Consumers Understand Tradeoffs

But according to McCallister, there is no reason to think health care consumers would not make more judicious and cost-savvy decisions if only they had the necessary information to "choose, finance and use" health care. He noted that consumers understand the meaning of tradeoffs in other purchasing arenas. If they decide to buy furniture at Ikea, for instance, they know they will have to cart the furniture home and assemble it themselves, rather than have a delivery man do the work. But these consumers also know they will be able to save some money. Likewise, people moving out of their homes can hire a moving company to haul away their possessions or have PODS (Portable on Demand Storage units) delivered to their driveway and then pack up their belongings themselves.

When it comes to health care, he said, the concept of tradeoffs hasn't really penetrated the minds of patients who are doing the buying. While 84% of Americans rank health care as the benefit they need most from their jobs, most people are clueless about what that benefit costs them.

"It's coming out of our paychecks, but we don't even know what we pay for it," McCallister pointed out. Most employees give little thought to what health plan to join for the coming year, spending only about 30 minutes to explore their options. Even many employers, who foot much of the bill, fail to see the value in more informed decision making. He recalled suggesting to a business that it would be useful to offer a session on health benefits. The manager's reply: "I can't afford to have my people off the job for an hour."

In addition to looking more closely at the options -- and costs -- of health care coverage, consumers need real-time, evidence-based information to act on when they are deciding what treatments to get. "The estimate is that 15% to 50% of our health care is of no use," he stated, echoing a theme that surfaced more than once at the Wharton conference. "If we're ever going to be able to understand what we're doing in health care, we have to be able to understand quality."

He noted that there are great variations in the practice of medicine across the country, and something as basic as where the patient lives can have a big difference on what care they get, or whether they get a treatment or procedure at all. In Wyoming, for instance, the rate of back surgery is 9.63 per 1,000 people, while in Illinois it is 3.39 surgeries per thousand, he said. The rate of back problems isn't that different in the two states, so that doesn't explain why surgery is more likely to be done in Wyoming.

"We have no methodology to judge the comparative effectiveness of new technologies," McCallister acknowledged, although the latest economic stimulus package does include $1.1 billion to fund comparative-effectiveness research -- which is a polite way of saying it's time to get to the bottom of whether a given treatment is worth the price. He said the adoption of standards for care by doctors and hospitals can make a big difference to patients, leading to fewer complications, shorter lengths of stay, and in turn, smaller bills. Doctors at Johns Hopkins, for instance, found that they could cut the infection rate among patients in the intensive care units by 66% by following a simple checklist of safety precautions. Great strides could be made in assessing quality issues, he added, if the federal government chose to release the Medicare database, which would provide researchers and others an unprecedented look at both the effectiveness and cost of care.