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Interesting op-ed in the Boston Globe today.
Estimates suggest that somewhere in the neighborhood of 30 to 40 cents of the health care dollar are spent on services that are "shoppable," i.e., those that can be planned/scheduled in advance and are available from multiple competing providers. And yet despite the rise of price transparency tools and a steady drumbeat of complaints of rising deductibles over the past decade or so, study after study has shown that even when people are in a position to price shop for health care services they rarely do.
Plenty of possible reasons. Lack of awareness (or utility) of available price transparency tools. Inertia, or perhaps bounded rationality. The complexity of and potential hidden fees in health care pricing. The invisible gravitational pull of insurance network coverage or one's doctor's referral relationships. But all perhaps symptoms of the same underlying condition: for the most part, the health care system just isn't designed to be a consumer-facing market and in practice it doesn't seem like most people, regardless of their ideological stripe, really think it should (or perhaps even could) be.
What good is health care price transparency if no one’s shopping?
Estimates suggest that somewhere in the neighborhood of 30 to 40 cents of the health care dollar are spent on services that are "shoppable," i.e., those that can be planned/scheduled in advance and are available from multiple competing providers. And yet despite the rise of price transparency tools and a steady drumbeat of complaints of rising deductibles over the past decade or so, study after study has shown that even when people are in a position to price shop for health care services they rarely do.
Plenty of possible reasons. Lack of awareness (or utility) of available price transparency tools. Inertia, or perhaps bounded rationality. The complexity of and potential hidden fees in health care pricing. The invisible gravitational pull of insurance network coverage or one's doctor's referral relationships. But all perhaps symptoms of the same underlying condition: for the most part, the health care system just isn't designed to be a consumer-facing market and in practice it doesn't seem like most people, regardless of their ideological stripe, really think it should (or perhaps even could) be.
What good is health care price transparency if no one’s shopping?
In 2018, Massachusetts launched a website, CompareCare, to help consumers shop for health care. The goal was to let people compare the price and quality of health care across hospitals and to provide information to researchers. It’s not just individuals who the state hoped might benefit. If consumers became more cost-conscious — say, regularly looking for the best deal on a colonoscopies or knee replacements — that would put pressure on providers to keep prices reasonable and contain costs for the whole health care system.
It hasn’t worked out that way. . . CHIA’s executive director Lauren Peters told the editorial board there was moderate interest when the site first launched, but the number of people visiting the site each day now is, on average, in the single digits.
Someone with a high deductible health plan may be more price sensitive. But as Ateev Mehrotra, chair of the Department of Health Services, Policy and Practice at the Brown University School of Public Health, points out, someone probably won’t bother price shopping for an inexpensive blood test, while a surgery is probably expensive enough that a patient will meet their deductible. Additionally, Mehrotra said, it’s hard to accurately compare prices between hospitals. Someone comparing knee surgery prices won’t know if one hospital adds a facility fee or another charges more for a preoperative visit. If a doctor affiliated with a particular health system recommends a patient get surgery at an affiliated hospital, the patient will probably be reluctant to override their physician. And health care systems make it hard for patients to get referred out.
State Senator Cindy Friedman, who cochairs the Legislature’s Joint Committee on Health Care Financing, said having a website where consumers can compare health care prices made sense in theory, but the complexity of the health care system makes it impossible in practice. “What we’ve learned is the system doesn’t allow for that information to be easily digested and put on a website,” Friedman said.
Additionally, as Peters noted, CompareCare focuses on elective outpatient procedures because they are considered “shoppable” services. “But we aren’t seeing a lot of people shopping at this time for elective procedures; they’re going where their doctor tells them to go or where they’re covered in network,” Peters said.