# What's the point of trivial insurance co-pays?

**URL:** <https://boards.straightdope.com/t/whats-the-point-of-trivial-insurance-co-pays/326082>\
**Category:** Factual Questions\
**Created:** [October 13, 2005, 4:00pm UTC](https://boards.straightdope.com/t/whats-the-point-of-trivial-insurance-co-pays/326082 "2005-10-13T16:00:28Z")\
**Posts on this page:** 20\
**Page:** 1

<div class="post-metadata">

**Author:** ![Emilio\_Lizardo](https://avatars.discourse-cdn.com/v4/letter/e/898d66/32.png) [@Emilio\_Lizardo](https://boards.straightdope.com/u/Emilio_Lizardo)\
**Post date:** [October 13, 2005, 4:00pm UTC](https://boards.straightdope.com/t/whats-the-point-of-trivial-insurance-co-pays/326082/1 "2005-10-13T16:00:28Z")

</div>

What is the point of trivial co-payment amounts for medical insurance? The rack rate for my vasectomy was over $1000, according to my urologist, but my out of pocket cost was only $10. The same was true for my wifes pregnancy and delivery. She had twins, delivered by c-section: tons of sonnograms, regular visits with the perinatologist, a huge team in the delivery room, several days of post-op recovery in the maternity ward, certainly tens of thousands of dollars worth of care, but all we had to write were maybe a half-dozen $10 checks. What is the point of such a trivial payment to the insurance company? One would think it would cost more than $10 in labor to process those payments. What gives?

---

<div class="post-metadata">

**Author:** ![Harriet\_the\_Spry](https://avatars.discourse-cdn.com/v4/letter/h/e56c9b/32.png) [@Harriet\_the\_Spry](https://boards.straightdope.com/u/Harriet_the_Spry)\
**Post date:** [October 13, 2005, 4:06pm UTC](https://boards.straightdope.com/t/whats-the-point-of-trivial-insurance-co-pays/326082/2 "2005-10-13T16:06:27Z")

</div>

The gist is that it is enough of a disincentive to keep you from getting unnecessary treatments, but not enough of a disincentive to keep you from getting anything necessary.

For example, by having a $10 copay most people won’t take their kid to the doctor for the common cold. With no copay, there would be not reason not to do it. By charging the copay for every visit, there is no constant bickering trying to get the doctor to code it as flu (so it will be covered) not a cold.

It’s not a perfect system by any means. One downside is that a lot of people are misled into thinking the true cost of a doctor’s visit is “around $10.”

---

<div class="post-metadata">

**Author:** ![aahala](https://avatars.discourse-cdn.com/v4/letter/a/a88e4f/32.png) [@aahala](https://boards.straightdope.com/u/aahala)\
**Post date:** [October 13, 2005, 4:15pm UTC](https://boards.straightdope.com/t/whats-the-point-of-trivial-insurance-co-pays/326082/3 "2005-10-13T16:15:45Z")

</div>

I would say it’s nuisance value.

They may think health care is similar to freebees of other things. If you don’t smoke you might not pay 5 cents for an ashtray, but there are a certain percentage of people seeing a box “free ashtrays” might take the whole box.

---

<div class="post-metadata">

**Author:** ![Sailboat](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/sailboat/32/461_2.png) [@Sailboat](https://boards.straightdope.com/u/Sailboat)\
**Post date:** [October 13, 2005, 4:20pm UTC](https://boards.straightdope.com/t/whats-the-point-of-trivial-insurance-co-pays/326082/4 "2005-10-13T16:20:46Z")

</div>

> [@Emilio Lizardo](#):
>
> The rack rate for my vasectomy was over $1000,

I’m just posting my appreciation of the term “rack rate” as a cost for vasectomy. Is it more expensive to have surgery, and cheaper if you just get racked?

Sailboat

---

<div class="post-metadata">

**Author:** ![Kent\_Clark](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/kent_clark/32/105_2.png) [@Kent\_Clark](https://boards.straightdope.com/u/Kent_Clark)\
**Post date:** [October 13, 2005, 5:32pm UTC](https://boards.straightdope.com/t/whats-the-point-of-trivial-insurance-co-pays/326082/5 "2005-10-13T17:32:17Z")

</div>

Here in Missouri, the legislature just approved trivial co-pays for Medicaid recipients. Half the affected families have not renewed their insurance.

---

<div class="post-metadata">

**Author:** ![chappachula](https://avatars.discourse-cdn.com/v4/letter/c/d2c977/32.png) [@chappachula](https://boards.straightdope.com/u/chappachula)\
**Post date:** [October 13, 2005, 5:43pm UTC](https://boards.straightdope.com/t/whats-the-point-of-trivial-insurance-co-pays/326082/6 "2005-10-13T17:43:55Z")

</div>

> [@kunilou](#):
>
> Here in Missouri, the legislature just approved trivial co-pays for Medicaid recipients. Half the affected families have not renewed their insurance.

Huh?  
I thought medicaid (as opposed to Medicare) was the government-sponsored care that is FREE for those who qualify. What is there not to renew? Do those “affected families” have a better form of health insurance? What am I not understanding here?

---

<div class="post-metadata">

**Author:** ![Kent\_Clark](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/kent_clark/32/105_2.png) [@Kent\_Clark](https://boards.straightdope.com/u/Kent_Clark)\
**Post date:** [October 13, 2005, 6:45pm UTC](https://boards.straightdope.com/t/whats-the-point-of-trivial-insurance-co-pays/326082/7 "2005-10-13T18:45:00Z")

</div>

> [@chappachula](#):
>
> Huh?  
> I thought medicaid (as opposed to Medicare) was the government-sponsored care that is FREE for those who qualify. What is there not to renew? Do those “affected families” have a better form of health insurance? What am I not understanding here?

It’s not free. Here’s the list of Missouri Medicaid procedures exempt from co-pays.

\*The following are not subject to the co-payment requirement:

Recipients under 19 years of age;  
Managed Care enrollees;  
Persons receiving Medicaid under a category of assistance for pregnant women or the blind;  
Services to residents of a skilled nursing facility; intermediate care nursing home; residential care home; adult boarding home or psychiatric hospital;  
Services to recipients who have both Medicare and Medicaid;  
Emergency or transfer inpatient hospital admissions;  
Emergency services provided in a hospital outpatient clinic or emergency room to treat a life threatening condition;  
Certain therapy services (physical therapy, chemotherapy, radiation therapy, psychotherapy, and chronic renal dialysis) except when provided as an inpatient hospital service;  
Family planning services;  
Services provided to pregnant women, directly related to the pregnancy or complications of the pregnancy;  
Foster Care recipients;  
In-Home/Personal care services;  
Hospice services;  
Medically necessary services identified through an Early Periodic Screening, Diagnosis and Treatment screen (EPSDT);  
Mental Health services;  
Medicaid Waiver services \*

[http://www.dss.mo.gov/dms/dated/msreductrecip.htm](http://www.dss.mo.gov/dms/dated/msreductrecip.htm)

In other words, If you aren’t a minor, a pregnant woman, blind, already in a nursing home or fall under one of the other treatment categories or exemptions, you can be required to pay a co-payment or premium. In Missouri, families with children pay premiums/co-pays if they earn more than 150% the poverty level. Individuals or couples without children are most likely not eligible for Medicaid unless they earn much less than the poverty level.

The legislature also eliminated payments for medical equipment. This includes oxygen, wheelchairs, feeding tubes, etc.

---

<div class="post-metadata">

**Author:** ![Balthisar](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/balthisar/32/2825_2.png) [@Balthisar](https://boards.straightdope.com/u/Balthisar)\
**Post date:** [October 13, 2005, 7:19pm UTC](https://boards.straightdope.com/t/whats-the-point-of-trivial-insurance-co-pays/326082/8 "2005-10-13T19:19:50Z")

</div>

> [@Harriet the Spry](#):
>
> For example, by having a $10 copay most people won’t take their kid to the doctor for the common cold. With no copay, there would be not reason not to do it. By charging the copay for every visit, there is no constant bickering trying to get the doctor to code it as flu (so it will be covered) not a cold.

Wow, $10 is not a disincentive for anything. If I were feeling lonely and wanted to talk to a doctor just for entertainment, it’s not nearly enough. Maybe they should have a sliding scale based on income?  
The _real_ disincentive is the time off work, the traffic, and the general incovenience of ever having to go to the doctor in the first place. A _free_ appointment isn’t enough to convince me to go unless it’s a good reason. It happens to be that my copay is $10.

---

<div class="post-metadata">

**Author:** ![Sal\_Ammoniac](https://avatars.discourse-cdn.com/v4/letter/s/8dc957/32.png) [@Sal\_Ammoniac](https://boards.straightdope.com/u/Sal_Ammoniac)\
**Post date:** [October 13, 2005, 8:06pm UTC](https://boards.straightdope.com/t/whats-the-point-of-trivial-insurance-co-pays/326082/9 "2005-10-13T20:06:50Z")

</div>

Just to clarify, I’m pretty sure the copay does not go to the insurance company, but to the doctor or hospital. And even though the amount seems small, it does add up. Take a doctor’s office seeing fifty patients in a day. If each patient pays a $10 copay, that’s on the order of $125,000 a year, which is not nothing. At a minimum, it’ll pay for your receptionist and a file clerk.

---

<div class="post-metadata">

**Author:** ![Kent\_Clark](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/kent_clark/32/105_2.png) [@Kent\_Clark](https://boards.straightdope.com/u/Kent_Clark)\
**Post date:** [October 13, 2005, 8:14pm UTC](https://boards.straightdope.com/t/whats-the-point-of-trivial-insurance-co-pays/326082/10 "2005-10-13T20:14:50Z")

</div>

> [@Balthisar](#):
>
> Wow, $10 is not a disincentive for anything.

See above. It is for about 12,000 families with children in Missouri.

---

<div class="post-metadata">

**Author:** ![vertizontal](https://avatars.discourse-cdn.com/v4/letter/v/ad7895/32.png) [@vertizontal](https://boards.straightdope.com/u/vertizontal)\
**Post date:** [October 13, 2005, 8:43pm UTC](https://boards.straightdope.com/t/whats-the-point-of-trivial-insurance-co-pays/326082/11 "2005-10-13T20:43:09Z")

</div>

I don’t have a cite, but a few years ago I heard a doctor being interviewed on the radio regarding this very question. He generally was discussing clinics and said that _any_ co-pay, even as low as two dollars, made a big difference in the number of people who come in who don’t need to. If the visit was totally free, the place would be packed with people having the slightest sniffle. If they were charged two dollars, then only patients with real issues came in. It doesn’t sound like much, but apparently the act of opening a wallet was a disincentive.  
I think \*\*aahala \*\* got it right with the ashtray analogy.

---

<div class="post-metadata">

**Author:** ![aamco](https://avatars.discourse-cdn.com/v4/letter/a/f19dbf/32.png) [@aamco](https://boards.straightdope.com/u/aamco)\
**Post date:** [October 13, 2005, 9:15pm UTC](https://boards.straightdope.com/t/whats-the-point-of-trivial-insurance-co-pays/326082/12 "2005-10-13T21:15:29Z")

</div>

> [@kunilou](#):
>
> Here in Missouri, the legislature just approved trivial co-pays for Medicaid recipients. Half the affected families have not renewed their insurance.

Because they didn’t need Medicaid, or because they couldn’t afford their copayments?

If you start handing out something for free, then suddenly enact a nuisance payment, it’s not unexpected (and probably welcome) if the total enrollees drop. That’s the point of the nuisance payment, to weed out the unnecessary uses.

Of course, if there’s proof that these people dropped and are now using the emergency room as their primary care, then that’s a problem (both financially and socially).

---

<div class="post-metadata">

**Author:** ![TheBoneyKingofNowhere](https://avatars.discourse-cdn.com/v4/letter/t/b9e5f3/32.png) [@TheBoneyKingofNowhere](https://boards.straightdope.com/u/TheBoneyKingofNowhere)\
**Post date:** [October 13, 2005, 9:16pm UTC](https://boards.straightdope.com/t/whats-the-point-of-trivial-insurance-co-pays/326082/13 "2005-10-13T21:16:09Z")

</div>

Vasectomy and c-section delivery on just a copay? There wasn’t a deductible for either of you (or had that already been met) or no co-insurance after the deductible? You, or your employer, must have a fine program set-up. It’s costing somebody somewhere premiums galore, I’m sure. Not that that is completely addressing your question…

---

<div class="post-metadata">

**Author:** ![Kent\_Clark](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/kent_clark/32/105_2.png) [@Kent\_Clark](https://boards.straightdope.com/u/Kent_Clark)\
**Post date:** [October 13, 2005, 9:50pm UTC](https://boards.straightdope.com/t/whats-the-point-of-trivial-insurance-co-pays/326082/14 "2005-10-13T21:50:13Z")

</div>

> [@aamco](#):
>
> Because they didn’t need Medicaid, or because they couldn’t afford their copayments?
> 
> If you start handing out something for free, then suddenly enact a nuisance payment, it’s not unexpected (and probably welcome) if the total enrollees drop. That’s the point of the nuisance payment, to weed out the unnecessary uses.
> 
> Of course, if there’s proof that these people dropped and are now using the emergency room as their primary care, then that’s a problem (both financially and socially).

The data are not conclusive at this point. What can be said is that there’s normally a turnover of about 1,000 cases per month of families moving on or off Medicaid. The first month that the premiums went into effect, 12,000 families dropped off the rolls – that’s about half the Medicaid recipients in the state. At this point, there’s no data on ER visits or anything else that will verify that these people did or did not have alternatives to Medicaid.

However, when you put an economic constraint on something and get a twelve-fold jump in response at the same time, you can fairly suspect a relationship even if you can’t say it’s a fact.

---

<div class="post-metadata">

**Author:** ![deevee](https://avatars.discourse-cdn.com/v4/letter/d/57b2e6/32.png) [@deevee](https://boards.straightdope.com/u/deevee)\
**Post date:** [October 13, 2005, 9:55pm UTC](https://boards.straightdope.com/t/whats-the-point-of-trivial-insurance-co-pays/326082/15 "2005-10-13T21:55:24Z")

</div>

I posted this question a while back (too lazy to look for cite and nobody could answer it anyway) My co-pay on prescription drugs is 25cents. Why bother? A buck I could understand as it would cover admin costs but a quarter? It would cost more to remit than just charging nothing. And a quarter is NOT going to stop anyone from getting something they might not need.

---

<div class="post-metadata">

**Author:** ![Rube\_E.Tewesday](https://avatars.discourse-cdn.com/v4/letter/r/f0a364/32.png) [@Rube\_E.Tewesday](https://boards.straightdope.com/u/Rube_E.Tewesday)\
**Post date:** [October 13, 2005, 10:39pm UTC](https://boards.straightdope.com/t/whats-the-point-of-trivial-insurance-co-pays/326082/16 "2005-10-13T22:39:53Z")

</div>

**deevee** , I think I remember your query. Something I never got around to suggesting at the time – maybe the amount was established in a long-ago collective agreement, at a time when the amount wasn’t totally trivial, and neither union or management ever thought it worthwhile to either up the co-payment or totally do away with it? Sheer inertia can explain a lot in life.

---

<div class="post-metadata">

**Author:** ![aamco](https://avatars.discourse-cdn.com/v4/letter/a/f19dbf/32.png) [@aamco](https://boards.straightdope.com/u/aamco)\
**Post date:** [October 13, 2005, 10:52pm UTC](https://boards.straightdope.com/t/whats-the-point-of-trivial-insurance-co-pays/326082/17 "2005-10-13T22:52:19Z")

</div>

> [@kunilou](#):
>
> when you put an economic constraint on something and get a twelve-fold jump in response at the same time, you can fairly suspect a relationship even if you can’t say it’s a fact.

I’m arguing that the response may not be negative here. The whole point of the nuisance payment is to get unnecessary people off the roster.

If there’s no cost involved, those enrolled in the program are a mix of people who really need the program (e.g. “good” enrollees) and opportunists who just tag along because it’s free (e.g. “bad” enrollees).

The point of the nuisance payment is to knock off, selectively, the bad enrollees.

---

<div class="post-metadata">

**Author:** ![deevee](https://avatars.discourse-cdn.com/v4/letter/d/57b2e6/32.png) [@deevee](https://boards.straightdope.com/u/deevee)\
**Post date:** [October 13, 2005, 11:15pm UTC](https://boards.straightdope.com/t/whats-the-point-of-trivial-insurance-co-pays/326082/18 "2005-10-13T23:15:55Z")

</div>

> [@Rube E. Tewesday](#):
>
> \*\* Sheer inertia can explain a lot in life.

Ain’t that the truth.

---

<div class="post-metadata">

**Author:** ![SomeGuy](https://avatars.discourse-cdn.com/v4/letter/s/ac8455/32.png) [@SomeGuy](https://boards.straightdope.com/u/SomeGuy)\
**Post date:** [October 14, 2005, 2:31am UTC](https://boards.straightdope.com/t/whats-the-point-of-trivial-insurance-co-pays/326082/19 "2005-10-14T02:31:27Z")

</div>

> [@Sal Ammoniac](#):
>
> Just to clarify, I’m pretty sure the copay does not go to the insurance company, but to the doctor or hospital.

Not really. It’s money that the insurance company would have to pay to the doctor or hospital if you didn’t.

---

<div class="post-metadata">

**Author:** ![F.U.Shakespeare](https://avatars.discourse-cdn.com/v4/letter/f/aca169/32.png) [@F.U.Shakespeare](https://boards.straightdope.com/u/F.U.Shakespeare)\
**Post date:** [October 14, 2005, 2:49am UTC](https://boards.straightdope.com/t/whats-the-point-of-trivial-insurance-co-pays/326082/20 "2005-10-14T02:49:00Z")

</div>

_60 Minutes_ once did a piece on two women who had opened up a legal aid clinic providing legal counsel to poor people. (They had earned law degrees when they were young, and later married upper-middle class husbands and raised families, so money was not a concern for either of them).

But they stipulated that there **had** to be a small charge for consultations – otherwise, so they asserted, clients would undervalue the service they were receiving.

They believed it was important that nobody ever assume this assistance they got was an entitlement.

[Next page](https://boards.straightdope.com/t/whats-the-point-of-trivial-insurance-co-pays/326082.md?page=2)