Why Don’t People Search for the Cheapest Health Care?

According to a poll conducted by Monmouth University earlier this year, the cost of healthcare is the top concern for American families. This makes sense in the context of a health system in which the proliferation of high deductible health plans—where patients pay greater amounts before their insurers start contributing—have led to significant increases in out-of-pocket spending. In light of these financial concerns, we might expect consumers to invest ample time into searching for less expensive care. However, a recent study found that few American healthcare consumers compare costs across providers before purchasing care.

To investigate price-shopping behaviors, the researchers surveyed adults across the United States who paid for healthcare costs out-of-pocket in the previous year. A slight majority of respondents said they knew their price before receiving care, and about 13 percent looked for their expected out-of-pocket spending by contacting their healthcare providers, visiting websites, or speaking with their insurance companies. Only three percent of respondents compared costs across providers.

Whereas other studies have argued that patients associate low prices with low quality, this study found that consumers don’t necessarily seek out higher-priced care to obtain higher quality. The researchers also found variations in consumer behavior depending on what type of service they were purchasing. For instance, people receiving lab tests or physical therapy were particularly likely to have compared costs across different providers. These findings suggest that the success of efforts to increase price shopping is dependent on clinical contexts.

While people generally expressed a high willingness to price shop, two primary impediments prevented them from doing so. First, respondents did not know where to find price information. While fifty-three percent said that they would use a website with comparison information if they knew about it, the utility of such sites is complicated by the need to know specific procedure codes to obtain prices as well as individual insurance plans to find out-of-pocket expenses. Second, respondents were unwilling or unable to switch providers, either as a matter of preference or because insurance networks restricted their choices. Of the respondents whose most recent care came from a new provider, a greater proportion had compared costs than the general population.

Attempts to make price shopping easier lie at the heart of many proposals to reform the healthcare system. If policymakers want to encourage price comparison, some first steps could include promoting price sharing and information access by reducing hurdles that shoppers face. Additionally, consumers should be given greater flexibility to select their providers. Online price tools aimed at increasing the ease of comparing prices exist, but this study suggests consumers have not made use of them. As the authors conclude, it is not enough for policymakers to pass price transparency laws. To get serious about increasing price shopping, they must first make efforts to make price information accessible and understandable.

Article source: Mehrotra, Ateev, Katie M. Dean, Anna D. Sinaiko, and Neeraj Sood. “Americans Support Price Shopping For Health Care, But Few Actually Seek Out Price Information,” Health Affairs 36, No. 8 (2017): 1392-1400.

Featured photo: cc/(alexskopje, photo ID: 119213294, from iStock by Getty Images)

rmcarson@uchicago.edu'
Ryan Carson

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