Patients as Consumers - Harvard Law School

MLR 106-4 Edit Format Document Hall Mich L Rev.doc
Patients have always been consumers, but, today, America’s battle
to restrain rocketing costs of health care has transformed the world
of patients as consumers: Crucially, two recent reforms have (1)
pushed more patients into the medical market and (2) made that market
a more parlous place.
In one of those reforms—managed care—insurers bargain with
doctors and hospitals and give providers incentives to cabin costs.
This helps plan members get care less expensively, which is its
intent. Unintentionally, however, managed care relegates uninsured
patients to a new marketplace, a marketplace of uncommon harshness
dominated by doctors, hospitals, and insurers. Briefly, insurers
aggressively negotiate rates for plan members; uninsured patients must
“bargain” individually with providers who are determined to recoup
what they bargained away to insurers.
Managed care, then, has momentously changed the market for
patients who must be consumers. The latest reform—consumer-directed
health care—drives more insured patients into that market. 4 Assisted
by a new tax shelter for “health savings accounts,” employers and
individuals are buying insurance with high deductibles that require
patients to pay most medical costs out of pocket. 5 To qualify for the
tax shelter, deductibles may range from $1100 for individuals to
$11,000 for families. 6 This is supposed to induce patients to shop like
consumers for good care at low prices. 7
http://content.healthaffairs.org/cgi/reprint/hlthaff.w2.139v1 (web
exclusive).
4. See generally Timothy S. Jost, Health Care At Risk: A Critique of
the Consumer-Driven Movement (2007); Amy B. Monahan, The Promise and Peril of
Ownership Society Health Care Policy, 80 Tul. L. Rev. 777, 803–05 (2006).
5. A deductible of $3500, for instance, covers all the annual
medical expenses for about 80% of people. See John V. Jacobi, Consumer-
Directed Health Care and the Chronically Ill, 38 U. Mich. J.L. Reform 531,
562 (2005); Paul Fronstin, Health Savings Accounts and Other Account-Based
Health Plans, Emp. Benefit Res. Inst. Issue Brief, Sept. 2004, at 1, 11,
available at http://www.ebri.org/pdf/briefspdf/0904ib1.pdf; Mark W. Stanton,
The High Concentration of U.S. Health Care Expenditures, AHRQ Res. Action,
June 2006, available at http://www.ahrq.gov/research/ria19/expendria.pdf.
6. Office of Pub. Affairs, U.S. Dep’t of Treasury, 2007 HSA Indexed
Amounts, http://www.treas.gov/offices/publicaffairs/hsa/07IndexedAmounts.shtml
(last visited Oct. 6, 2007).
7. Patients are simultaneously encouraged to be consumers by other
developments. For example, some physicians are establishing cash-only
practices that refuse insurance. See Sandra J. Carnahan, Law, Medicine, and
Wealth: Does Concierge Medicine Promote Health Care Choice, or is it a
Barrier to Access?, 20 Stan. L. & Pol’y Rev. 101 (2006); Frank Pasquale, The
Three Faces of Retainer Care: Crafting a Tailored Regulatory Response, 7 Yale
J. Health Pol’y L. & Ethics 39, 50 (2007). Also, retail chains are opening
clinics offering basic services for everyday ailments. See Mary Kate Scott,
Health Care in the Express Lane: The Emergence of Retail Clinics (Cal.
HealthCare Found. 2006), available at
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