A key pillar in the debate over how to rein in health care spending is a shift in financial responsibility to consumers via high deductible health plans coupled with increased availability of price data. The argument is that by giving consumers more “skin in the game” as well as price comparison tools, consumers will actively seek lower cost care.
Yet, a new paper published in Health Affairs adds to a growing body of evidence complicating this theory, finding few Americans actively seek out-of-pocket price information before receiving care. According to the study, less than one in seven adults who had out-of-pocket spending as a result of their last health care visit had sought cost information before the visit.
“Despite high out-of-pocket costs, Americans are not shopping for health care. Consumers need to start shopping to put downward pressure on health care prices and make markets more competitive,” said Neeraj Sood, senior author of the study and professor at Sol Price School of Public Policy and Schaeffer Center.
The study is based on a nationally representative survey of almost three thousand nonelderly adults who had received medical care in the previous twelve months. Sood and his colleagues wanted to investigate how frequently patients are actually shopping around for care and what barriers they face when trying to find that cost information.
Though Out-of-Pocket Costs are Important, Few Seek Out Price Information
Between 2010 and 2014 patients have seen a 41 percent increase in out-of-pocket spending, according to the researchers.
Results of the survey show that nearly three-quarters of adults say out-of-pocket costs are an important factor when choosing a health care provider and the same fraction agreed or strongly agreed that encouraging patients to compare costs and quality of medical services when they choose a health care provider would be good think. The vast majority also did not think that more expensive providers provided better quality care. Yet despite these favorable attitudes towards price shopping few consumers actually shopped for health care.
Few respondents actively sought out pricing information during their last medical episode though. Of the respondents who incurred out-of-pocket spending in their last health care encounter, just 13 percent actively tried to find out what their out-of-pocket cost would be before the visit. Furthermore, only 10 percent of respondents considered going to another provider and just 3 percent compared costs among providers.
Interestingly, the researchers found that rates of shopping varied depending on the type of care received. Respondents were substantially more likely to have compared costs across providers for physical therapy (24 percent) and for lab tests or imaging services (11 percent) than a physician office visit (1.6 percent) or urgent care visit (0.9 percent). The authors point to the higher cost of physical therapy and out-patient services as well as the non-urgent nature of these appointments as possible explanations for this difference.
Lack of Knowledge about Obtaining Pricing Information and Established Patient/Doctor Relationships are Key Barriers
The researchers point to two major barriers consumers face when trying to get price information: difficulty in obtaining the information and a desire to not disrupt an already established relationship they have with their provider.
For example, though the number of online price comparison tools targeted towards consumers has increased in recent years, three quarters of respondents said that they did not know of a resource that would allow them to compare costs.
“Consumers are just not using online price shopping tools for health care. These tools still lack functionality that price shopping websites for other products such as airline tickets have had for decades,” said Sood.
In addition, an established relationship with a provider was a strong incentive to not comparison shop.
“Our results emphasize that simply passing price transparency laws or regulations (as over half of states have done) appears insufficient to facilitate price shopping,” writes the authors.
Though the majority of survey respondents reported they did not think there was a relationship between cost and quality when it comes to medical services, few actively sought out out-of-pocket cost, compared provider costs, or considered going to another provider before receiving care.
Policymakers should consider these findings, which are consistent with other recent research, when assessing strategies to reduce overall health care costs and whether the burden placed on consumers is achieving the intended results.
“In previous studies my colleagues and I have shown that just increasing a patient’s skin in the game does not result in increased price shopping for health care but rather, where there is reduced spending, it is due to overall reduced use of services,” said Sood. “This study adds to this body of research, showing there are still significant barriers to price shopping that need to be dealt with.”
The study was co-authored by Ateev Mehrotra, Katie Dean, and Anna Sinaiko of Harvard Medical School.