Skin in the Game

In Catastrophic Care, “skin in the game” is the load-bearing design principle behind David Goldhill’s critique of American health care: patients should make “a meaningful financial contribution at the point of purchase,” so they behave as the direct purchasers of care even when insurance or state subsidy is involved. The book’s admiring portrait of Singapore turns entirely on this — the first of three traits that distinguish Singapore’s system is that “for all types of care… patients make a meaningful financial contribution at the point of purchase,” meaning “all patients in Singapore have a lot of skin in the game.”

The book contrasts this with the American “Island” mindset, where the direct cost of care is hidden through insurance, dulling price signals and letting “absurd prices” persist. Goldhill’s proposed Balanced Health System (BALANCE) — health accounts, health loans, and high-deductible catastrophic insurance (TruCat) — is essentially a machine for restoring skin in the game: routing the money “you’re already paying for health care but don’t realize it” through an individual Health Account so consumers spend it directly. The recurring anecdote of a patient who would “drop three hundred dollars on a hairdresser once a month but couldn’t conceive of paying two hundred and fifty out of pocket once a year to see [a] physician” is the book’s emotional shorthand for what happens when patients have none.

Where this appears

• Catastrophic Care — the central design principle behind Goldhill’s reform proposal; the Singapore comparison and the BALANCE system both turn on patients paying meaningfully at the point of care.

From Roam

• [← Go back to Chapter 5.1](Chapter 5.1 – Skin in the game reduces moral hazard)
• Someone has skin if he is exposed to the consequences of his mistakes.
• Skin in the game is important because it protects from moral hazard, removes sources of irreversibility, and prevents dangerous behaviors from spreading.
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• {{embed: Chapter 5.1 – Skin in the game reduces moral hazard}}
• {{embed: Chapter 5.2 – Skin in the game removes sources of irreversibility}}
• {{embed: Chapter 5.3 – Skin in the game prevents dangerous behaviors from spreading}}