Price Shopping for Healthcare
One explanation for high healthcare costs in the United States is high prices for medical services. Although prices vary across providers, healthcare consumers have historically had little incentive to seek out lower prices since insurance covers the bulk of the cost. Moreover, lack of transparency in medical pricing makes price-shopping for services difficult. In an effort to incentivize price-shopping, employers are increasingly offering high-deductible health plans (HDHPs), which require enrollees to pay more of their health costs out-of-pocket. From 2006-2012, HDHP enrollment grew from 4 to 19 percent of employees with employer sponsored insurance. However, little is known about how HDHPs affect consumer behavior in regards to price-shopping. The growing popularity of HDHPs warrants a better understanding of behavior changes upon HDHP enrollment and what mechanisms encourage enrollees to effectively price-shop for healthcare. The first paper of the session uses medical claims to measure differences in prices paid for common outpatient procedures between HDHP and traditional plan enrollees. The second paper uses medical claims to measure the impact of Castlight—a novel and increasingly popular web based tool that provides consumers with price information—on prices paid for common laboratory procedures. The third paper assesses whether the price of a physician visit is a good signal of the costliness of the physician in that it captures the costs of health services referred by the physician. Such work will help advance understanding of how to encourage price-shopping for healthcare and increase price competition in healthcare markets.