Consumerism Works. Arm Them With Good Information

Submitted by hci3-usr on Friday, July 15, 2016 - 10:09

Newtown, CT – July 15, 2016

A recent article in Harvard Magazine intimates that it’s time to reconsider consumerism in health care – While there’s little doubt left that high deductible health plans have a negative effect on consumer behavior because they reduce consumption of high and low value services indiscriminately, that is not at all analogous to saying that consumerism in health care doesn’t work. In fact, the opposite is true even though it doesn’t fit the increasingly popular narrative. So let’s closely examine the arguments using real data from the State of New Hampshire. Why NH? Because it happens to have an all-payer claims database that, when used with the right agreements in place, allows you to publish the results of analyses and even reveal the identity of providers in doing so. For now, we’ll protect the guilty, but not for long. And let’s start where we left off last week, with alarming news on the lack of compliance by obstetricians and surgeons in hysterectomy surgeries. As a woman living in New Hampshire and whose treatment requires a hysterectomy, you can have the procedure done in any number of facilities. Our analysis suggests you can choose one of thirteen with prices varying twofold between the lowest and highest priced. The Harvard article, citing research from JAMA, concludes that many women, perhaps the majority, would choose facility “M” on our chart. And that makes sense barring any other information. After all, if you’ve blown through your deductible and out of pocket expense, why not select the Ritz over Motel 6? But is it really the Ritz you’re selecting?

What this means to you – Barring information on quality, once consumers hit their out-of-pocket maximum, the higher priced providers will logically be the preferred. And that’s because outside of health care, higher price almost always means higher quality, which is what the authors of the JAMA paper found out. However, once you add an understandable and reasonable indicator of quality of care, the decisions are very different. The decisions are also very different when you apply the deductible at the marginal dollar rather than the first dollar, as Jamie Robinson and colleagues have shown. Going back to our analysis of New Hampshire facilities, adding an indicator of quality, in this case risk-stratified rates of potentially avoidable complications, will yield a very different decision. Irrespective of cost-sharing, if I have to choose between facility “M”, which seems very expensive and of mediocre quality, and facility “I”, which is moderately priced and of much better quality, I’d go for “I”. And that facility doesn’t happen to be the lowest priced, but it definitely has far fewer complications. So for those who read beyond the headlines, consumerism in health care can and does work when the consumers have access to the right information. And of course it helps when their benefit design isn’t counter-productive.


Francois Sig


Francois de Brantes
Executive Director