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With Health Care Deductibles, Consumers Get More Responsible

The era of high deductible plans is here. In 2010, 10 percent of ‘large employers’ offered high deductible plans; in 2014 it was 22 percent. Next year, the figure will almost be 33%, according to a new study by National Business Group on Health. Those statistics are from a NYT profile on the rise of these plans—and the challenges they pose.

One theory behind promoting these kinds of plans is that they force employees to pay for more of the care they consume, thus making them more likely to shop responsibly. But the NYT notes there’s a big barrier to that theory becoming reality: prices aren’t transparent:

Insurers and independent providers, including Castlight and Healthcare Bluebook, offer tools that help consumers estimate their costs and the quality of the providers. But shopping around can still be challenging.

“Castlight and others like it make a valiant effort to provide price and quality information,” said Uwe E. Reinhardt, a health policy expert and professor at Princeton.

“But the question is whether the prices they give you are binding. To really shop around effectively, prospective patients need binding prices.”

This is exactly right. Giving consumers financial incentives to shop smarter without the ability to do so is a recipe for disaster. Conversely, allowing consumers to know the wide variation of prices in their area will help them to avoid places where costs are artificially inflated.

Other challenges outlined in the piece, however, are less compelling. For instance, the Times claims that consumers can’t really shop around for health care anyway because emergency conditions don’t give you time to compare prices—you just go to the nearest doctor. This just isn’t born out by the data, however. The Robert Wood Johnson Foundation has found that high deductible plans can lower spending by 5 to 14 percent, and both sides agree that the shift to higher deductibles have seriously contributed to the health care spending slowdown.

Some might argue that this represents people just forgoing necessary care as opposed to evidence of shopping smarter or a cutting down on medical excess. That may be true in some cases, and we should be sensitive to that. But given both that lots of medical care is unnecessary and that people respond rationally to price transparency alone, it’s likely these savings are as much about smarter shopping as about avoiding necessary care. More of this, please.

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  • FriendlyGoat

    What does “be sensitive to that” mean in the second sentence of the last paragraph? WHO is going to be sensitive in what way that is to have any meaningful effect on any citizen’s insurance plan or personal finances?

  • Ann in L.A.

    The inability to judge the quality of MD’s and hospitals should be thrown in here too. Right now, many equate price with quality and assume that if it costs more, it must be better. That leads some to buy more-expensive health care than they would if there were a better measure of quality.

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