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Even With ‘Skin In The Game,’ Health Care Shoppers Are Not More Savvy

January 20, 2016

It’s long been argued that if consumers are shopping with their own money, they will be savvier in their choices of services and doctors. But a research letter published Tuesday highlights a need for “greater availability of price information” as well as “innovative approaches” to make information easier for consumers to use.

The research letter, published in JAMA Internal Medicine, was based on an Internet-based survey of insured adults who had purchased medical care in the past year.

The researchers questioned nearly 2,000 respondents about what factors they considered when making choices. The survey included 1,099 people with high-deductible health plans — those that typically have lower monthly premiums but require individuals to pay more than $1,250 out of pocket before their insurance will kick in — as well as 852 people with more traditional forms of coverage.

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They found that even when people were responsible for more of their health costs, they weren’t more likely to consider cost or shop around for the best deal on medical treatments. A majority of people across the board knew that some doctors cost more than others. Even so, only about 10 percent of consumers in each group considered other doctors the last time they bought medical care; and only about 4 percent compared costs.

Fifty-six percent of those with high-deductible plans said they would use additional sources of health care pricing information if they were available. So did half of those with conventional coverage.

“There is a big incentive for consumers in high-deductible health plans to price shop, and they just don’t seem to be doing it,” said Neeraj Sood, a co-author on the research letter and director of research at the Leonard D. Schaeffer Center for Health Policy and Economics at the University of Southern California.

In recent years there’s been an uptick in the number of high-deductible health plans. Almost 25 percent of people with employer-based coverage had high-deductible plans in 2015, compared with 13 percent in 2010, according to the Kaiser Family Foundation’s survey of employer health benefits.

The JAMA report is the most recent effort to measure the impact of high-deductible plans on consumer behavior. Other groups have also found that high-deductible plans don’t directly translate into more comparison shopping by patients, or more efficient users of health care.

Last fall, for instance, the National Bureau of Economic Research, a private, nonprofit organization, published a paper analyzing how people’s behavior changed when their employer, a large, self-insured company, switched coverage from a free health plan to one with a high deductible. The conclusion: The switch did not cause workers to hunt for better prices when buying health care. Instead, the employees used less health care — cutting back on things they might not need, like imaging scans, but also on valuable services like preventive checkups.

Even as the trend toward higher deductibles gains steam, consumers’ ability to comparison shop remains relatively difficult, Sood said. And that might explain why more people aren’t shopping around for the best quality and value in the care they receive.

If policymakers are serious about bringing down health costs, Sood said, they need to take steps to push the health care industry to make pricing information more available.  For consumers, “skin in the game or financial incentives are not enough” to encourage bargain hunting in health care, Sood added. “We need to make it more convenient. We need to give the right decision tools with skin in the game.”

Plus, when people buy a medical procedure, they’re often paying for several services at the same time — if they’re getting surgery, they have to pay for the surgeon, the anesthesiologist and the hospital fee, said Benjamin Handel, an assistant professor economics at the University of California, Berkeley, who co-authored the National Bureau of Economic Research paper. That bundling together of several services makes it harder to price shop, he added, saying it’s difficult to find how much each of those different things will cost and then to come up with the right, most cost-effective collection of goods. Even if people have a financial incentive to shop around, then, they might be too discouraged to really try.

Though cost sharing hasn’t yet encouraged people to shop around, that could change, Handel said. “I don’t think these studies should rule out increased cost sharing,” he said. “The focus should be on trying to provide more information and more tools” for consumers.

Meanwhile, an editor’s note accompanying the letter noted the limitations of Internet-based surveys such as this one, citing their potential for skewed response rates, among other shortcomings. Still, the note defends the study’s findings, and the authors’ interpretation of their results. “It is true that high-deductible health plan enrollees have ‘skin in the game,’” writes editor Joseph S. Ross. “However, these enrollees are exposed to substantial out-of-pocket risk with little evidence that this risk exposure will incentivize higher-value health care decisions.”

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Submitted by Michael Henderson on Wed, 01/20/2016 - 22:41 Permalink

There seem to be multiple reasons why "skin in the game" by itself doesn't work.

First, patients need to change their perspective. Insurance companies have taught patients not to worry about cost when signing up for a plan. The ads essentially state "If you have our insurance, you don't have to worry about anything but getting well."  Or "Let's do anything for health." These ads are telling patients that they can reduce their anxiety by not having to pay attention to cost or access to a quality physician. The insurance company is by their side, like a trusted friend who only has their best interest in mind. In my experience, many patients expect that since they have paid into the system, anything that could possibly be beneficial should be available. Money is not a concern, as they feel they have paid in advance. What they don't understand is that paying a premium only assures access to the insurance plan. That money isn't being kept in an account for future use, but is used to pay for expenses incurred by others accessing the insurance plan. To keep expenses from increasing, insurance companies use  prior authorizations as a roadblock for physicians and can also refuse to cover services based on their own analysis of what constitutes medical necessity - very blunt and largely ineffective tools that I believe actually lead to increased costs. Bottom line is that insurance companies don't pay for services. Instead, they redistribute premiums. 

Second, insurance companies need to be more upfront with providing patients their estimated costs. I think they should publish what they allow, which I am sure they would be loath to do. However, the healthcare system exists to serve patients, not insurance companies. It is the terms of the insurance plan that determines a patient's out of pocket costs, not the provider charges.  In order for value to be a part of the decision making process, patients ultimately are the ones that need to know what thier costs will be, in conjunction with advice from their physician about what services are useful. The missing information needed for patients to calculate their costs is what the insurance company allows.

Third, it is very difficult for patients to determine what they really need, and thus tend to default to "more must be better". If cost is a factor, they do tend to be more conservative, but will refuse necessary treatment. Do they really need the blood tests, specialist referrals, procedures or medications prescribed by their physician? That is a very subjective question. Physicians genuinely disagree on what is necessary and this can be due to experience, training, time spent with the patient, patient wishes and malpractice concerns. If we could get malpractice reform where patients are truly part of the medical decision making process and therefore bear responsibility for the decisions they make and not just their physician, then over utilization could be reduced. Overutilization is not only expensive, but lowers quality. Patients equate high cost meds/tests and lots of tests as signs of quality - oversimplification. 

Fourth, physicians need to be adequately paid for thinking. A good surgeon knows when surgery is appropriate versus inappropriate, which takes time to consider and discuss with the patient. Surgeons should not be evaluated only on complication rates from surgery. There are 2 basic approaches to diagnosis and treatment. At the one extreme, all we need are a patients demographics, chief complaint, current medical problems, brief social history and medications.  It is often possible to then order a battery of tests and start standard medications. The patient doesn't have to be questioned or examined. This is the model I perceive to be the dominant form that insurers and non-clinicians value. Of course, they will say that they want a full history and physical, but in practice they don't. The other extreme is to go through a detailed history, patient exam and then thoughtful consideration of the many options. In the 65 and older population, a 45 minute appointment is quite reasonable, yet Medicare reimburses only enough time to spend 6-7 minutes face time with patients.  Ultimately reimbursing physicians to think is less expensive and favors appropriate utilization, but convincing payers and patients of this is difficult if not impossible. 

Overall, whether my thoughts above are exactly correct or not, my impression is that the hypothesis is too simple. The healthcare system is complicated and can't be reduced to one effect is due to one cause. 

Dr. Mike Henderson