Linking cost sharing to value: an unrivaled yet unrealized public health opportunity

UMMS Affiliation

Department of Quantitative Health Sciences

Publication Date


Document Type



*Cost Sharing; Cost-Benefit Analysis; Health Services; Health Services Misuse; Humans; Public Health; United States


Biostatistics | Epidemiology | Health Services Research


As the financial burden of cost sharing continues to rise, patients increasingly avoid necessary care, thereby contributing to the high morbidity and mortality of the U.S. population compared with that of other developed countries. The rationale for cost sharing is often based on the moral hazard argument, which states that individuals may overuse care if they do not share in its costs. We evaluate this argument in detail, using it to distinguish between appropriate and inappropriate settings for cost sharing. Cost sharing may be appropriate when health services are of low value (low ratio of benefits to costs), whereas it is inappropriate when health services are of high value (high ratio of benefits to costs). In practice, cost sharing is rarely linked to value, and therefore much of the cost sharing that currently occurs is inappropriate and harmful. Cost-effectiveness analysis is an objective method to estimate the value of health services and may be a way to systematically evaluate whether cost-sharing policies are appropriate. Systematic efforts to discourage inappropriate cost sharing may improve public health.


Ann Intern Med. 2007 Apr 17;146(8):602-5.

Journal/Book/Conference Title

Annals of internal medicine

PubMed ID


Related Resources

Link to Article in PubMed