High-Deductible Health Plans Don’t Seem to Encourage Price Shopping

Let our journalists help you make sense of the noise: Subscribe to the Mother Jones Daily newsletter and get a recap of news that matters.


Sarah Kliff points today to a new paper that investigates the effect of high-deductible health plans. In theory, since these plans require people to spend more of their own money, it should motivate them to shop around for better prices. But that’s not how things turned out.

The chart on the right shows what happened when a large firm forced all of its employees to switch from an insurance plan that provided free health care to a high-deductible plan. At first, spending on medical care dropped sharply. Over the next two years, however, it rose back nearly to its previous level. (Note: ACG is a predictive measure of sickness.) The switch to the HDP plan apparently caused a short-term shock, but over the longer term people needed whatever health care they needed. They might not have liked it, but they paid the higher prices.

Still, they did spend less for a while. But how much of that came from shopping for lower prices vs. simply consuming less health care? The firm provided employees with a price-comparison tool, which made it fairly easy to shop for better prices, but apparently it went virtually unused. The best evidence of this comes from spending on imaging services like X-rays and MRIs. These are commodity services, and patients aren’t likely to use a higher-priced service simply because they don’t want to switch doctors. An X-ray is an X-ray.

But as the table below shows, price shopping accounted for barely any of the decrease in spending. Even for X-rays, most patients apparently just went wherever their doctors told them to go without shopping around at all. The researchers conclude:

Consumers did not shift to cheaper providers, either immediately in the first year post-switch or afterwards in the second year….Price shopping is not an important component of the spending reductions resulting from the switch to high-deductible care.

It’s possible, of course, that two years isn’t a long enough study period. Price shopping for medical care isn’t common, and it was especially uncommon at this firm, which had previously provided completely free health care. As usual then, more study is needed. But this is a pessimistic result for those who think that forcing consumers to pay for health care with their own money will motivate them to shop for better prices. It doesn’t seem to. Sarah Kliff has much more discussion of what this means at the link.

IT'S NOT THAT WE'RE SCREWED WITHOUT TRUMP:

"It's that we're screwed with or without him if we can't show the public that what we do matters for the long term," writes Mother Jones CEO Monika Bauerlein as she kicks off our drive to raise $350,000 in donations from readers by July 17.

This is a big one for us. It's our first time asking for an outpouring of support since screams of FAKE NEWS and so much of what Trump stood for made everything we do so visceral. Like most newsrooms, we face incredibly hard budget realities, and it's unnerving needing to raise big money when traffic is down.

So, as we ask you to consider supporting our team's journalism, we thought we'd slow down and check in about where Mother Jones is and where we're going after the chaotic last several years. This comparatively slow moment is also an urgent one for Mother Jones: You can read more in "Slow News Is Good News," and if you're able to, please support our team's hard-hitting journalism and help us reach our big $350,000 goal with a donation today.

payment methods

IT'S NOT THAT WE'RE SCREWED WITHOUT TRUMP:

"It's that we're screwed with or without him if we can't show the public that what we do matters for the long term," writes Mother Jones CEO Monika Bauerlein as she kicks off our drive to raise $350,000 in donations from readers by July 17.

This is a big one for us. So, as we ask you to consider supporting our team's journalism, we thought we'd slow down and check in about where Mother Jones is and where we're going after the chaotic last several years. This comparatively slow moment is also an urgent one for Mother Jones: You can read more in "Slow News Is Good News," and if you're able to, please support our team's hard-hitting journalism and help us reach our big $350,000 goal with a donation today.

payment methods

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate