A new paper from EPI Director of Health Policy Research Elise Gould, Increased health care cost sharing works as intended: It burdens patients who need care the most, finds that shifting more health care costs onto consumers is a flawed strategy for containing health expenditures. Cost sharing puts an undue burden on those who can least afford it and does little to make health care cheaper or more efficient.

Cost sharing seeks to bring down overall health expenditures by making people more careful consumers of health care. However, health care consumers who are sick or in need of emergency services are rarely in a position to shop around or second-guess the advice of their doctors. At the same time, the price of a procedure is rarely an effective way to judge its value. As such, increasing cost sharing does little to make people more discerning health care consumers, and instead simply hurts the most vulnerable Americans.

“Policies to increase cost sharing are simply not an effective way to lower overall health care costs,” said Gould. “Unless we increase cost sharing for truly catastrophic medical needs—which no one is suggesting—these policies will miss the primary cost drivers in our health care system. Roughly 80 percent of health care costs are driven by just 19 percent of the population—encouraging healthy people to cut back on health care simply misses the majority of costs.”

The paper looks in depth at two cost sharing policies: the Affordable Care Act’s excise tax on high-priced health insurance, and the proposal to restructure Medicare into a voucher program. The excise tax is poorly targeted, since premiums are driven by a variety of influences unrelated to the generosity of plans. Turning Medicare into a voucher program, meanwhile, could increase the financial and health risks to elderly and vulnerable Americans. Ultimately, any cost containment achieved by making health care more expensive to consumers is driven by reduced medical care, not reduced prices.