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Health Care Consumerism: Spending on Shoppable Services

A new report from the Health Care Cost Institute suggests that providing consumers with pricing to help them shop for health care may only have a modest impact on reducing overall health expenditures. Less than 7% of health expenditures are paid for by consumers for shoppable services.

Here are some numbers from the HCCI study:

  • About 43% of the $524.2 billion spent in 2011 on health care for the privately insured was considered shoppable.
  • Roughly a quarter of the privately insured population does not have a claim during a given year.
  • Around 15%, or almost $81 billion, was spent out of pocket on health care by privately insured consumers.
  • Of the out-of-pocket spending, $37.7 billion [7%] was spent on shoppable services.
  • Coinsurance and deductibles made up about three quarters of out-of-pocket shoppable spending.
  • Most out-of-pocket shoppable dollars [44%] were for ambulatory doctor services.

While price and quality information is important and should be available to consumers, it may be unrealistic to expect that it will drive major market changes. The HCCI analysis found less price variation for outpatient than for inpatient services, and the more shoppable outpatient services generally are lower-priced to start with. While consumers with serious health conditions or high deductibles could realize significant savings, there may be little value for many consumers to shop when there is minimal price variation.

The report concludes that one should be realistic about the power of consumers to control health care costs. Instead, it recommends efforts be focused directly on providers and payers who are better positioned to put downward pressure on prices.

Sources:

Spending on shoppable services in health care. Health Care Cost Institute, Issue Brief #11, Mar. 2016. http://www.healthcostinstitute.org/files/Shoppable%20Services%20IB%203.2.16.pdf

Frost A and others. Health care consumerism: can the tail wag the dog? Health Affairs Blog, Mar. 2. 2016. http://healthaffairs.org/blog/2016/03/02/health-care-consumerism-can-the-tail-wag-the-dog-2/

Related sources:

White C; Eguchi M. Reference pricing: a small piece of the health care price and quality puzzle. National Institute for Health Care Reform, Research Brief 18, Oct. 2014. http://www.nihcr.org/Reference-Pricing2

Price transparency efforts accelerate: what hospitals and other stakeholders are doing to support consumers. American Hospital Association, Trendwatch, July 2014. http://www.aha.org/research/reports/tw/14july-tw-transparency.pdf

White C and others. Healthcare price transparency: policy approaches and estimated impacts on spending. West Health Policy Center, Policy Analysis, May 2014. http://www.westhealth.org/wp-content/uploads/2015/05/Price-Transparency-Policy-Analysis-FINAL-5-2-14.pdf

Muir MA and others. Clarifying costs: can increased price transparency reduce healthcare spending? William & Mary Policy Review 4: 319-366, 2013. https://www.wm.edu/as/publicpolicy/wm_policy_review/archives/volume-4/volume-4-issue-2/MuirAlessiKing_s13f.pdf

Posted by AHA Resource Center (312) 422-2050, rc@aha.org

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