Wednesday, September 19, 2007

Consumer Directed Health Care

Robin Hanson has an important point over at Cato Unbound which hits on the utility of increased cost sharing or consumer directed health care. I have previously mentioned the Rand Study which is cited by health care experts as the authority as it is the only randomized longitudinal study in the health care field.

Conservatives have maintained that consumer directed health care will lead to super savvy health care consumers who are able to bargain down costs and skimp on only inefficient care and revolutionize medicine as we know it. This premise has motivated the health care reforms that the Bush Administration has pushed, namely, Health Savings Accounts. Liberals have rightly pointed out that this is all a bit pie in the sky. Health care is such a complex field that is unlikely that consumers will get it right and that they will likely skimp on important care yielding unfortunate health outcomes. Or to put in other words, putting medical decisions in the hands of consumers is too risky. To validate this claim liberals often cite the Rand study. In the Rand study, patients were randomly assinged health plans that differed in the level of cost sharing. It is true that the Rand study showed that those that had higher levels indiscriminately skimped on medical treatments that were both effective and ineffective. This is true but ultimately in spite of the reduced care, those patients that had higher cost sharing did not demonstrate statistically significant differences in health outcome. While this does not necessarily support the conclusion that cost sharing will rid health care of all its woes, it does seem to disabuse the notion that cost sharing will harm the consumer. The consumer won't get better care or worse care, just less of it.

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