Unbiased Analysis of Today's Healthcare Issues

Does comparison shopping work in health care?

Written By: Jason Shafrin - May• 24•16

According to a recent study in JAMA, the answer may be no.  High-deductible health plans aim to not only reduce the use of unnecessary services, but to make consumers more price sensitive and search for high quality, low priced care.  The latter goal, however, depends crucially on whether patients have access to information on accurate price information and whether they will actually use that information in selecting their health care providers.

A study by Desai et al. (2016) examines what happens when two employers offer their employees a price transparency tools indicating both the total cost of the service and the patient’s expected out of pocket cost.  They use a difference-in-difference approach and find:

Mean outpatient out-of-pocket spending among those offered the tool was $507 in the year before introduction of the tool and $555 in the year after. Among the comparison group, mean outpatient out-of-pocket spending changed from $490 to $520. Being offered the price transparency tool was associated with a mean $18 (95% CI, $12-$25) increase in out-of-pocket spending after adjusting for relevant factors. In the first 12 months, 10% of employees who were offered the tool used it at least once.

Patients may be more interested in using price transparency tools if culture changes and this becomes the norm. In the short-run, however, patients do not appear to access or use information on the price of healthcare very often.

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One Comment

  1. Dr Dave says:

    For some STRANGE reason people some how think that prices matter in healthcare. They ONLY do if the person is paying the bill AND they only do when the actual price is regulated by the interaction between the provider and the patient. In our society neither are the case. What a provider (be it hospital doctor pharmacy lab etc ..) “charges” means nothing to what they actually get paid. the payment amount is determined RETROACTIVELY to the service. Only after the service is provided and submitted to the insurance does a “contractual agreed amount” become known. Since the provider and the patient have no idea what that amount is the best they can discuss openly is the random amount that is sent to the insurance company as the amount “charged” but literally NO ONE pays that amount EVER. if it is a cash patient they get a cash discount if they are an insurance patient then the insurance plan dictates the final amount paid.
    There is no reason to push for transparency UNLESS we are ALSO going to remove many of the lower end services from being part of insurance plan coverage and part of the patient’s responsibility so that they have an incentive to shop for things like tests imagining studies and even PCP and Pediatrics routine exams. If we took the excessive amount of low end priced services out of insurance and made them part of a patient’s health care spending account then transparency would work but until we implement mandatory HSA’s we are wasting a LOT of brain power and effort convincing people to be cautious about spending someone else’s money.
    Dr Dave

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