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National
Center for Policy Analysis
BRIEF ANALYSIS - No.
438
 Health Reimbursement
Arrangements: Making a Good Deal Better
by Devon Herrick
The proportion of health care
paid directly by consumers has been
falling for decades. In 1960, individuals
paid directly for 50 percent of their health care.
Today they pay for only 15 percent. The other 85
percent is paid by third parties,
generally employers, insurance companies
or the government. [See the
Figure.] As their share of health
expenses declined, so also
did consumers interest in controlling
health care costs. For example,
if patients pay only 15 cents out
of each dollar they spend
on health care, they have an incentive
to consume care until
its worth to them is only 15 cents at
the margin.
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