High Deductible Health Plans Price Shopping

Submitted by hci3-usr on Friday, January 29, 2016 - 05:55

Newtown, CT – January 29, 2016

There is mounting “evidence” that consumers in high-deductible health plans aren’t more likely to shop than those in traditional plans – There is, however, very clear evidence that switching to HDHPs will reduce costs, driven by decreases in utilization. In a very large longitudinal study of a full replacement HDHP, researchers find that reductions in health care costs are entirely the result of reduced utilization of services. They further find that utilization decreased even more dramatically for those with a high severity index, such as plan members with chronic conditions. Of course, this is entirely consistent with research done by RAND in 2009, which reprises similar research done decades ago. When studying the effects of HDHPs, researchers rightfully look at whether unit price of services have changed, whether the mix of services has changed, and whether the frequency of services has change, since all three factor into overall health plan costs. Since price rarely changes, the extended conclusion is that HDHP members don’t price shop. An online survey of HDHP and non-HDHP members tested that hypothesis and the headlines concluded that both groups are poor price shoppers. The headlines, however, miss some important conclusions about the survey, which the authors delineate in their JAMA Research Letter.

What this means to you – First, HDHP members are far more aware that higher prices don’t equate to better quality. Second, they understand that prices for services like radiology vary significantly, and that it’s important to look for pricing information when making that decision. Third, they are more likely to use price information if available. And therein lies the rub. While insurers and employers have deployed price transparency tools, and while some evidence suggests that using these tools can lead to more informed choices for discrete services, the information provided isn’t particularly useful for most health care decisions. If you’re a patient with a condition, or contemplating an elective procedure, or simply having a baby, your health care pricing information looks something like this instead of what you really want, which is this. Somehow, you are expected to assemble the individual price for all the services and come up with some estimate of the entire episode cost. And even if you can, you have absolutely no way of comparing that episode cost between providers. So why in the world should anyone be surprised when HDHP and other plan members say that they didn’t consider price when going to see their physician? Why would they? They have absolutely no method to determine whether their choice of physician will lead to a higher or lower total episode price. And to use this “evidence” to suggest that consumer-patients won’t change their shopping habits in a HDHP is more than an overreach, it’s inserting a pretty heavy bias and ignoring very clear evidence that when presented with more complete pricing information and the impact of that pricing on their out-of-pocket expenses, consumers have systematically made the value decision. So, to sum up, let’s be clear that real pricing information will lead to value decisions by all plan members, not just HDHP members. However, let’s also not ignore that HDHP members will self-ration all care, even the care they shouldn’t. If you want to do things right you can’t just pick and choose the convenient evidence, you have to pay attention to all of it.

Francois Sig

Francois de Brantes
Executive Director