Forum for Health Economics & Policy
Editor-in-Chief: Goldman, Dana / Romley, John
CiteScore 2018: 0.89
SCImago Journal Rank (SJR) 2018: 0.314
Source Normalized Impact per Paper (SNIP) 2018: 0.548
Can Consumers Control Health-Care Costs?
The ultimate aim of health care policy is good care at good prices. Managed care failed to achieve this goal through influencing providers, so health policy has turned to the only market-based option left: treating patients like consumers. Health insurance and tax policy now pressure patients to spend their own money when they select health plans, providers, and treatments. Expecting patients to choose what they need at the price they want, consumerists believe that market competition will constrain costs while optimizing quality. This classic form of consumerism is today’s health policy watchword. This article evaluates consumerism and the regulatory mechanism of which it is essentially an example – legally mandated disclosure of information. We do so by assessing the crucial assumptions about human nature on which consumerism and mandated disclosure depend. Consumerism operates in a variety of contexts in a variety of ways with a variety of aims. To assess so protean a thing, we ask what a patient’s life would really be like in a consumerist world. The literature abounds in theories about how medical consumers should behave. We look for empirical evidence about how real people actually buy health plans, choose providers, and select treatments. We conclude that consumerism is unlikely to accomplish its goals. Consumerism’s prerequisites are too many and too demanding. First, consumers must have choices that include the coverage, care-takers, and care they want. Second, reliable information about those choices must be available. Third, information must be put before consumers in helpful ways, especially by doctors. Fourth, the information must be complete and comprehensible enough for consumers to use it. Fifth, consumers must understand what they are told. Sixth, consumers must actually analyze the information and do so well enough to make good choices. Our review of the empirical evidence concludes that these prerequisites cannot be met reliably most of the time. At every stage people encounter daunting hurdles. Like so many other dreams of controlling costs and giving patients control, consumerism is doomed to disappoint. This does not mean that consumerist tools should never be used. If all that consumerism accomplished is to raise general cost-consciousness among patients, still, it could make a substantial contribution to the larger cost-control efforts by insurers and the government. Once patients bear responsibility for much day-to-day spending on their health needs, they should be increasingly sensitized to the difficult trade-offs that abound in medical care and might even begin to understand that public and private health insurers have a legitimate interest in controlling medical spending.