Harvard Study: Shopping For Health Care Fails To Lower Costs

I hate it when there's more bad news about the health care costs that are devouring our family, municipal and national budgets. (Latest number: $3 trillion, or 17.5 percent of America's GDP.)

But here it is: A Harvard study just out in JAMA finds that when health care consumers use price-comparison tools, they don't end up spending less. In fact, they may even spend a bit more, perhaps because they think higher prices mean better quality.

So much for the idea that if you just let people shop for cheaper care, prices will surely go down.

The study's senior author, Dr. Ateev Mehrotra of Harvard Medical School, says the findings do not mean that health care price transparency mandates — which have passed here in Massachusetts and more than half of states overall — are a bad idea. Rather, he says, the message is that "It isn’t that easy just to fix this problem."

About the study: It looks at nearly 150,000 employees at two big companies that gave their workers access to an online health care shopping tool, and compares them to nearly 300,000 status-quo employees. It found that among the employees who got the tool, outpatient spending on average went up a couple of hundred dollars, from $2,021 to $2,233.

The control group's spending also went up slightly, but among the workers with the shopping tool, spending went up a bit more: by an average of $59 for outpatient care, including $18 out of pocket.

"Some of it is benefits design. ...[And] we should also recognize that not everything in health care is shoppable."

Dr. Ateev Mehrotra

"Not A Panacea For High Health Care Costs," says the headline of an accompanying editorial in JAMA. No kidding. Surely no one expected price transparency to solve our $3 trillion problem, but still, these results are also surely disappointing to anyone who hoped health care shopping might at least make a dent.

Or perhaps it will, someday. I spoke with Dr. Mehrotra, an expert on consumerism in health care, about what the results mean. Our conversation, lightly edited:

How would you sum up what you found?

There's a lot of enthusiasm in the health care system about increasing price transparency, to both help patients become better consumers and to decrease health care spending. And unfortunately, in our results, we do not find that providing price transparency decreases health care spending.

I think there’s been this general idea that, 'Oh, all we need to do is give people high deductibles, give them prices, and magic will happen, and people will start switching their providers to lower-cost providers.' And one main message from this is that this should temper that enthusiasm, and it’s more complicated than that.

I don’t think it's that patients think shopping for care is a bad idea. People generally realize that prices in health care are high and they should switch. But there are other factors that are playing a role.

Some of it is benefits design. We have these really complicated health care benefits designs that people really struggle to master, and under our current benefit design you might go to such a website and say, 'Oh, I’m thinking of having my knee operated on and I’ll pay the same amount at every hospital, so it doesn’t matter.' And a lot of the surgeries were for things that were relatively higher cost and therefore it didn’t matter. So that’s an issue.

And also, a lot of health care is emergent: When you’re having a heart attack and you’re in an ambulance, you’re not going to say, 'Oh, let me see where it’s cheaper for me to go for care.' So we should also recognize that not everything in health care is shoppable.

That's one set of factors. The second set is that a lot of other things are impacting where we get care, and price transparency tools are just one small element. One example is that a lot of people like their doc, and they don’t want to switch, no matter what the price is.

A second example is if their physician tells them go get this lab test or this MRI or go see this cardiologist, patients are often loath to switch, even though the price might be higher for the lab or provider they’ve been told to go to.

And other things are playing a key role too: It’s not just about money. It’s about the quality of care, their experience, what their friends, their family, and other websites are telling them. So price is only playing a relatively small role there.

Well, and your study seems to suggest that in fact, there may be a backfire here: I'm thinking of it as like a 'Whole Foods effect,' that if an apple is so much more expensive there, it must be better. If it's more expensive, and I'm going to be paying the same amount, I might actively seek to go to a more expensive place, right?

There is a concern that some patients — and we think it’s a relatively small fraction — will see a high price associated with a hospital or doctor or MRI and say, 'Well, that might mean that they’re a better hospital or physician or MRI place.' So that is a concern that people have had with introducing price transparency tools.

And what does this study tell us about that?

I’m trying to be a little tempered on this, because we did find that the introduction of the price transparency tool was associated not with a decrease in health care spending but an actual increase in health care spending overall. And one potential explanation is what we just discussed. The reason I'm trying to temper that is because it wasn’t very consistent; there are some other reasons why that might be the case. So I think the more conservative, reasonable view is that we didn’t find that it reduced health care spending; I’m not ready to say a tool like this actually increases health care spending unless this is replicated in future work.

I think the more conservative, reasonable view is that we didn’t find that it reduced health care spending; I’m not ready to say a tool like this actually increases health care spending unless this is replicated in future work.

Even though spending didn't go down, it still may have helped some patients individually, right?

Right. Overall, just providing a tool like this is insufficient. But I don't want to deny that patients are out there struggling with health care costs and they’re looking for better price information.

And also, people can use this tool for many purposes. For example, just understanding where their spending is going. You get this avalanche of mailings about your bills, and going to these websites can be useful to see hey, where is my spending going? Where am I in my deductible?

So improving price transparency is a good thing. I just want to temper our enthusiasm that it will decrease the health care cost trend, as some have promoted.

Massachusetts passed our health care price transparency law several years ago. What do your findings say about its likely effect and where it should be going?

This is very relevant in this market, given there's been so much press and policy interest in the variation in health care costs, specifically in the Boston area, as well as passage of the law in Massachusetts mandating that health plans provide tools for their members, as well as mandating that providers give price information when patients call.

My reaction is that this study should temper our sense that this law has had any significant impact on spending within Massachusetts.

And then, you asked maybe the most important question, which is: How do we move forward here? Because I’m not arguing, 'OK, just shut all these tools down as useless.' For me, it means that we need to be thoughtful about how we provide this price information.

"The average American hasn’t ever played this role of going out there and shopping for a physician or shopping for an MRI."

First, we have very complicated benefit designs. Can we create a more simple benefit design where prices are more important for a larger fraction of what patients have in terms of care they are receiving?

And second, can we be more proactive with this information? Right now, simply putting up a website isn’t enough. How do we get this price information to patients in a way that, when they’re at the point of decision-making about where they’re going to get care, it’s right in front of them, as opposed to just expecting people to use this random website?

And I imagine it just takes time for people to get used to really shopping for health care?

That’s a really important point. The average American hasn’t ever played this role of going out there and shopping for a physician or shopping for an MRI. This is a brand new role, and it’s very uncomfortable and unusual and different. As more of this information gets out there, and we start looking at this over years, and you hear about 'Your friend did this and your mom did this,' then maybe people will be more likely to remember and think about this price information before they get care.

Readers, what do you think? Are you getting used to the idea of shopping for health care? Are you even finding it possible?