The Ethics of "Skin in the Game" Thinking

An article on “How Much ‘Skin in the Game’ do Medicare Beneficiaries Have?” in the November-December issue of Health Affairs presents important findings about the Medicare population. It also invites attention to the health policy expression de jour “skin in the game.”

The authors analyzed out of pocket spending for 1997 – 2003 from the Medicare Current Beneficiary Survey (a survey of 12,000 representative Medicare beneficiaries). Median spending as a percentage of income increased steadily, from 11.9% in 1997 to 15.5% in 2003. Those with income below 200% of the federal poverty level spent 22% of their income on health care. Those over 400% spent less than 8%. As a share of income the poorest, sickest, and oldest, paid most. Four in ten Medicare recipients spent more than 20% of their income on health care.

The authors let the numbers speak for themselves, right up to their concluding sentence: “Our findings suggest that giving elderly and disabled Medicare beneficiaries more ‘skin in the game’ could make health care less affordable and accessible for all but the highest-income beneficiaries.”

Of course they are right. Having the oldest, sickest, and poorest, spending relatively so much more than others for their health care is not – from the perspective of equity and fairness – acceptable system performance.

But what about the phrase “skin in the game” itself? The fact that the Health Affairs authors put the phrase into quotes makes me believe that they agree with me in finding it a singularly repugnant way to talk about the economic side of how we deal with frailty, illness, and mortality itself. These aspects of human experience would appear to represent significant skin in life’s game!

The phrase is meant to convey that individuals should be concerned with the efficiency of medical care. It is true that the structure of health insurance currently gives patients and providers few external incentives to care about efficiency. And even for those who want to promote a more cost effective system, useful information on cost and quality is hard to come by.

To my ear “skin in the game” has a scolding quality, as if unless patients are at risk for the cost of their care their default position will be selfishness and economic profligacy. My experience suggests otherwise. In my clinical practice I have found that when patients understand that expenditures that produce limited or no benefit impoverish the health system and ultimately deprive others of access to care, most want to promote cost effectiveness. Human solidarity in the face of illness provides a motive for efficiency.

A Google search will tell you that Warren Buffett coined the phrase to make the point that high ranking company officials should own stock in the enterprise, to ensure that their interests are aligned with that of outside investors. Buffett’s reputation lends respectability to the phrase, but he denies having anything to do with its coinage! I would like to think that he is distressed by the overuse of the phrase in the health policy world.

At the Consumer Driven Healthcare Summit held in Washington DC September 26 -28, Jamie Robinson, an economist with a strong commitment to the social mission of health care, advocated for a nuanced combination of “individual responsibility with social accountability.” A 25 minute videotape of his talk is well worth listening to. Your will hear Robinson talk about the importance of incentives that support needed care and make patients responsible for deciding whether low value interventions are worthwhile to them. But you won't hear the kind of ham handed use of "skin in the game" thinking that is currently too widespread in health policy circles.