Healthcare Savvy

Can you imagine buying gas from a station with no signs to let you know the prices? Or having the clerk at a clothing store pick the “right” jeans for you, with no opportunity to figure out for yourself which ones fit best? In a sense, this is how Americans buy something far more important: health care.

Economists and policy makers have long emphasized the challenges in treating health care as a consumer good. Supply generally drives demand; there is little correlation between cost and quality; and end users have neither visibility into costs, nor much incentive to find out. Lack of price transparency makes it nearly impossible to find health care cost information even for someone motivated to look for it. Consumers also have little basis for evaluating quality; often the data that is available is dense and hard to interpret. In other words, most Americans do not have the practice or capacity, let alone the information they would need, to make informed health care decisions.

But it does not need to stay this way – and, indeed, it cannot if health care reform is to succeed. Under the Affordable Care Act, 12 million consumers are expected to purchase their own health insurance via a health insurance exchange by 2014, growing to 28 million in 2019. Americans, including lower-income individuals qualifying for subsidized health insurance, will have new health plan choices, and new means of comparison shopping. Even without reform, health insurers are designing and employers are increasingly offering products that shift costs and choices to the consumer.

Remarkably, as a nation and a health care industry, we have not prepared our population for the increased responsibility and decision-making power they will soon assume. Yet there are places around the world that have a lot to teach us in this arena, and they’re not necessarily the ones you might guess – or the ones health economists tend to focus on. Read the rest of this entry →