Copayment

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A copayment, or copay, is a flat dollar amount paid for a medical service by an insured person. Insurance companies use copayments to share health care costs to prevent moral hazard. Though the co-pay is often only a small portion of the actual cost of the medical service, it is thought to prevent people from seeking medical care that may not be necessary (eg: an infection by the common cold), which can result in substantial savings for insurance companies.

However, a co-pay may also discourage people from seeking necessary medical care. The RAND Health Insurance Experiment,^[1] a landmark study performed in the 1980s, demonstrated that cost sharing reduced appropriate and necessary office visits and preventive care as well as inappropriate visits, with adverse effects on visual acuity,^[2] blood pressure control,^[3] and survival among high-risk patients.^[4]

Medication copayments have also been associated with reduced use of necessary and appropriate medications for chronic conditions.^[5]^[6]

[edit] Notes

^ Lohr KN, Brook RH, Kamberg CJ, et al. Use of medical care in the Rand Health Insurance Experiment: diagnosis- and service-specific analyses in a randomized controlled trial. Med Care 1986;24:S1-S87.
^ Lurie N, Kamberg CJ, Brook RH, Keeler EB, Newhouse JP. How free care improved vision in the health insurance experiment. Am J Public Health 1989;79:640-642. [Erratum, J Public Health 1989;79:1677.]
^ Keeler EB, Brook RH, Goldberg GA, Kamberg CJ, Newhouse JP. How free care reduced hypertension in the health insurance experiment. JAMA 1985;254:1926-1931.
^ Brook RH, Ware JE Jr, Rogers WH, et al. Does free care improve adults' health? Results from a randomized controlled trial. N Engl J Med 1983;309:1426-1434.
^ Drug copayment and adherence in chronic heart failure: effect on cost and outcomes. Cole JA et al, Pharmacotherapy 2006 Aug;26(8):1157-64.
^ Impact of two sequential drug cost-sharing policies on the use of inhaled medications in older patients with chronic obstructive pulmonary disease or asthma. Dormuth CR et al, Clin Ther 2006 Jun;28(6):964-78; discussion 962-3.