Why “Skin in the Game” Turns Out To Be Not Enough to Motivate Consumers to Check Healthcare Prices | Mark Hagland | Healthcare Blogs Skip to content Skip to navigation

Why “Skin in the Game” Turns Out To Be Not Enough to Motivate Consumers to Check Healthcare Prices

April 22, 2018
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An experiment in Massachusetts reveals the limitations of offering consumers provider pricing information

Experts across the U.S. healthcare industry have been saying for years now—decades, really—that empowered health care consumers are going to revolutionize the healthcare system in our country. And it’s hard to argue with that idea in principle. The question is, just when will U.S. healthcare consumers really become “empowered”? The answer to that question is not as self-evident as it seems.

On the one hand, as the employer-purchasers of U.S. healthcare push their employees and employees’ families further and further into high-deductible health plans, it is inevitable that healthcare consumers will become more price-sensitive with regard to their contributions to healthcare expenses.

But will the very fact of price impacts automatically push consumers into becoming more investigative, discerning consumers of healthcare services? Will they actively use tools provided by health insurers in order to make choices among providers?

Well, the answer to that question turns out to be a decidedly mixed, even perhaps slightly discouraging, one, at least for now. As an April 17 article in the Boston Business Journal noted, “A new report has found that though insurers are doing a better job providing cost estimates for their members, consumers still aren’t all that interested in shopping for their health care. The results come from a recent study intended to follow up on an analysis done in 2015 by consumer advocacy group Health Care For All,” the Boston Business Journal’s Jessica Bartlett reported. The study was sponsored by the Pioneer Institute, “an independent, non-partisan, privately funded research organization that seeks to improve the quality of life in Massachusetts through civic discourse and intellectually rigorous, data-driven public policy solutions based on free market principles, individual liberty and responsibility, and the ideal of effective, limited and accountable government.”

As Bartlett noted in her article, “The online tools were developed as the result of a state law passed in 2012, which required insures to develop cost estimator tools by October 2014.” She quoted Barbara Anthony, the primary author of the report and the former Undersecretary for Consumer Affairs and Business Regulation, as stating that “We’re beginning to move in the right direction.”

As Bartlett reported, “Health Care For All assessed the tools the following year, and gave the state’s three largest insurers—Blue Cross Blue Shield of Massachusetts, Harvard Pilgrim Health Care and Tufts Health Plan—a ‘C’ grade for their cumbersome and ineffective systems. Since then, Blue Cross has made several improvements to its tool, changing the name to “Find a Doc and Estimate Costs,” making it more prominent on the website and clearly showing out-of-pocket costs and remaining deductibles. Harvard Pilgrim and Tufts also had to completely remake their websites after their vendor for the service pulled out of the market. The new cost estimator sites now explain out-of-pocket consumer costs, remaining deductibles and even quality metrics.”

Still, Bartlett noted in her article, “Despite there being better tools, there were only 297,000 inquiries on the cost estimator tools from early 2014 through 2017. Combined, the three insurers cover three million people.”

Anthony told Bartlett that "Health care price transparency is still a new idea to many consumers and to providers. It’s almost an alien concept—the idea people should know how much their healthcare will cost before they incur the procedure and may opt for lower cost providers…so (we need to be) educating consumers, educating employers, providing information in an easy to understand way, providing incentives for people in an easy way,” Anthony said.

And, Bartlett wrote, “While the prevalence of high deductible health plans may spur some people to shop for their care and use price estimator tools, Anthony said there needs to be a growing focus on incentive programs that encourage consumers to shop for health care.”

Here’s what’s particularly interesting: as the report notes, “In 2012, the Massachusetts Legislature enacted what was intended to be comprehensive health care cost containment legislation: ‘An Act Improving the Quality of Health Care And Reducing Costs Through Increased Transparency, Efficiency and Innovation (Ch. 224). ‘Some of the more touted features of Ch. 224 were innovative provisions dealing with healthcare price transparency that require both insurance companies and providers of all types to make price information available to consumers seeking such information. The goal of these provisions was that transparency in pricing would help reduce healthcare costs as market forces would drive patients toward lower-cost, higher-value providers.”