No incentive to comparison shop and it’s too complex

Advocates for price transparency would have us believe that we, as “consumers,” should consider our health care a product to be shopped for, like a pair of shoes. But mainly we are “patients,” with varied, often time-sensitive health-care needs. There is an important distinction between presenting the information—and choices—to patients and asking consumers to make complicated decisions about their health care based on that information. The health-care system is complex: Less than 15% of Americans can correctly answer questions about basic components of traditional health insurance. Choosing health-care services and providers may be even more complicated, especially for the half of all American adults that have at least one chronic condition. More important, the public seems to not want to shop for health care. In studies, fewer than 5% of respondents used health-care shopping tools when available. This lack of use has persisted over time, even as tools have improved. When it comes to their health care, people generally don't want more choices; rather, they want to know that they are getting good care and to feel confident in their range of choices. Most Americans prefer to choose their providers based on recommendations from their friends or their family, rather than on price. People also lack a sufficient incentive to engage in price shopping. A single, well-informed and motivated consumer who needs an expensive elective procedure may be able to spend time researching and save money by shopping for the lowest price possible, but this scenario is the exception rather than the norm. Available evidence is not cause for optimism about how much money can be saved with more choices and publicly available prices. While large health-care payers may save some money from consumer shopping, the average person will likely see little, if any, savings. And what savings are possible will largely be determined by insurance-benefit design. No consumers could shop their way to a lower copayment, or out of making a deductible payment. Factor in the associated opportunity costs, and the average American won't save money. Finally, many Americans don't live in places with lots of providers and health-care choices. Transparency efforts centered on consumer shopping rest on the assumption that people have multiple options to choose from. Some say people can avoid complexity entirely and take simple steps to save a lot of money—such as asking a doctor for generic drugs and paying cash for procedures, which can carry a lower price. But health-care prices are much more complex than those scenarios make them appear. Prices vary by procedure, provider, facility and negotiated insurance rate. As for asking a doctor how to save on costs, we cannot expect doctors to be experts on everything. No health-care provider could memorize the price of every service or drug, nor do most have access to a tool that provides this information. For most patients, their insurance determines their costs, and providers don't generally have access to all of the necessary information about a patient’s insurance to give the advice people need about costs. Even the seemingly simple switch from a brand prescription to a generic version might be complex. Some drugs don't have generic versions, some generics are as expensive as the brand versions, and some may not be covered—or be well-covered—by a specific insurance plan. The estimated price and quality of a health-care service or provider should be available to anyone who wants it. But we should not expect people to make complex decisions about their health care using those abstract measures. Smart shopping might work for some people. But for the vast majority of consumers, it isn’t even a choice.