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Flawed Assumptions Behind High Deductible Plans Leave Consumers Paying More


The prevalence of high deductible health care plans has largely been propelled by the idea that consumers would be more responsible with their health care spending if they had a larger stake in it. The logic assumes consumers know what kind of care is necessary and what is superfluous. The reality of how consumers use high deductible plans is more complex, New York Times reports.

A body of research — including randomized studies — shows that people do in fact cut back on care when they have to spend more for it. The problem is that they don’t cut only wasteful care. They also forgo the necessary kind.

When they do seek care, consumers often take their doctor’s advice, both on what care to receive and where to receive it.

A recent study by the National Bureau of Economic Research shows that consumers often weigh their doctor’s advice over comparison-shopping, even for elective, non-emergency procedures. Often, patients go to higher-cost facilities – the study examined patients who received M.R.I.s – which their doctors had recommended.

“Many patients are going to very expensive providers when lower-price options with equal quality are available,” said Zack Cooper, a health economist at Yale and a co-author of the study. Though patients seem to follow the advice of their doctors on where to go, their doctors don’t have all the information on hand to make the best decisions for the patient either. 

Comparison-shopping could save consumers money. Yet, the study found that less than 1 percent of patients used price comparison tools to shop around for their M.R.I.s.

If patients went to the lowest-cost M.R.I. that was no farther than they already drove, they’d save 36 percent. Savings rise if they’re willing to travel farther. Within an hour’s drive, for example, savings of 55 percent are available.

Still, comparison-shopping is rarely straightforward. Ateev Mehrotra, who teaches health care policy and medicine at Harvard, realized just how hard pricing a procedure can be, when his daughter needed surgery. Despite Mherota’s understanding of the country’s health care system, it went terribly.

Roundabout calls, incomplete information from his insurer, and $200 consultation visits to acquire surgery estimates thwarted Mehrotra’s attempts.

One month into our price-shopping effort, all we knew was that the ophthalmologist’s fee would be in the $452 to $1,007 range, and the total surgery would cost much more.

Frustrated, Mehrotra gave up and scheduled his daughter’s surgery. He believes his experience is ubiquitous:

My colleagues and I have found that most people can’t successfully shop for care, and that offering people a price transparency website doesn’t help them switch to lower-cost providers and doesn’t decrease health care spending.

Moreover, when emergencies strike, consumers often don’t have the time, flexibility, or mental capacity to comparison shop.

People don’t know what care they need, which is why they consult doctors. There’s nothing inherently wrong with relying on doctors for medical advice. They’re trained experts, after all. But it runs counter to the growing trend to encourage people to make their own judgments about which care, at what level of quality, is worth the price — in other words, to shop for care.

Mehrotra says that before we can expect consumers to shop around for cheaper care, we need to make it easier for consumers to do so.


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