Patients aren’t consumers, but the fiction of the rational health care shopper continues

Can you buy health care like computers? For years health policy gurus, an assortment of employers, and entrepreneurs have argued you could, and the theory, at least, crept into the Affordable Care Act. Think of the nearly $14,000 families buying in the health exchanges will have to pay out of pocket next year before their insurance kicks in.

The reasoning goes like this: If patients have more “skin-in-the game,” they will rethink going to the doctor, even decline recommended treatments. When they do need them, they will shop for services like they do for computers, picking the one with the lowest price and highest quality. But since many medical procedures like CT scans appear to be fungible, shoppers will call up a bunch of imaging centers and take their business to the cheapest one. But it’s not so simple. Just ask WBUR’s Martha Bebinger how easy it was to shop for a colonoscopy in Boston. Finally, she chose quality over price after nearly a yearlong search.

Theory, however, tells us shopping will cause the national health care tab to drop, and eventually America will have tamed the growth of its high its high-cost health system. So powerful is this skin-in-the-game approach to cost containment, it’s a major feature of Medicare Advantage plans and is creeping into employer coverage too. Through the years researchers at the RAND Corporation and others have poked big holes in the theory, but the fiction of the rational health care shopper continues. It substitutes for more serious cost containment measures that would require the government to push back on the demands for ever-higher prices from providers, hospitals, insurers, drug companies, and other players, a fear that has prevented the U.S. from adopting a real universal health insurance system.

“The American discussion of the role of consumers in the consumption of medical care is bedeviled by what I would call ‘market theology’ crowding out good sense,” said Yale professor emeritus Theodore Marmor. “The evidence from research and from experience is that patient cost-sharing is an illusory instrument for distinguishing useful from useless medical care. Out-of-pocket costs prompt reductions in medical use, but these financial barriers reduce care without improving quality or reducing overall expenditures.”

Last month came a powerful new study from researchers at UC Berkeley and Harvard that tracked the medical spending behavior of nearly 77,000 workers and dependents as the employer transferred them from a health plan with no deductible to one with a $3,750 deductible (for families) and an out-of-pocket limit of $6,250. They were given state-of-the-art shopping tools and a health savings account with an employer contribution equaling the deductible that they could use for the new upfront costs they faced. The salary level of the workers was relatively high — some 60 percent had incomes equal or higher than $125,000. Two years into the study, there was no evidence they shopped for health care. “Consumers don’t seem to be responding in the way we thought they would,” Jonathan Kolstad, one of the study’s authors, told me. “These guys have all the tools and you’re still having this effect.”

Instead, they cut back on all services — inpatient and outpatient hospital care, drugs, emergency room visits, and preventive care — with total spending reductions between 12 and 14 percent, Kolstad said. However, the average price of doctor visits was not dropping. Surprisingly, some of the sickest people were more likely to cut back the most — especially during the deductible period. And while employees and their dependents did cut back on potentially wasteful care like imaging services, they also cut back in equal measure on potentially useful care, such as preventive services, Kolstad noted. Researchers also found that once workers satisfied their out-of-pocket maximum, they spent as much as they would have spent the year before the switch to a high deductible plan.

As a chronicler of the modern consumer movement, I, too, championed the shopping theory, and when the New York City Department of Consumer Affairs required pharmacies to post the prices of common drugs, I applauded. When evidence came in that consumers didn’t shop and high-priced pharmacies still charged high prices, I changed my mind. Consumers and patients were fundamentally different. Indeed Marmor says, “The conflation of customer and patient gives birth to much illusion.”

Shoppers looking for computers and patients needing surgery have a fundamentally different relationship with the marketplace. The guiding principle in shopping for a computer and most other consumer goods is “buyer beware” — the onus is on them to investigate a seller’s pitch designed to win them over. When it comes to health care, patients necessarily have to trust doctors to provide the right diagnosis and treatments to cure an ailment. Who would go to someone they couldn’t trust with their life?

"When New York City required pharmacies to post the prices of common drugs, I applauded. When evidence came in that consumers didn’t shop and high-priced pharmacies still charged high prices, I changed my mind. Consumers and patients were fundamentally different. Indeed Marmor says, 'The conflation of customer and patient gives birth to much illusion.'"

In the case of consumer goods and services, most shoppers have had some experience with the products or some basic knowledge of how they work and can evaluate the accuracy and relevance of the seller’s pitch. You know what canned carrots taste like. With health care most patients have relatively little knowledge to evaluate a doctor’s diagnosis and proposed treatment. Kolstad told me it’s hard for “people who are not medically trained to figure out what’s good for their health.” If you pick the wrong computer — or the wrong health insurance policy, which people do purchase by price — you live with it for a while and try not to make the same mistake again. If you pick the wrong doctor or imaging center, you might be dead, or at least suffer a bad outcome.

Still, that fundamental difference hasn’t stopped sellers, start-ups, and advocates of skin-in-the-game solutions from sending forth a constant stream of “new and improved” shopping tools with the hope that the next generation of patients will start acting like consumers. Leah Binder, the CEO of Leapfrog, which runs one of the better sites evaluating hospital quality, said, “For millennials raised on Amazon and apps, everything is up for comparison. They get it and expect it.” Binder believes the movement toward price shopping “is transforming culture in a very significant way,” and the day will come when people shop for health care using price and quality data. Never mind that there’s not much quality information around and even when there is, it’s often not applicable to many patients’ needs.

I discussed all this with Jeanne Pinder whose site Clear Health Costs gathers prices for nearly three dozen “shoppable” procedures like MRIs and cardio stress tests in seven cities and reports wide variations. Pinder’s site doesn’t track whether people use the service to make actual decisions or even follow through with a test. But she told me people do make comments like, “I’m so glad you’re doing this,” or “Let me tell you my story.” Most people don’t know prices for medical care vary and just having the numbers lets them know they do. “This is good journalism and a public service,” Pinder said.

That may be, but the evidence, including the latest strong results from the Berkeley study, tells us that the focus on turning patients into shoppers has significant downsides. When people can’t distinguish between low- and high-value care or forego needed treatment because even a “cheap” price is too high for the family budget, the cost of treating them may eventually be far greater. Remember, that was one of the arguments for the Affordable Care Act. But the high cost-sharing the exchange policies demand turns that premise on its head. I’m all for transparency and think Pinder’s work, as well as Steven Brill’s in Time and Elisabeth Rosenthal’s in The New York Times, goes a long way to acquaint the public about the American cost of health care. Just don’t count on 320 million people looking for the cheapest CT scan to lower the high price tag for American health care.

Veteran health care journalist Trudy Lieberman is Contributing Editor of the Center for Health Journalism Digital. This is her first post for the newly relaunched Remaking Health Care blog series.

[Photo by Giuseppe Milo via Flickr.]