This “skin in the game” theory is mostly nonsense that is neither supported by data nor a simple understanding of human behavior.
For example, a story in USA Today looked at new government reports and found that just 5 percent of the population is responsible for 50% of the health care spending in this country. In our country much of our health care spending goes to very sick people who need care. Making these very sick people pay higher co-pays or deductibles will not change the fact they will seek out treatment to try to save their lives. It just makes those who are sick poorer.
With the majority of our health care spending going to those who are very sick, it is just not mathematically possible to create significant savings by trying to modestly change the health care purchasing habits of relatively healthy people.
Also, the idea is completely flawed to anyone with a basic understanding of human behavior. The “skin in the game” theory only works if you believe much of health care spending is caused by a large number of people who really enjoy going to the doctor and getting expensive tests but only do so because insurance makes it “cheap” for them. Almost any regular human (besides maybe on economist) would tell you most people don’t like going to the doctor or getting medical tests. Most people don’t need additional financial decentives to make them avoid going to the doctor.
The stupidity of this “solution” to our health care cost should be abundantly obvious but unfortunately it is widely promoted by most American politicians. It is strongly supported by both Republicans and Democrats, including President Obama. Obama so strongly bought into this silly theory that despite spending millions attacking John McCain for wanting to tax health insurance benefits, Obama fought hard to make sure the Affordable Care Act included a tax on insurance. This provision is designed to make people face more cost shifts, such as higher co-pays and deductibles. Obama repeatedly claimed this “skin in the game” idea will “bend the cost curve.”
Sadly, we will probably never adopt proven solutions to reduce our huge levels of health care spending until our political leaders admit this “skin in the game” theory is nonsense. That is why the stupidity behind it needs to be pointed out repeatedly and often.