Consumers Can’t Handle Options They Don’t Have


Not to build a day of blog posts drawn from a source, the Wall Street Journal, to which not everybody has full access, but an essay by Amanda Frost, taking up the “no” side of the debate question, “Can consumers be smart health-care shoppers?,” gives an opening for a point that ought to be made more frequently:

When it comes to making decisions about our health care, being a “smart shopper” takes more effort than most of us are willing to put in.

Advocates for price transparency would have us believe that we, as “consumers,” should consider our health care a product to be shopped for, like a pair of shoes. But mainly we are “patients,” with varied, often time-sensitive health-care needs. There is an important distinction between presenting the information—and choices—to patients and asking consumers to make complicated decisions about their health care based on that information. …

Available evidence is not cause for optimism about how much money can be saved with more choices and publicly available prices. While large health-care payers may save some money from consumer shopping, the average person will likely see little, if any, savings.

Frost’s argument appears to be that consumers in a market with artificially constrained options — that is, in which choices are limited, obscure, and difficult to understand — don’t seem to want to clear that high hurdle, so lowering the bar is a bad idea.

Look, if shopping for health care “takes more effort than most of us are willing to put in,” then people will pay extra for options that free them from the burden.  Frost is essentially saying that those who are willing to put the effort in should not be allowed.

But I don’t believe she’s correct.  Once people get used to the idea that they aren’t under the watchful eye (or the thumb) of their insurance companies and the government, they’ll begin figuring out pricing and talking among themselves.  The possibility of choices will make new products and more competition possible, lowering prices and improving quality.