Patients Are Not Consumers...But Who Is?

Kim BellardIt has become an article of faith in some health policy circles over the past 20 years that the "solution" for our health care system's woes is to make us better health care consumers -- the so-called consumer-driven movement.

After all, we've known for at least forty years that increased cost-sharing does influence how much health care we consume, so, in theory, higher deductibles and coinsurance, plus better cost/quality information, should give us the right incentives to shop.

Most health care professionals are equally convinced patients aren't, and are never going to be, "consumers" in any meaningful sense.  Health care is too scary, relies on too much specialized information, and is too often "consumed" at times when we are least able to make thoughtful decisions.

So far the evidence that health care shopping works is skimpy, and I've often wondered why.  I've come to realize that it is not just a health care problem.

We're just bad consumers generally.

Oh, no, you might say.  We're a nation of consumers!  We love shopping!  We're the home of the mall, of Walmart, of huge grocery stores, of Amazon!  Shopping is as American as mom and apple pie.

Well, if health care has shown us anything, it is that just because we spend a lot of money on something doesn't mean we're good consumers.

Take one of the most common consumer products over the past thirty years, the personal computer.  Through luck or shrewdness, Microsoft managed to ensure that most of the early computers ran on a Windows operating system, buggy though it was, and we didn't demand better.  It wasn't the best OS available then and it isn't now (although it has improved), yet Windows remains by far the dominant operating system.

Well, then, consider mobile phones, specifically smartphones.  We love our smartphones even more than we ever loved our PCs, and Apple has certainly raised the bar for the entire market with its iPhones.  Here, certainly, is a case where we've acted as good consumers. 

Or maybe not.  Last year Apple made around 80% of all smartphone profits, despite only having around 15% of market share.  That is not a sign consumers are demanding better value.  Apple is now rolling out iPhoneX starting at a cool $1,000, and preorders for it are already depressing orders for other models.

If it is new and flashy, we want it.

Then there is the quintessential America product, the automobile.  Once upon a time, U.S. manufacturers dominated not just the U.S. but the world.  They got cocky, gave us ever more expensive and lower quality cars, and assumed we'd just keep buying them.  They didn't introduce car safety features like seat belts or air bags because we demanded them or because they wanted to improve their vehicles, but because lawsuits and consumer gadflies like Ralph Nader forced them into it.

Higher gas prices in the 1970's gave foreign car manufacturers the chance they needed, and they've been taking market share ever since, to the point when it's fairly even.  We now have better choices, safer vehicles, and -- thanks to the Internet -- virtually all the information anyone could want to shop for the best vehicle.

So what do we buy?  Year-in, year-out, the top three selling models in the U.S. are huge, gas-guzzling, expensive pickup trucks (Ford F-series, Chevy Silverado, and Dodge Ram).

It's not that so many of us are farmers or construction workers.  We buy them because we like who we think that makes us.  You don't have to watch too many car commercials to realize they're appealing to our desired self-image rather than encouraging us to shop smartly.  And it works.

Most of us don't like our cable companies, but most of us tolerate old technology, subpar customer service, and paying for channels we never watch.  Few people consider flying a fun experience these days, but airlines continue to shrink legroom, tack on ancillary fees, and reduce choices of flights.  Yet we keep flying.

OK, but surely the success of Walmart and Amazon proves we're good consumers, taking advantage of low prices and comparison shopping?  Don't count on it.  Even at these low-cost merchants, there still are plenty of markups on most items (think Air Jordans really cost $150?).  And Amazon illustrates how prices for the exact product can still vary greatly -- yet some people still pick the higher priced options.

If there is anyplace we might be expected to act as good consumers, it might be at the grocery.  We all shop there, and our lives literally depend on our choices.  Any illusions one might have about how wisely we shop there should be dashed by the cereal aisle, which is filled mostly with overpriced ways to repackage sugar.

So where, exactly, are we acting as good consumers?

The fact of the matter is that we are not rational consumers.  There is a raft of research literature on this point.  Psychologist Peter Noel Murray, Ph.D., calls it "the myth of the rational consumer."  We like to tell ourselves -- and anyone who asks -- that we're making sound, rational purchase decisions, but much of our purchase decisions are driven by influences that we may not even be aware of.

In the end, Dr. Murray says: "It is the consumers’ perceptions of emotional payoffs that cause purchase behavior."

We're aware of how badly we consume health care services because the health care system is so bewildering, and because our encounters and health insurance premiums are so expensive.  If we used more legal services, we'd be talking about the arcane legal pricing structures and how ill-equipped we are to shop for those services.

The question isn't why we're not better health care consumers, but why we ever thought we'd be better at shopping for it than anything else.

That being said, there are people who do try to shop prudently, and would probably do more in health care settings if they had better data and more options.  We may not be actually getting better deals at auto dealers -- their profits don't seem to be suffering much from all our supposed hard bargaining -- but more of us at least can leave there feeling we tried.

We can at least hope for that much, even in health care.