Claims analysis: Price transparency won’t do much to cut U.S. health spending

Menu-izing the costs of care doesn’t turn the average American into a skilled healthcare shopper, but don’t blame the consumer.

While some 43 percent of U.S. healthcare spending does indeed go into “shoppable,” non-emergent care—everything from flu shots and blood tests to colonoscopies and electively timed surgeries—only around 7 percent of out-of-pocket spending goes to such services.

The result, according to a new analysis from the Health Care Cost Institute, is that the healthcare system as a whole wrings little cost benefit out of the push for price transparency.

The HCCI issue brief containing the analysis, “Spending on Shoppable Services in Health Care,” says the authors examined 2011 claims data for people under age 65 with employer-sponsored health insurance.

They highlight as the most notable of their findings:

• At most, 43 percent of the $524.2 billion spent on healthcare by individuals with employer-sponsored insurance in 2011 was spent on shoppable services.
• About 15 percent of total spending in 2011, almost $81 billion, was spent by consumers out of pocket.
• $37.7 billion (7 percent of total spending) of the out-of-pocket spending in 2011 was on shoppable services.

“Overall, we come to the conclusion that the potential gains from the consumer price shopping aspect of price transparency efforts are modest,” the authors write.

“Though one important feature of properly functioning markets is the availability of both price and quality information, consumer activity driven by this information should not be the focus,” they add. “Rather, we believe that delivery systems should be designed without consumer shopping at the fore and view any benefits from shopping as a positive outcome.”

The full analysis is available online.