12 July 2011

Why "consumers" can't drive down health care costs

Bloomberg has a great article up about how impossible it is to find out how much medical procedures cost. Mimi Ferraro spent hours trying to find the least-cost provider for an injection of cancer medication she needed. She made her decision based on information that came after numerous calls - to the insurance company, which told her it couldn't give an estimate on the cost until after she'd had the procedure (!) and then a week of waiting on the answer from her oncologist's office. It was wildly inaccurate. She paid $4,099.51 for a shot she was told would be about half that much. She could have gotten it for half that much at a local pharmacy - but it wouldn't have counted toward her deductible. Her high deductible, that is.
This kind of [high deductible] insurance is expected to help reduce health costs. Given a need to make higher upfront payments, patients may be more selective about the services they buy and keep spending low. But there is a significant flaw in this reasoning: Patients aren’t the ones who make the decisions about which tests and procedures to purchase. Doctors are. And doctors, along with hospitals and insurance companies, don’t let on how much the services cost.
Another significant flaw is that a plethora of studies have shown that people do not make good decisions about health care spending. They balk at spending for preventative measures and, when panicked, will spend far too much when it's too late. Not that they know how much they're spending.

Ferraro pulled together some studies that show no one knows what procedures will cost. She thinks that if every patient demands the cost information that she was asking for, costs will actually become transparent. I absolutely disagree. It's not in anyone but the patient's interest to make that transparent, and our for-profit system isn't set up to benefit the patient. Excuse me. I meant the consumer. I would also point out that not only are U.S. health care consumers blindfolded, this kind of treatment is emotional torture and very bad for your health.

But most Americans can tut-tut. It happens to someone else. We look for what they did wrong - like get sick, for instance - and feel reassured that it won't happen to us.

Who needs foreign-born terrorists to wreck our communities when we've got insurance companies!

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