Perspectives

Why Healthcare Can’t Be Free

The Psychology of Price, the Buffet Effect, and the Value of Sensible Cost-Sharing

“Free healthcare” is an idea that sounds morally unassailable. After all, why wouldn’t we want essential medical care to be available to everyone at no cost? But beneath the surface of this emotionally appealing concept lies a powerful behavioral dynamic: the zero price effect—a cognitive bias that warps our perception of value when something is “free.”

The problem isn’t just economic—it’s human. When something costs nothing, our consumption changes. Our prudence fades. Our filters go offline. And our judgment is replaced by impulse. In healthcare, this shift can become dangerous, inefficient, and wildly expensive—for individuals, employers, and entire systems.

To understand why healthcare can’t be free, we need to explore what “free” does to the human brain, how it changes consumption patterns, and why modest, well-structured cost-sharing is not a punishment—it’s a necessary tool to promote value.

The “Welcome to the Buffet” Effect

Imagine an all-you-can-eat buffet. The price is $0. You didn’t pay a dime to walk in. What happens? You load your plate. Then you load it again. You take more than you want—because you can. You try things you’d never normally pay for. And when you leave, you’re not just full—you’re uncomfortable.

This is not hypothetical. Studies of free buffets, free samples, and “zero price” offers show a clear pattern:

• People overconsume when things are free, even if they don’t truly value what they’re consuming.
• Perceived value distorts—free feels better than cheap, even if quality is lower.
• Behavioral thresholds disappear—free short-circuits rational decision-making.

This is the zero price effect—a foundational concept in behavioral economics. When the cost is zero, the typical tradeoff evaluation (Is this worth it?) vanishes. The “why not?” impulse takes over.

What Happens When Healthcare Is Free?

This behavioral distortion carries over directly into healthcare. When medical services cost nothing—or when an individual hits their out-of-pocket maximum—we see measurable overuse:

Studies show:

• When Medicaid programs introduced copayments, outpatient visits dropped by 17% and inpatient behavioral health stays by nearly 50%, with no major health deterioration among the population studied (Arkansas, 2024).
• When telehealth services were uniformly priced at $0 (even while other services had copays), no utilization difference emerged between populations—proving it was the copay, not the person, driving behavior.
• In high-deductible health plans, once members hit their out-of-pocket maximum, utilization spikes dramatically, particularly for elective or low-value services—because the disincentive disappears.

This isn’t just about more visits—it’s about waste:

• Duplicate tests, unnecessary imaging, and marginal-value procedures increase when costs are obscured or eliminated.
• One estimate suggests 20-25% of specialty care may be unnecessary, according to physician self-report and claims-based utilization review studies.

When Free Becomes Expensive

Free healthcare isn’t free. It simply shifts the costs elsewhere:

• To employers, in the form of skyrocketing premiums.
• To healthy members, who subsidize those using excessive or unnecessary care.
• To the system, where overutilization strains provider capacity and accelerates inflation.
• And to patients, ironically, when poor value care leads to harm, delays real diagnosis, or causes unneeded anxiety and follow-ups.

This dynamic is amplified in fee-for-service systems—where providers are paid per procedure. When cost is invisible to the patient, and volume drives provider revenue, the result is runaway utilization and little incentive for restraint on either side of the exam table.

Sensible Cost-Sharing: A Behavioral Checkpoint

Far from being punitive, copayments and cost-sharing act as gentle guardrails for decision-making. They:

• Encourage consumers to evaluate necessity.
• Reduce impulse-driven care-seeking.
• Help differentiate between urgent and deferrable needs.
• Empower the use of price and quality comparisons—when supported by tools like good-faith estimates or episode-based bundled pricing.

The RAND Health Insurance Experiment—a landmark multi-year study—found that even small out-of-pocket costs reduce utilization by 15-30%, depending on the service, with little measurable impact on overall health outcomes for routine care.

The point is not to make care inaccessible. The point is to create just enough pause in the system to engage the consumer’s brain.

Smarter Design, Not Just Cost

Cost-sharing works best when it’s intelligent, predictable, and tied to value. That’s why Oxbridge Health Episode Benefit Plans use:

• Fixed bundled prices for entire episodes of care—visible before a consumer shops.
• Allowance-based benefit structures that reward smart choices through shared savings.
• Good Faith Estimates adjudicated in real time, so consumers know what they’ll pay (and save).
• A “donut hole” uncovered corridor to discourage overuse after OOP maximums are hit.

This is cost-sharing done right—not as a blunt instrument, but as a lever of behavioral economics and consumer empowerment.

Free Isn’t Freedom

When healthcare is “free,” it doesn’t liberate consumers—it removes all accountability. It distorts judgment. It fuels waste. And it erodes the sustainability of our system.

Healthcare shouldn’t be a buffet. It should be a curated experience—where consumers are informed, engaged, and rewarded for smart decisions. Not pushed to consume indiscriminately just because there’s no price tag.

Zero is not a magic number. It’s a behavioral trap. And in healthcare, the cost of “free” is anything but.