The Washington PostDemocracy Dies in Darkness

How a tool to help patients save on health care backfired

(Rachel Orr/The Washington Post)

First, the good news: We seem to be on the edge of a new age of price transparency in health care. All kinds of tools are being developed to give consumers the ability to find out how much health care will cost even before they decide where to go, ranging from a primary care doctor's visit to a flu shot. Just last week, a Health Affairs study showed how dramatically prices for health care procedures can vary by geography. For example, a pregnancy ultrasound in the state of Ohio varied from $522 in Cleveland to $183 in nearby Canton.

Bringing light to health care prices, an area that is famously opaque and hard to navigate, offers for the first time the prospect that patients will truly be able to shop around and save themselves -- and the health care system -- money.

But a study published in the Journal of the American Medical Association on Tuesday suggests that transparency tools alone aren't going to lead to much, if any, savings. The study followed health care spending at two large employers that offered a web tool that allowed patients to easily shop around and save on health care costs.

The stark truth: Researchers found that the tool was barely used -- only 10 percent of the 150,000 people at the two employers ever logged in to the price-shopping website over the course of a year. And there wasn't evidence that people used that information to save money on outpatient services, when compared with a similar group of employees who didn't have access to such a tool -- even when the employees were subject to a high deductible and theoretically would be more motivated to shop around.

Why savvy shoppers can’t fix health-care spending

"Our findings temper the enthusiasm around the idea that price transparency is some sort of panacea… That price transparency alone, coupled with high deductible health plans, are going to lead to reduced spending," said Sunita Desai, a health economist in the department of health care policy at Harvard Medical School, who led the study.

When the researchers adjusted for differences between the group offered the tool and those who were not, they found that access to price information actually increased spending. On average, employees with access to the tool spent $59 more -- including $18 more in out-of-pocket spending.

This doesn't mean that consumers will never price shop, Desai said. But one of the most striking things the researchers found is that for those few employees who did log in to the transparency tool, about half of the searches were for procedures that were $1,250 or higher -- meaning that most of the procedures people were shopping around for were pricier than their deductibles. That means they wouldn't be saving themselves money most of the time, lessening the motivation to make a thrifty choice.

The findings dovetail with a working paper published last year, which found that high deductible health plans did cut health-care spending, but not for the reason most people would hope. Instead of shopping around for cheaper health care, patients simply cut back on seeing the doctor altogether, until they had reached their deductible.

Use of price-shopping tools may increase over time, as consumers get used to them. And Desai thinks that tailoring insurance plans differently could increase the motivation to shop around. For example, the use of more coinsurance, instead of flat co-pays, would mean people are paying a percentage of a procedure's cost. That could help nudge people to shop around. She also thinks that "reference pricing," in which health plans pay a flat fee for a procedure -- say, $30,000 for a hip surgery -- with patients on the hook for any cost above the fee could encourage shopping.

Even more aggressive would be services that are more proactive. If a patient had a procedure scheduled that would benefit from shopping around, such as an imaging scan, the insurer could call the patient and point out that they could save money by going to a lower-cost provider.

But if the hope is to control growing health care spending and save the system significant amounts, consumers making wise choices may not be nearly as effective as one would hope. A study by the Health Care Cost Institute in March found that 7 percent of health care spending in 2011 was out-of-pocket spending on shoppable services, the portion where patients would be most motivated to cut back.

"My main takeaway is that price transparency needs to be coupled with other features with other innovations in health plan benefit design that make that give patients more incentive to price shop," Desai said.