• Revenue Cycle Management
  • COVID-19
  • Reimbursement
  • Diabetes Awareness Month
  • Risk Management
  • Patient Retention
  • Staffing
  • Medical Economics® 100th Anniversary
  • Coding and documentation
  • Business of Endocrinology
  • Telehealth
  • Physicians Financial News
  • Cybersecurity
  • Cardiovascular Clinical Consult
  • Locum Tenens, brought to you by LocumLife®
  • Weight Management
  • Business of Women's Health
  • Practice Efficiency
  • Finance and Wealth
  • EHRs
  • Remote Patient Monitoring
  • Sponsored Webinars
  • Medical Technology
  • Billing and collections
  • Acute Pain Management
  • Exclusive Content
  • Value-based Care
  • Business of Pediatrics
  • Concierge Medicine 2.0 by Castle Connolly Private Health Partners
  • Practice Growth
  • Concierge Medicine
  • Business of Cardiology
  • Implementing the Topcon Ocular Telehealth Platform
  • Malpractice
  • Influenza
  • Sexual Health
  • Chronic Conditions
  • Technology
  • Legal and Policy
  • Money
  • Opinion
  • Vaccines
  • Practice Management
  • Patient Relations
  • Careers

Study: Consumer Choice Doesn't Significantly Lower Healthcare Spending


A new study throws cold water on the popular idea that consumers can save themselves and the healthcare system loads of money if they become savvier shoppers for healthcare services.

healthcare costs

A new study throws cold water on the popular idea that consumers can save themselves and the healthcare system loads of money if they become savvier shoppers for healthcare services.

The analysis by the Health Care Cost Institute focused on what consumers paid out of pocket, where comparison shopping can result in lower costs. The study found that less than 7% of total healthcare spending in 2011 was paid by consumers for “shoppable” services.

“What surprised us was the percent of total spending that [consumers] could affect was really pretty modest,” said Amanda Frost, a co-author of the study and a senior researcher at HCCI, a nonprofit research group based in Washington, DC. “Because these gains are pretty modest, designing systems around expecting consumers to become uber shoppers might not be the best way.”

The analysis examined 2011 claims data from three large private insurers, representing roughly a quarter of people younger than age 65 who have employer-sponsored coverage. The researchers defined shoppable services as those that could be scheduled in advance and were among the most used and/or highest priced services; they then divided claims into categories such as outpatient/physician services and inpatient facility services, among others.

The study found that less than half — 43% — of the $524.2 billion in total healthcare spending in 2011 was on services that could be considered shoppable, such as non-emergency hip and knee replacements, colonoscopies, flu shots and blood tests. Consumers’ out-of-pocket spending on those services made up $37.7 billion.

Consumers’ out-of-pocket spending total includes what they pay in deductibles, copayments and coinsurance payments for healthcare services. Since copayments are flat fees — $20 for a doctor visit, for example — they aren’t affected by price comparison shopping. A quarter of the money consumers spent out of pocket for shoppable services was on copayments in 2011.

Deductibles and coinsurance, in which consumers pay a percentage of the bill, are highly variable, however, and present consumers’ best opportunity for shopping savings. The study found that deductibles accounted for nearly half of the dollars spent by consumers on shoppable services, while 27% was tied to coinsurance payments, the vast majority of which were for outpatient/physician services.

To reduce spending overall, focusing on “consumerism” and giving people tools to compare the price and quality of healthcare services doesn’t give much bang for the buck, said David Newman, executive director of the Health Care Cost Institute and co-author of the study.

The onus should instead be on employers, insurers, providers and regulators to move the needle, he said. One promising possibility is reference-based pricing, for example, where employers cap the amount that they’ll pay for healthcare services that vary widely in price, thus encouraging workers to make cost-effective choices.

“Employers and insurers know where the low prices are,” Newman said. “When you see somebody who’s gone in for back pain and they know is a candidate for back surgery, that’s the time to intervene.”

Please contact Kaiser Health News to send comments or ideas for future topics for the Insuring Your Health column. This article was originally published by Kaiser Health News,

a national health policy news service that is part of the nonpartisan Henry J. Kaiser Family Foundation.


Related Videos
Victor J. Dzau, MD, gives expert advice
Victor J. Dzau, MD, gives expert advice