This may change in light of the Supreme Court holding the private mandate to be legal, but for now, do not overpay your tax so as to avoid being in a refund situation, and when the IRS tries to collect the penalty, kindly tell them to stuff it. It’s a once-in-a-lifetime opportunity.

      I can cite chapter and verse on that if you need assurance. I am a CPA and do this sort of thing for a living.

      • Still think Canada is the land of healthcare nirvana?

        As to “skin in the game” generally people don’t care about the maintenance on rented items like a car. But if they own it “skin in the game” they tend to get the oil changed and the ball joints greased. People always own their health but constantly exhibit behaviors consistent with merely renting it when someone else pays.

        • No system is perfect. All systems are in flux at all times as they adjust to current situations. But there is barely any public support in Canada for an American-style health care system. That is, in fact, what they happily booted from the country in the 1970’s.

          The problem with filtered American news is that we only allow American sources and a few disaffected Canadians to report on their system. We never hear from the millions of Canadians who are satisfied. Consequently, Americans, and I include you, know nothing about their system.

          I might add as well that the Canadian system, as industrial countries go, is far form the best. That honor, last I read, goes to France (The US was at 36, right behind Cuba, at 35.) [WHO}

        • By the way, your analogy simply does not apply to health care, as the rest of the industrial world already knows. You can have your opinions, but don’t make up facts.

    • PS: Ask your attorney about homesteading.

      • Colorado scored in the top five for emergency care, Mark: your Democratic governors scored near the top.

      • Oh, please. These people are apparently wealthy enough to stand on their principles and eschew Obamacare. My guess is they don’t dislike socialized medicine (even the most hardened conservative signs on to Medicare), they just don’t like Pres. Obama. So they can reduce their risks, i.e, don’t smoke, wear seatbelts, eat right, exercise and maintain ideal weight, and wait until they qualify for Medicare. And they can continue to wail in the meantime. Older readers, please tell: was the Medicare rollout this controversial?

        • I don’t know many people who are still alive and remember the rollout, but going from what is written about it, it is an entirely different situation.

          Medicaid/Medicare is a government run medical “insurance” system. I use quotation marks because there are some very key differences between private insurance and Medicare. Medical Care providers cannot negotiate prices with Medicare. The payment amounts are set in Washington and Medical care providers are not allowed do charge anything over that amount. Moreover, since it is government run, there is no “board of directors” to negotiate with, no profit margin to worry about and no stockholders to make happy. Medicare is the single more efficient form of medical coverage in America and has been since it’s inception. The only really complicated part of Medicare is that it is Federal Funded but State implemented. For example, in the State of Montana, the qualifications for Medicare are vastly different than the qualifications in say, Colorado. This is one of the reasons that the working poor in Montana were hit harder than other places when Montana failed to accept the Medicare expansion put in place by the ACA.

          As far as outcry – yes, there was a great deal of gnashing of teeth, beating on the chest and screams of “Socialism” etc. They died down pretty quickly, though, because the political kickback of enacting Medicare made it clear that the voters wanted to see it in place. The ACA COULD have been the same way if the Democrats had stuck to their guns and enacted Medicaid for all – you can keep your private insurance if you want to, but if you want, you can opt into Medicaid for a LOT less.

          The fix to the situation is equally easy – the Democrats have to get off their ass and push for a public option – Medicaid for all.

          • Could not agree more- Medicaid covers more benefits than many private insurance plans and has administrative costs of less than 6%- private insurers had to be forced by the ACA to keep admin costs under 20% the dems really flubbed this one- and will probably continue to do so by eliminating mediciad entirely in favor of private insurance during the next session. Our democratic legislators (and members of congress) are pretty weak.

          • I think you reversed Medicaid and Medicare a couple of times in the above.

          • Providers will tell you that if a doctor approves a service, Medicare covers it unless it is a non-covered procedure, and there are some, cosmetic stuff and the like. With a private insurer the doctor must get advance approval for procedures. And then some hack at the insurance company will second guess his every move.

            When my brother died in 2006, he had been moved to Hospice. However, New West refused to pay for his last day in the hospital, saying that he should have been moved to Hospice one day earlier. The doctor, who was actually on top of the situation and treating him, was overruled. That’s nonsense.

        • Excellent question!
          I’m old and do not know

          Ah, but the kids keeping an eye
          On me they know and
          Will vote more times than me

          Yep, ask around first
          About costs/benefits
          Asking sim question
          Of old people
          And the huge bunch
          Looking out for our interests
          Also theirs !!

  6. Single payer. Or else die and decrease the surplus population. The ACA is the Republican plan so of course it is more concerned with corporate profit then healthcare.

    • The ACA? Don’t be scared to call it what it really is. ObamaCare! And name one Republican that voted for this piece of shit. The idea that ObamaCare is a Republican plan is a bit of historical revisionism that is being put forth by low information voters to deflect blame for Obama’s brain fart of a bill. Google “is Obamacare a republican idea?”
      And I’m curious, did Larry and Norma get banned again?

      • The private insurance mechanism employed by the ACA was proposed by the Heritage Institute, which is not a Democratic think tank. And Richard Nixon proposed a similar scheme. Denying those facts is either historical revisionism or the result of a low information understanding of the ACA.

        • Thanks for setting me straight. I had no idea the Republicans came up with the plan, and then convinced all those gullible Democrats to vote for it. The Heritage foundation and Nixon? LOL!

          • Romney Care is also the Same Heritage Model

            • The same person wrote both proposals. This is documented. Believe what you want, but you are showing an incredible lack of knowledge on the subject, Jim.

              • I’m showing an incredible lack of knowledge on the subject? I can Google with the best of them. Please show me a link that proves Obamacare was written by the Republicans. In the meantime here’s something to chew on:
                Face it, Democrats own this turd, and no matter how you guys spin it, you will always own it. The next election cycle is going to be fun.

                • The takeaway quote from the article
                  “When I actually took the time to read the Heritage plan, what I found was a proposal that was radically dissimilar to the Affordable Care Act.” Is the author wrong?

                • JinDooger, ACA was written by an Industry committee headed by former WellPoint executive Liz Fowler, whom Baucus allowed to work out of his office. The bill she crafted is the one that passed, and adhered to the Heritage model. All of the political babble was scripted, including manipulation of Tea Party people to stage anti-Obama demonstrations. This added the illusion that ACA was some kind of leftish reform. That’s how politics works – manipulation of images.

                  After she oversaw passage, Fowler left Baucus’s office and went to the White House where she oversaw implementation. Once that was done, she went back into private industry.

                  Baucus apparently had the hots for her. Man you should have seen him saying good bye. Either that, or he was kissing the feet of his master.

              • No doubt you have learned the folly of responding to the lunatic fringe, Mr. Kailey: please make a note of it.

        • And I also read that when Obama was in his choom gang in Hawaii, he thought it would be a great idea that his choom buddies in Colorado could buy their weed out in the open, without worrying about those pesky laws. So by your thinking, the legalization of marijuana in CO was all his doing.

        • And Someone told me that Obama said if I liked my current insurance, that I could keep it. Oh wait……..

          • Two ironic things about that: (1) I had my own insurance. It sucked a lot. It cost $250/mo, had a $5,000 deductible, and I’m pretty sure I would had to have sued to get coverage. No, I didn’t want to keep it. (2) That fly-by-night outfit would have dropped me like a stinging ant if I’d actually gotten sick. No, I didn’t want to keep it. Who would?

            • What’s your point? You didn’t want to keep your shitty insurance that you admit would not cover you? Why didn’t you drop it? Sounds like you would have been better off with no insurance. At least you would have saved $250 a month. Now you can get insurance that’s subsidized by someone else, and Obamas forcing you to do it. You should be happy.

  7. Not one word about tax deductible, inheritable medical trust accounts, I see.

    • Yeah, I can afford to pay an insurance premium AND, say, $100 per month in an HSA. Yes, I can do that. Who needs luxuries like haircuts and a new muffler? That’s what life should be about: just scraping by. Y’know, making your rent or mortgage payment, heating bill, and monthly insurance premiums on $40,000 a year.

    • Medical Trust Accounts, all of these set aside schemes, are how health care should work from the viewpoint of the 1%. We simply set aside funds for later use. It’s that simple.

      Of course, unemployment, low wages, high medical costs are an impediment, and an extreme illness or injury can wipe out an MTA in one day. But from the viewpoint of, say, one of the Walton heirs, it is how we should deal with health care, and from their viewpoint high up there makes perfect sense.

  8. …who believes in single-payer health, medical and wellness care because he knows the environmental effects of industry on the majority of Americans who believe KXL should be gouged into the Earth so China can further impact the US west coast.

  9. Mark my words, Democrats were all willing to stand up for seniors against privatizing Medicare, but when it comes to standing up for the poor, the democrats are going to line up for privatization, throwing poor people under the bus. Kinda makes me sick to think about, but you’ll hear it justified as “oh but at least they’ll get something.” Tell that to seniors and you’ll be summarily ousted from the democratic party – poor people – screw em!

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