Economists have long said health care, as a market, is a strange animal. A large part of this is because patients don't act like regular consumers.
Imagine you walk into a Target store. You stroll through the aisles and see all the regular stuff. Just one thing is different — nothing has any prices.
Now imagine that as you're checking out, your boss is there saying, "Let me help you out with that." In most cases, our employers pay for a large part of our health care.
Patients are a strange sort of consumer. We don't know what anything costs, and even if we did, it does not matter because we are not covering most of the cost.
This is not necessarily wrong. It simply means that as consumers, we are not very involved in containing costs. There is debate about whether this should change, with economic arguments on both sides.
Transforming Patients Into Consumers
David Goldhill, a businessman who wrote the article "How American Health Care Killed My Father" for The Atlantic magazine, argues that patients need to act more like consumers.
Goldhill's father died from a hospital-borne infection. While sitting in the hospital, he says, he noticed all the ways in which a hospital does not act like a normal business.
"I thought about all the things I had seen while accompanying my father in his time in the hospital that made absolutely no sense to me," he says.
On several occasions, he says, his father was taken for procedures intended for other patients. What's more, the hospital's investment in information technology was less than what he's seen at his own dry cleaner: "And this is an industry where information literally is a life-and-death matter," Goldhill says.
Goldhill says the problem is that health care costs are hidden from us. He says that over the course of your lifetime, you and your employer spend $1.7 million on your family's health care.
"Let's take all the money we're spending on insurance, give it to the patients and have the patients spend much of it directly," he says. "Let's have catastrophic insurance for the worst cases — the truly rare, major, unpredictable events. And the rest, let's rely on the consumer. The key is that the patient is actually getting the bill."
Goldhill's proposal is what many economists call a consumer-driven model. Individuals would be required to buy some sort of catastrophic plan. Only expenses over, say, $50,000 would be covered. That's a high deductible, but you would have $1.7 million over your lifetime that you currently do not see. That amount would be built up slowly in what is often called a health savings account.
The Unique Nature of Health Care
Richard Kirsch of Health Care for America Now, an advocacy group pushing for affordable health care, hates the idea of a consumer-driven health care system. He says you can't compare health care to a typical business. It is different from shopping around for a car or a pair of shoes.
Kirsch offers this example: You look down at your arm and see a growth there. You're likely worried that the growth might be cancer, but you're also scared.
"If now you have to go into a bank account or have financial barriers to getting that care, you may not go to the doctor and see if that growth is a problem or not," he says. If you go to the doctor and find out that it's not a problem, then that's good news. But, he adds, what if you didn't go and it turned out to be a serious melanoma that caused a lot more expense and became a serious health risk later on in life?
"We don't want health care consumers making decisions based on finances," Kirsch says. He also makes an economic argument. Markets, he says, need good information to work. And the patient — the consumer — doesn't have enough information.
Goldhill agrees that patients do not have the information they need to make the right choices now. He argues, though, that if we controlled more of the money, businesses would pop up to help us choose doctors and hospitals. That is how most consumer economies work, he says. We all benefit from Walmart's low prices, even if we don't shop there.
"You're not going to shop for health care if you're hit by a bus," Goldhill says. "That's not the point. The point is, you're served in a health care system that has been tightened up, both from cost and quality point of view, because some consumers for many procedures are shopping around."
Kirsch sees that as a lot to ask of patients. He points to places like the Mayo Clinic that provide good care at a low cost as an example of how the system can work well without saddling patients with hard financial decisions.
There are some data from the nonprofit Rand Corp. on this question that Kirsch and Goldhill are debating.
One answer is that they are both right: If you make patients more like customers — force them to chip in more with co-pays for drugs, doctor visits and procedures — that does seem to eliminate waste. On the other hand, it also means some people won't go to the doctor when they need to.