• Copayments are stupid

    Let’s make a deal. You shell out just $500 and I’ll pick up the tab for any automobile you care to buy. I’d better protect myself a little, so the deal is only good for Honda, Toyota, and Hyundai. Are you going to get the base model Yaris ($14k)? I seriously doubt it. You’ll probably get something nicer, maybe a souped up Land Cruiser ($80k+). I’m going to pay an awful lot.

    Having learned my lesson, let me make a smarter deal. I’ll give you $15k toward a car, any car on the planet. If you want something more expensive, you pay the difference.

    Which deal will lead to more prudent shopping, less wasteful car spending? Which will incentivize the market to be more efficient and consumer friendly?

    I can think of a few reasons why we don’t see the latter deal in health care, known as reference pricing. I bet you can too. But I’m not convinced those reasons outweigh all the problems we have with conventional copayments, akin to the first deal.

    Coinsurance — you pay 20% of the car, I pay 80% — is not quite as stupid as copayments, but it doesn’t make the consumer as sensitive to price as reference pricing. Note, one can combine reference pricing and coinsurance. I pay in full the first $X and you pay some percentage beyond that.

    Should we have more reference pricing in health care? Why or why not?

    More about reference pricing on TIE here.


    • What’s your point here? Are you advocating for no copayments?

    • This is 20 year old news. Many of us who are accountable for corporate benefits spending migrated off of copayments well over a decade ago – only to run into criticism by the policy wonks about “high deductible health plans” – which, itself is a misnomer.

      Today, to qualify for a Health Savings Account, you need a deductible of $1,250 (single). Compared to the $200 deductible I had in my health care plan in 1984, nearly thirty years ago, that is about 6.5%/year average increase – well below the escalation in the cost of health care coverage. In other words, my “high deductible” today is a significantly smaller percentage of the average cost of health services received by an individual.

      PPACA, for example, considers a deductible of $2,000 to be extreme.

      Over time, we will all recognize that the taxpayer subsidy scheme in PPACA for exchange-based coverage will also generate some perverse effects.

    • Your question, “Should we have more reference pricing in health care,” also implies a “and if so, for which services?”

      My instinctive response to this was yes we should for elective services, and we can debate whether to expand to non-elective services. But of course you have a previous post discussing what services are elective, and the general conclusion is that there’s a spectrum of electiveness, and that procedures/drugs/devices can be hard to classify. And of course there are the political implications of classifying services as elective.


      Also, given the enormous dispersion in listed prices for almost every medical product, it would seem that Medicare, which does pay a standardized rate (adjusted for local costs) for medical products, would be the place to start. Of course, starting this in the private sector might be a way to bypass some of the political difficulties surrounding this issue.

      • The most expensive and prevelant care in this country is elective (cancer care, heart and lung care, diabities, etc.) in the sense that we COULD choose provider(s) more wisely if given the incentive and tools to do so.

        Please spare me the its too complicated to do so even with the right tools and incentives routine.

    • Not saying that price should not be a factor at all but I am saying it should not be the primary factor which is what will happen if you go to a reference pricing scheme.

      The idea that ordinary people will have the expertise to become effective health care shoppers is ludicrous. If it was that accessible, doctors wouldn’t need x years of medical school and training. (It can work for some but not for the vast majority of people.) Plus many medical situations do not occur in an environment where comparison shopping is a viable option.

      And the analogy doesn’t even fit. People get medical care where their doctors or their friends send them or where they have relatively convenient access to it. They don’t seek out the most expensive care simply because they aren’t paying for it. They are simply insensitive to price in both directions … because, for the most part they are either ignorant of it or don’t really have choices.

      For the most part the incentive problem in health care is the incentives for the providers are all screwed up, not so much the incentives for consumers. The incentives – financial, lifestyle, prestige, etc. – drive providers into higher cost, often dubiously efficacious specialty care and away from primary care. The FFS system rewards volume – more tests, more appointments, more procedures. You may be able to encourage more primary care consumption by eliminating those copays but that doesn’t address the capacity issues. And it doesn’t necessarily follow that you can promote appropriate care by increasing copays on specialty care unless you differentiate somehow between appropriate care and wastefule “care”. But of course that just provides more opportunities for the insurance companies to deny care through UM and prior approval, etc.

      The payment structure must change to emphasize more primary care and pay for outcomes, not volume. There is nothing inherent in reference pricing to guarantee that outcome.

      • ‘ insensitive to price in both directions ‘ Right! I’ve been looking for how to say that – after 20+ yrs in healthcare (behavioral, but kind of like ‘real’ healthcare) that’s what I’ve seen. And building from that, looking at how people really make healthcare decisions, (or even if they are actually thinking thru anything) can lead to calling into question some of the other analyses/conclusions/observations found here. Having said that, TIE is a great resource, discussion board, source of information, etc. I’m glad I stumbled across it.

      • Great Point!!!

        This is something that maybe hard for clinicians to grasp in the abstract but when people (or worse still – their families) are making these decisions they are in a very, very, very poor position to do so. They both are not cost-conscious (which is very different from not price sensitive) but they also didn’t go to medical school and residency and fellowship…

      • One sentence of cawley’s explanation is extremely bothering to me (and he/she isn’t the only one to preach this). This constant notion that it is ludicrous for the general public to shop for health care services on their own. Health care might be the only industry for which the American public believes or is conditioned to be too stupid to shop for themselves. How do people invest in retirement? Decide where to go to college? Pick careers? Decide on car insurance? etc. The answer is through transparency. Yes it is true that our system presently is very poor in this department but if consumers (yes even you cawley) demanded the publication of prices and outcomes data from hospitals and physicians it would be made available. This constant notion that health care is this holy grail that only insurance bureaucrats, politicians, lobbyists, and HR personnel understand is a slap in the face to the American consumer. Consumer driven health care, it can work. As a society we need to demand more transparency and ability to be more involved in our health insurance decisions.

        • People can certainly shop for medical services.

          But what evidence do we have that they can do it better than for any of the examples you provided? I would argue that people do all of those things rather poorly in the aggregate. They spend too much on college. They invest poorly (if at all) for retirement. They pick careers that they dislike. They don’t buy insurance, enough insurance, or pick companies by rational criteria. I think that your examples reinforce the point.

        • Too stupid, no, not informed enough, maybe, too difficult, probably.
          I recently needed to see an orthopedist. Finding one taking new patients took 2 days, and that was after calling my insurance company for a list. The doctor diagnosed my condition as a hernia, correctly diagnosed I had bursitis as well and told me there was no treatment for it. After 4 more weeks of being passed around to other doctors and tests, I saw another orthopedist who said it was the bursitis causing the pain, and one shot solved it!
          I am a smart woman, a professional in the pharma industry, and there was simply no reasonable way to know who to go to.
          And price comparison isn’t possible; they will not reveal pricing ahead of time. The best I could get was the basic appointment rate, and nothing else.

    • Isn’t the problem with your example that car prices are on display, right on the car (as are most consumer goods)? Many times when I’ve gone to the doctors office for a procedure they tell me, “oh, you’ll need to call so and so, I don’t know the billing side.” Healthcare costs aren’t exactly transparent. Point being, the insurance company can cover 80% of anything they want, but until we have more transparency in healthcare costs the consumer will have no idea if the 20% of the “car” or healthcare procedure/test/exam will cost them $100, $1,000 or more.

    • I do not think you can compare an elastic good like cars with an inelastic good like healthcare. I understand the point you are trying to make and how more “skin in the game” would prevent people from consuming needless medical care. We are all aware of the RAND study and how consumers react.

      However, I do not think the problem in this country is that consumers drive the consumption of unwarranted care. I think the two main problems are that our prices are too high and the people in charge of what to spend are the ones who often profit from this spending (i.e. physicians and hospitals).

    • I think you have to add in to your analogy that the person buying the car has no idea what they are buying, and are being advised by the car salesman about which car they need to buy.

      • I think that’s a personal choice except in the case of emergency or incapacity. Those cases are probably suitable for full, catastrophic coverage.

        I’m not saying there isn’t information asymmetry. There is. There always will be. I’m saying it need not be as severe as we let it be. Consumers need not be as passive as they are. I know many will resist that statement, but how can it be uniformly false? There’s a lot of very good information for consumers out there, from Cochrane reviews to Choosing Wisely and more.

        I’m also a supporter of incentives for more and better shared decision making, with all the patient decision aids it requires.

        • The challenge is to give people a way of knowing which sources, e.g. Choosing Wisely, are credible. In practice that might mean highly transparent (all meetings, resumes, donations, grants etc. are available to the public) public or private rating agencies. One possibility is a member funded health information cooperative (started but not sustained with public funds) with similar transparency whose sole mission is to provide its members with accurate information about price, quality, and comparative effectiveness.

        • I think one answer may be to do the kind of Comparative Effectiveness research that you and others advocate. How is a layman really to know if one treatment is more cost effective than another if we aren’t doing the research in the first place?

          To continue the analogy, we have magazines such as Consumer Reports and the like that review and compare cars in a way that consumers can understand.

          I guess the websites you talked about are doing this kind of thing, but perhaps doctors should be giving the patients the necessary information, or at least have it handy.

          My last employer’s health insurance had an incentive for this kind of thing: If you had certain conditions (back problems requiring surgery, heart disease, cancer, etc), they would give you $500 to review some of these decision-making tools (that probably tried to get you to choose the cheaper treatment, I don’t know).

    • What problem are you trying to solve? Family health plans cost roughly 20k; are you advocating that people get 20k more from their employer and are free to use it as they see fit? For a single person, it is roughly 5k; so they get 5k and use it as s/he sees fit? What if people take the money merely to live and buy no insurance? Are they then prohibited from using ER services unless they can pay cash? I think I read on this site that it isn’t the total number of doc visits, hosp. visits that are our problem (we are in line with the rest of the world in that regard) but the costs of said service.

      I bring this up because the median US wage is around 26k and the median US household income is around 53k. Unless people are giving the money directly now spent by employers and other providers on health insurance, the median person in America cannot even begin to think about health insurance. A family who gets 20k more from work has a lot more to spend it on besides health care just to survive; ditto a median single worker. I can easily foresee millions of people not buying insurance. You can only stop that (to a degree) if you ban people from using the ER unless they have either the cash and/or the insurance to pay. Are you willing to allow these people to be refused and to die?

      The only people who will be able to shop around will be the wealthy- and they can do that already. Unless- and this is a big unless- doc prices and other medical prices plummet, and I mean plummet to maybe one-third to one fourth of current costs. How many docs and med. providers do you think are willing to do that?

      It is nice to say choice but when you have nothing, you have nothing to spend.

      • A lot of wasteful care is being delivered and accepted as necessary with little regard to cost. Deductibles and copayments are going up. The stated reason is to increase patients’ attention to cost. The real reason is that it’s an alternative to higher premiums, which are going up pretty fast as it is. Reference pricing is rarely in the conversation. Why not?

        As I wrote, I can think of reasons why not, and some have already been stated in the comments. I can also think of problems with standard cost sharing. Which is worse? I don’t think one can settle that objectively.

        • I understand that and appreciate that but it still doesn’t get at the crux of the problem: how does the median person/family in America pay for health care? Maybe I wasn’t clear enough: let’s say a law was passed tomorrow declaring that all health premiums paid by employers and/or anyone else (see Medicare) were now to be paid directly to the person/family involved. That would mean about a 5k bump in salary for a single worker and 15k for a family plan. For others, I am not so sure; I believe Medicare spends about 10k but I can’t seem to find the median cost. Such a bump up would seem great if it meant extra money (like the rich have) but all it means is more needed money for the median American. It means they forego care, in all likelihood. And for the sick? Look at me for example:

          I am on Medicare due to disability ( ms) but I can tell you when I worked in Massachusetts 12 years ago as a lawyer, I could get ins. at about 3k per month (I had ms then but worked through it). Mass. guaranteed coverage but did not limit costs. I can’t imagine that today any insurance company would want me and if they did, 10k added to my meager ssdi payments would hardly cover my insurance on an open market.

          As it is I don’t take most of the ms meds I should because I can’t afford them. As I told someone at my health plan (I have med. advant.), you won’t pay x for meds but I will cost hundreds of thousands more if I need to go a nursing home- how does that make sense? I suppose (and I don’t say this to be maudlin/trolling) but one sure fire way to save money would to pay people like me less for care, don’t allow us access docs and ers unless we have the funds, and hope that we die early and often.

          What bargaining power do sick people like me have? None. Zero. In theory it is a great idea that I have skin in the game but bargaining implies that there is some relative balance of power. When you are sick, you have no such bargaining power. When I was young and healthy and making great money and paying loads of taxes and fees, I had great bargaining power. Now? Not so much.

        • Austin writes: “Deductibles and copayments are going up. The stated reason is to increase patients’ attention to cost. The real reason is that it’s an alternative to higher premiums,”

          Why isn’t the reason that higher deductibles make people think twice about care that may not be needed. How many more MRI’s are done on backs because the MRI is free or near free? How many less would have been done if the MRI was reasonably postponed giving the problem time to heal? I think MSA’s and then HSA’s showed themselves to be effective reducers of cost in two ways: 1) reducing unnecessary testing 2) preventing follow up on incidental discoveries found during the testing process that would have never been discovered. This can be very expensive and non productive.

        • “A lot of wasteful care is being delivered and accepted as necessary with little regard to cost.”

          Is this really true? It looks to me that the problem is much more that insane prices are being charged. If all insurance companies refused to pay one red cent over Medicare prices, and everyone was insured, and doctors were not allowed to refuse insured patients, then it’d be real hard to run up serious money on a few extra tests.

          Also, as a patient, most of the time, I’d rather be safe than sorry, so the idea that docs are protecting themselves from malpractice suits by assuring that they are not doing malpractice doesn’t sound like a bad thing at all (especially considering the enormous amount of malpractice that occurs in the US (it kills more than car and workplace accidents combined (sorry if I’m a broken record here: my father’s care at “the best hospital in Boston” (where he had been employed as a safety officer years earlier and trusted deeply) was horrifically incompetent, careless, thoughtless, and stupid; and killed him.)).

          • One can be just as sorry from overuse as underuse.

            • Yes, I do understand the problem of false positives. Heck, even the blokes over at Crooked Timber, realize that if you get a test that says you might have prostate cancer one is screwed in that one really can’t ignore it. (I probably would, but I’m perverse and a bit more scientifically aware* then your generic liberal arts/poly sci type (whom I do respect!).

              *: In particular I’m quite aware that cancer deaths per 100,000 population are, largely unchanged over the last few decades despite the heroic efforts of oncologists and researchers. It’s really depressing. Cut out smoking and cancer goes down: (more generally reducing carcinogenic exposure is the only thing that’s made significant inroads other that a few counterexamples (e.g. childhood leukemia). It’s very depressing. At least three of my colse women friends from my undergrad/grad school days have died of breast cancer. Three of my Japanese friends and relatives have lost wives. It’s depressing in the extreme. All of these were young, brilliant, energetic, charismatic folks cut down in their prime. I’ve been reading abour the Higgs boson discovery. I’d much rather that money had been spent on cancer research.

              Sorry for the rant. Feel free to reject it.

    • Austin you are right on target. By the way the only practical way reference point pricing would work is in an episode based payment enviornment.

      P.S. I wish people would stop with the false arguements against valid analogies. We know very little about most of the products and services we buy (that is an fundamental characteristic of a free market economy that thrives on specialization), yet the pricing system works reasonably well in most cases. The question is to what degree does a market fail to conform to the ideal. Does anyone really believe medical care is that different and if so why? In other words is it our own doing or something intrinsic about medical care. I struggle mightily with this question.

      • I used to be more in the “intrinsic to medical care” camp. I’ve moved a bit toward the “it’s our own doing”. But, really, it’s a little of both. Health and health care are different from other goods and services. But they don’t have to be as different as we have caused them to be.

        • “Its our doing”
          The distinguishing features of the HC market and why more prone to failure, to me, well established, Unique and requires no explanation.

          By “its our doing,” I assume you mean the nonsensical workarounds and how we have approached our HC marketplace for the past few decades, not the inherent features (failures) of the market itself.


          • I mean a lot of things. Here’s one. We know there is information asymmetry. Our “solution” for it has been incomplete, mostly in the form of insuring ourselves against the financial harms. (Insurance does more than that, but it also does that.) This probably made things worse in the sense of incentivizing more unnecessary care (along with useful care). Only recently has there been a renewed effort to educate the public about wasteful and harmful care. It’s long overdue. It probably won’t work all by itself and broadly. But it may help some patients.

    • Austin,
      It sounds like you’re suggesting that consumerism as an answer to rising costs. I think you’re suggesting a milder form than HDHPs, perhaps full coverage up to the reference price but cost sharing for anything above it. A reference price could be the price for the minimum high-quality provider in the area. This makes sense to a point: if consumers value the additional comforts or quality of a higher-cost provider, they pay it. This does provide a middle ground between the 1990s HMO situation of arbitrary limits on payments and procedures and the current system of few limits. However, there’s also I/O competition aspect here – there must be sufficient competition in a region and sufficient capacity at the reference price to see benefits.

      • Nailed it.

        Plus, there are many variants. I’m not proposing anything in particular, just re-raising reference pricing as a potentially useful tool as part of an arsenal. Since I’ve praised it before, this is not a change of view for me.

        • Personally, reference pricing in this vein just seems like such an obviously good idea that I don’t understand why there isn’t more discussion of it. Of course the major issue is determining the reference price point for every condition, but it’s not like anyone can claim with a straight face that there aren’t similar issues with any health care system.

          It’s not like the general idea is even absent within the major health care debate. After all, isn’t Paul Ryan’s premium support plan really just a very simple reference pricing scheme for insurance premiums rather than for provider payments?

        • There is no reference pricing discussion because by being opaque, they can nickel and dime people to death. Tell people they can spend up to x amount in healthcare before shelling out copays and coinsurance, and they will – it pretty much guarantees that x amount will be paid. Whereas, by having a copay, you deter the trip to the doctor, and reduce the payments.

          • Yes, that is the difference. So, consideration of both is worthwhile (copays + reference pricing) if one is serious about patients behaving like consumers.

    • Yes it might be better if one got cash on diagnosis. For example if you get x cancer you gate $100,000.

      The big problems would be fraud and insurance company doctors who insist you do not have x cancer. Of course you could reduce the insurance doctor side of the problem by getting life, disability and long term care insurance from the same organization that gives you health insurance.

    • What Austin seems to be suggesting, or at least one variant of what he’s suggesting, is a P&C insurance model – if your doctor says you need rotator cuff surgery, you get $6,000. If you chose to go to a surgeon/facility that charges $7,000, you pay the difference. If you pay $5,000, you pocket the difference. Anybody who’s ever pocketed a check from your auto insurance for hail damage (I once did this, it’s perfectly legal) should understand the concept.

      It’s a great idea, and one that stops treating patients like passive objects that medical professionals ‘do health care to.’ It’s pretty much the only way we can ever actually get to a real pricing system that not only is transparent, but also ends the gouging of the uninsured, cash-paying patient that goes on.

    • I hate the kind of analogy that you used. For most medical treatments, most of us don’t see the “luxury” option. We’re looking for the best chance of recovery. I don’t want to spend more time in a lovely Doctor’s waiting room or being poked and prodded or getting blood taken. If I do it, it’s because the doctor or health information I trust has convinced me that I need a colonoscopy, not because this ranks right up there with a free massage.

      People don’t choose, say, expensive robotic surgery/proton beam therapy because it’s the Lexus of surgery, but because they’re trying to avoid a Yugo.

      I’d say the most important way to control costs is not to ask the patient to figure out whether he’s being offered a Lexus, a Yugo or a Ford Fiesta, but to outlaw marketing convincing people that if the seats aren’t leather, it’s a Yugo and it will break down as soon as you drive it off the dealer’s lot.

      • True. In many cases in health care, the “luxury” model has all the practicality of the efficient one, but with a good dose of useless and harmful “extras.” Would you like a CT scan with that? (Never mind it won’t reveal anything we need to know, and may reveal many things we are better off not knowing.)

        • Again, I think you’re focused on the wrong set of incentives. I do not have the training to know whether I need a CAT scan. If my doctor – who has years of training and should be aware of guidelines and evidenced based care – says I need it, I get it. (If I can afford it.)

          The far greater issue is that doctors often have an incentive to recommend procedures that are not necessary. There are both positive incentives – paying Doctors by procedure – and negative ones – the threat of law suits if they don’t do CYA procedures (for the record I think that factor is wildly overblown but it is a factor nevertheless).

          The only impact of placing more of the financial responsibility on the patient in this case is that less care – much of it necessary – will be delivered.

      • Price differentials are not exclusively, or even primarily, the product of ‘Yugo, Fiesta, or Lexus’ options. In most cases today it’s simply differences in the ways different providers fabricate random numbers they chose to call prices before discounting them by anywhere from 30% to 95% (give or take).

        Some price differentials are simply the result of certain providers deciding to offer real prices instead of the “charge master” rates other providers use. Sometimes it’s about quality, or convenience, or location, or a whole host of other considerations. But it is a serious mistake to think that price differentials are necessarily the result of “luxury” options or “frills,” or even quality.

    • You’re an intellectually honest guy. I respect that.

      Maybe we’re going about this in a backasswards way. We’re focused on cost, cost, cost and the consumer disconnect from being a rational consumer.

      Maybe we should turn it on its head, and give consumers presents.

      Use reference pricing, and then let the insured choose their treatment option. If they spend less than the reference amount, whether by foregoing care or choosing the cheaper options or whatever – give them the money.

      Sorry to hear you got leukemia. Here’s your million dollars in vouchers. A year later, oh you died? That sucks…ah, but says here you only used $400k of care, mostly palliatives, instead of spending a million five on trying for a cure. OK. Here’s the $600k check for your widow and young family.

    • If your goal is to discourage use of health care, the copay is definitely stupid, and co-insurance and reference-pricing less so, in that order.
      Yes we want to discourage abuse of health care, but are customers (patients) capable of distinguishing necessary from unnecessary uses of healthcare? If you set the financial barrier too high, at some point some patients will be hurt by not using health care..

      • What if the reference price is sufficient to buy necessary care? I agree that patients cannot always tell what is necessary. But if nobody can, then the whole notion is vacuous.

        • True, and along with that comes convincing patients that the therapy covered by the reference price actually is sufficient and they don’t require whatever more expensive option is advocated by their doctor.

          If we give a prostate cancer patient $10k to have their prostate surgically removed but their doctor tells them he’s gotten better results with $20k IMRT, will patients still accept that the cheaper reference therapy will deliver similar results or simply insist on the more expensive option?

          • If the notion of “good enough” has meaning and we have decided that $10k buys a “good enough” treatment then the only two people who need care about the $20k IMRT is the patient and his doctor. If “good enough” is not meaningful or determinable then are we obligated to fund every treatment every doctor recommends forever?

            To be sure, there are other ways of trying to incentivize efficient care. Not a single one of them is perfect or without opposition. In that context, it is hard for me to understand why reference pricing shouldn’t be on the table.

            • I completely agree with you on reference pricing, just illustrating one of the challenges. Treatment of prostate cancer seems to be one of the most established procedures in terms of comparative effectiveness ) and in spite of the lack of evidence supporting higher cost procedures, we still see doctors and patients repeatedly opt for them.

              I would hope that this is mainly due to financial incentives, even if that is taking a fairly cynical view of providers. Anything that helps on that front I’m in favor of, including reference pricing. A well-structured reference pricing scheme on its own seems as if it would be much more effective at controlling costs than co-insurance or co-payments on their own, although realistically some combination of co-insurance and reference pricing seems much more plausible politically.

            • But who decides what is “good enough?” Who is the one setting the reference pricing? Is it the federal or state governments, the insurance companies, individual hospital systems? I think this would be an impossible sell in the US. Look at what is happening with the NICE in the UK. While it may have some merit economically, politically I see this as nearly impossible.

            • In a way reference pricing is like balanced billing something that should be on the table as well. Imagine if balanced billing were permitted (there may or may not be some controls). The expert cardiologist that is world renown could bill more than the just graduated physician who only had one year of post medical school training. I think both have a place at the table.

    • The biggest flaw with the theory that health care services as a market is the inequality of information. First, the consumer may or may not have any medical background, so they are unable to determine if recommended services/goods would be useful or even necessary, Second, often consumers do not have access to information regarding cost variations between the medical services providers in their area.

      I have been following the Safeway health benefits plan with interest over the past year. Laree Renda, President, Safeway Health Inc has an enlightening article published in the Institute for Healthcare Consumerism website:


      While Ms. Renda highlights behavior change, I was most interested in the information that is given to their employees. Note the cost of a diagnostic colonoscopy varies from $887 to $7,245 in the greater San Francisco Bay MSA area. Assuming that the consumer is convinced that they need a diagnostic colonoscopy, cost-shares as a percentage of total costs would be reasonable, assuming that the quality of services performed was within acceptable standards.
      Unfortunately, most health benefits plans do not provide this level of detail to their customers. It will be interesting to see if the explosion of health information available to consumers will actually be information that they want or use.

    • About that copayment-Toyota analogy …..

      A counter-analogy may be subway ticket. If you think of copay as a fix-priced $2 subway ticket, copay may not be that stupid. Even though you pay the same price whether the ride is 2 stops or 10 stops, you get off at your destination. You don’t get off at further away stations simply because you pay the same price. So for copay to work, both the patient and the provider have to know exactly what they want to achieve, and both have to agree that the more expensive (the further away subway station) is not necessarily the better. Wishful thinking perhaps.

    • One practical barrier to reference pricing in 2014 will be the ACA’s new out of pocket spending ceiling. Plan designs will not be permitted to expose individuals to more than rough $6400 in annual out -of-pocket expenses (twice that for families).

      By the time a consumer reaches a key health care decision (whether to have procedure X, which specialist/hospital to go to for the procedure, etc.) some or all of that $6400 limit will have been spent down (for preceding doctor visits diagnosing the problem, related tests/labs, etc.). This will leave what is likely a very narrow window (if one even exists) of price-based sensitivity to influence the different options.