Don't expect the market power of price-conscious patients to slow U.S. healthcare spending.
Patients who sought what researchers consider “shoppable” healthcare—care that can be scheduled in a market with some competition—had out-of-pocket costs that accounted for 7% of all spending for privately insured patients, new research from the Health Care Cost Institute shows.
The study underscores the potential limits of depending on patients as consumers to compel hospitals, clinics and laboratories to compete more aggressively on price, a strategy some policymakers believe could help reduce unnecessary spending. Other research shows patients have minimal price information, but the new HCCI study suggests that even savvy shoppers may have limited market power.
“If you want to hold down prices, if you want to use prices and quality to get people to buy value, 93% of the dollars are elsewhere,” said David Newman, executive director of the not-for-profit research organization.
The results come as a growing number of households must spend $1,000, $2,000 or more to meet high deductibles before health insurers will begin to pay most medical bills. States and policymakers have pushed for greater price transparency and more quality data to help patients shop for medical care, but that data can be hard to access, limited or useless, experts say.
"While knowledge about price and quality is important, and is information that consumers are entitled to, we should be realistic about the ability of this information in the hands of consumers to drive changes in the market," the researchers wrote. "Overall, we come to the conclusion that the potential gains from the consumer price shopping aspect of price transparency efforts are modest."
Households spent $37.7 billion out-of-pocket in 2011 for medical care that could be bought after comparison shopping. Yet the analysis found that even that sliver of spending could not be completely altered by attentive consumers.
“Can we really influence all of that?” asked Amanda Frost, the not-for-profit research organization's senior researcher. “The answer is no. Probably not.”
How much incentive patients have to shop on price will depend on their health plan benefits and the amount that prices vary across their market.
Consumers typically pay for medical care under co-payments, deductibles and co-insurance. Co-payments, however, are a fixed price that does not change regardless of where patients seek medical care. That accounted for roughly one-third of the estimated out-of-pocket spending. “How much you're paying out of pocket is heavily influenced by benefit design,” Frost said.
Co-payments last year averaged $24 to $37 for physician office visits, depending on the specialty, about $300 for hospital visits and $181 for outpatient surgery, annual data collected by the Kaiser Family Foundation and the Health Research and Educational Trust show.
Patients see larger expenses under deductibles and co-insurance. Nearly 20% of workers with employer health benefits had a deductible of at least $2,000 last year, a percentage that has steadily increased in the last decade, the Kaiser data show. Co-insurance for hospital visits can total, on average, 19% of the bill. Health plans limit the total amount patients spend, but 1 in 10 patients last year had amounts that exceeded $6,000 for a single person, Kaiser reported.
HCCI researchers looked at how prices varied across markets to see where consumers had an opportunity to save. “If they're all charging the same price for a service, shopping gets you nowhere,” Frost said. States like Kentucky and Texas, with larger populations and presumably more providers options, had more price variation than less-populated states such as Hawaii and Montana, the analysis found.
Notably, inpatient prices varied less for shoppable services than for urgent medical care. “When there is the ability to shop … the prices seem to be a bit narrower,” Newman said.
Chapin White, a senior policy researcher at RAND Corp. who did a similar analysis using autoworkers' medical claims data, said results confirmed prior findings. Patients' limited influence means that insurers, employers and government payers must find additional ways to drive changes in the marketplace, he said. “We can't expect patients to be in the driver's seat, driving the healthcare system to higher quality and better value.”
Physicians increasingly act as consumers when they enter contracts to manage patients' healthcare costs, such as accountable care, bundled payments or global budgets. Doctors who hope to better manage costs have a “powerful incentive” to consider prices before they refer patients elsewhere for care, he said.