The Healthcare Economist’s Jason Shafrin has written an interesting article about how the French healthcare system utilizes hyperbolic discounting in order to avoid moral hazard. Basically, their system requires the patient to pay up front for a visit to the doctor, but then health insurance reimburses the patient 70% of the cost. This has two advantages over a system like ours which only requires the patient to pay their copay at the time of service. First, it conveys the value of the visit. Here in the US, people who have health insurance with copays for office visit are often unaware of the actual cost of the visit. They pay their copay and the rest is billed to the health insurance company. People who read their EOBs will see the actual billed amount and the amount that the insurance company paid, but I doubt that everyone reads their EOBs.
The second advantage to the system of having the patient pay up front and then get reimbursed is that people by nature will think twice about going to the doctor if they know that they have to pay for the visit themselves – even if they know that most of the money will be reimbursed. It’s sort of an instant-gratification-in-reverse idea, and helps to reduce over-utilization of health care.
For me, the most interesting part of the article had to do with the fact that the office visit in question was priced at $33.80. Apparently, that was the entire cost of the visit, 70% of which would later be reimbursed by health insurance. When was the last time you saw a total office visit charge that was less than $35? My family has an HSA-qualified policy, so we pay for our own medical expenses until if and when we meet our deductible. With Jay’s knee surgeries over the last couple years, we’ve had lots of office visits, both with the surgeons for consultations and follow ups, and also with the physical therapists. The billed amounts have ranged from $63 to $150 per visit, with most of the visits in the $110 range. Our health insurance policy pays for our son’s well child visits (all policies in Colorado have to cover well child visits before the deductible), but I’ve never seen an office visit charge of less than $100 on the EOBs we get after his check ups.
The cost of an office visit in France is significantly less than it would be here. Figuring out why, and implementing some of the same strategies here, ought to be part of our health care reform efforts. All of the effort we’re putting into health care reform seems a bit silly if we continue to pay two or three times as much for basic services as people in other developed countries.
I found Jason’s article in the Cavalcade of Risk, which he hosted this week at The Healthcare Economist.