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  • BIOETHICS FORUM ESSAY

Will “Consumer-Driven Health Care” Cure the Health Care Cost Problem?

Persistent health care inflation at levels that many believe are unsustainable has led insurers, employers, and the current administration in Washington to promote consumer-driven health care as the new panacea for containing spending. The idea turns traditional health insurance on its head. Under traditional insurance, the insurer paid for expenses beyond a relatively small deductible up to a certain level, and then the patient was responsible for the rest. Under consumer-driven health care, the patient is responsible for costs up to a certain threshold, beyond which the insurer becomes responsible.

The defining feature of consumer-driven health care – making patients financially responsible for first-dollar health care costs – is not new at all. Before the spread of third-party payment, patients who could afford to pay for health care did so out of their own pockets. What they saved by being thrifty on health care they were free to spend on other things. Or they could save the money and spend it on health care at a later time.

But the present health care system differs from this earlier era in several important ways. Previously, there was much less high-cost care in the physician’s armamentarium, and what there was – private sanitaria, expensive surgeries, long-term hospitalization – was much less widely available. Second, the high-cost interventions available in the past usually had little proven value, but those available today can provide significant clinical benefit, and decisions to forego them may have serious and even dire health consequences. Third, patients in the previous system relied on their physicians to decide what was best for them. Consumer-driven health care is an extension of patient autonomy and its embodiment in the principle of informed consent, which makes patients, at least in theory, co- if not principal decision-makers.

On the one hand, patients may seem to make better decision-makers than health care professionals. Patients can apply their own value systems and tailor their purchases to their individual level of risk aversion. A “vitalist” can ask for everything possible to prolong life. A person who is highly risk-averse can purchase extra tests to rule out more remote possibilities of illness. Putting patients in the driver’s seat avoids the need for caregivers to attempt to elicit patient preferences through the informed consent process, or to guess at those preferences with the risk of getting them wrong.

Yet the consumer-driven health care model rests on a questionable assumption: that patients are well-informed and able to process often complex information in a rational manner. This may not always, or even often, be the case. Consider the debacle created by the new Medicare prescription drug benefit. Similar though less well-publicized difficulties are faced by individuals when they have to select a health plan from the menu provided by the dwindling number of employers who still offer a choice.

Consumer-driven health care will only exacerbate patients’ lack of information. In addition to choosing a high-deductible health insurance policy and an accompanying health plan to handle the administrative tasks of paying providers, patients will have to identify their treatment options, determine and evaluate the pros and cons of each option, factor in how much they cost, and most importantly, evaluate their relative cost-effectiveness. Cost-effectiveness analysis is a task that has baffled expert health services researchers. It is naïve to expect that it can be performed well by ordinary patients.

Perhaps proponents of consumer-driven health care assume that patients will hire someone to help them make health care decisions. (I once proposed a model for such a service. See Maxwell J. Mehlman, Medical Advocates: A Call for a New Profession, 1 WIDENER L. REV. 299 (1996)). But this will substantially increase health care costs, when the whole point is to reduce them. The alternative, of course, is for patients to rely on the advice of their caregivers. But this exacerbates the dangers that patients face from provider conflicts of interest.

There seem to be only two explanations for why some people believe that consumer-driven health care is the way to go. The first is completely cynical. The ultimate result of consumer-driven health care is to transform the patient-provider relationship from a fiduciary relationship, in which the patient’s interests trump the provider’s, into an arm’s-length relationship in which patients have to look out for themselves. This allows unscrupulous entrepreneurs to take advantage of patients for their own financial gain. Given that the support for consumer-driven health care comes primarily from the entrepreneurial sector, this explanation cannot be dismissed.

The other explanation is that there are two fundamentally different views of the patient. Proponents of consumer-driven health care tend to view patients as like themselves: intelligent, well-informed, rational, wired, and empowered. Opponents are likely to view patients as poorly-educated, ill-informed, frightened, and vulnerable. The former kind of patient might be better off in the free-market environment that consumer-driven health care seeks to foster. The latter are ripe for the plucking. An ideal approach might respond differently to different patients, being more deferential to patients who seem comfortable with a consumerist role and more protective toward others. But it is unclear how caregivers could identify which patient was which.

Published on: March 9, 2006
Published in: Health and Health Care, Health Care Reform & Policy

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