Access to Health-Care Prices Doesn’t Lower Spending

If people know how much health care services cost, they’ll shop for the best prices and spend less — or so the theory goes. That’s why the Massachusetts law intended to lower costs included a requirement that doctors, hospitals, and insurers provide cost estimates.

But a Harvard Medical School study published Tuesday casts doubt on whether such efforts can curb spending.

The study examined outpatient care sought by 149,000 employees of two large, national companies in 2011 and 2012. The employees were offered an online tool revealing how much they would pay out of pocket for services such as X-rays, lab tests, outpatient surgeries, and physician office visits.

Only 10 percent used the online tool in the first year.

And overall, the group with access to the price tool spent no less on outpatient care than a similar group of 296,000 employees from companies that did not offer price information, according to the study, which appears in JAMA, the Journal of the American Medical Association.

As insurance plans increasingly require consumers to pay larger shares of their health care costs, price transparency has been embraced as a way to give consumers control over their spending — and to lower overall health care spending. Despite having little research to test this premise, half of states have legislated price transparency requirements.

“There’s been a great deal of enthusiasm and excitement about increasing price transparency,” said Dr. Ateev Mehrotra, a health care policy professor at Harvard Medical and senior author of the study. “We really need to temper that enthusiasm, because giving people tools like this isn’t enough.”

In an editorial accompanying the article, Dr. Kevin G. Volpp of the Philadelphia VA Medical Center concluded that “Price transparency tools are not likely the panacea that many have hoped for with respect to controlling health care costs.”

But critics said the study was outdated and too narrow to be useful for making policy.

“I would hesitate to draw big conclusions from this particular study,” said Amy Whitcomb Slemmer, executive director of the Massachusetts advocacy group Health Care for All. She questioned whether the study used “a fully functional cost-comparison tool” — which would include information about quality alongside the prices, and which would be easy to use. “When you look at how few used the tool — that’s an indication it’s not user-friendly,” Whitcomb Slemmer said.

The fact remains, however, that different providers charge widely different prices for the same services, and there is no evidence of any connection between price and quality.

Reducing price disparities has been a top goal of the Health Policy Commission, a Massachusetts agency formed in 2012 to develop policies for controlling medical costs and improving quality.

At a meeting in March, the commission concluded that enabling consumers to make price-conscious choices cannot, by itself, address the problem of price variations.

Documents from that meeting lay out the challenges: Among the state’s three biggest insurers, only 50 of every 1,000 members use the insurers’ websites that provide price information. Those websitesare often hard to navigate. And some patients equate higher prices with higher quality.

Barbara Anthony — senior fellow in health care at the Pioneer Institute, a nonprofit think tank with a free-market, limited- government philosophy — said the study’s main message is not that prices should remain “a national secret.” Instead, its message should be that insurers and others “have to double down their efforts to motivate consumers to choose high-value, low-priced services.”

She recommended training and incentives.

“We’re trying to change a culture here,” said Anthony, who championed the state’s transparency law when she was state undersecretary of consumer affairs. “You don’t do that by saying, ‘Here’s a site, go use it.’ ”

Anthony also noted that half of the study’s participants had deductibles of only $500, and the highest deductible was $2,500. Many people have much higher deductibles, which might make them more likely to research price information, she said.

Clare Krusing, spokeswoman for America’s Health Insurance Plans, the insurance industry’s trade group, said the study gave a limited picture of the potential for price transparency tools. Many of the services the study examined were preventive care, which the Affordable Care Act requires insurers to pay for fully, without co-pays — so patients would have no need to search for prices.

Additionally, she said, many insurers today provide information about quality.

“The move toward transparency and providing consumers with information so they can make choices about their care is critically important,” Krusing said. Consumers want this information — and it’s worth providing even if it doesn’t reduce costs, she said.

The study suggests ways to engage consumers: Offer bonuses as incentives for researching prices, or contact employees who seek care and give them price information, rather than waiting for patients to initiate the research.

But even with those measures, there are limits on how much consumer choice can drive down prices, said Mehrotra, the study author. An estimated 40 percent of health care is “shoppable” — services for which a consumer can shop in advance and have a choice of providers.

“A large fraction of our health care spending is limited to a small group who have a lot of illnesses or medical problems,” Mehrotra said. “Those patients, in some ways, are least able to use these [price] tools. They have a network of physicians they’re already well plugged into. It’s not easy for them to switch.”

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