The third-party reimbursement model drives up medical costs because patients miss out on the price signals that in a normal market would cause them to seek less costly alternatives and avoid wasteful spending. Various types of cost-sharing approaches –co-payments, deductibles, tiered networks, consumer directed health plans– have been tried, but they have limited effectiveness.
The third-party reimbursement model drives up medical costs because patients miss out on the price signals that in a normal market would cause them to seek less costly alternatives and avoid wasteful spending. Various types of cost-sharing approaches –co-payments, deductibles, tiered networks, consumer directed health plans– have been tried, but they have limited effectiveness. A major shortcoming is the assumption that patients actually want more health care services, just like they would presumably go wild in the Apple store or Nordstrom if you set them loose there with a co-pay and formulary.
I believe that patients actually just want to get better and that they will be willing to forego expensive services and products when it makes sense to do so. Therefore I’m heartened by the results of a study published in Health Affairs (Introducing Decision Aids At Group Health Was Linked To Sharply Lower Hip And Knee Surgery And Costs). Here’s the abstract:
Decision aids are evidence-based sources of health information that can help patients make informed treatment decisions. However, little is known about how decision aids affect health care use when they are implemented outside of randomized controlled clinical trials. We conducted an observational study to examine the associations between introducing decision aids for hip and knee osteoarthritis and rates of joint replacement surgery and costs in a large health system in Washington State. Consistent with prior randomized trials, our introduction of decision aids was associated with 26 percent fewer hip replacement surgeries, 38 percent fewer knee replacements, and 12–21 percent lower costs over six months. These findings support the concept that patient decision aids for some health conditions, for which treatment decisions are highly sensitive to both patients’ and physicians’ preferences, may reduce rates of elective surgery and lower costs.
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This approach is no panacea. For example it only applies to a subset of medical costs. But it confirms to me that patients are more than willing to entertain less costly interventions when it makes sense to do so.
