Being A Consumer Isn’t Just About Money, But About Choice

Wendy Lynch

First published 5/5/11 on the Altarum Institute Health Policy Forum

Imagine you heard about a friend who purchased and moved into a new home based on the advice of his realtor. He later regretted the decision, learning that he paid twice what he should have, there were unsafe levels of pollution nearby, and the roof leaked. Would you wonder why your friend hadn’t done his homework? Or would you assume that, because he is not a property expert, it was wise to rely solely on advice from his professional realtor?

Asked in a different way: when considering the purchase of an important product or service, how important is it to be personally informed about that product?

In most cases, we accept that buyers have a shared responsibility when purchasing products and services.

Change the topic from homes to health care and watch opinions change.

Several recent articles (1) and blog discussions (2) have sparked emotional debate about the potential dangers of asking citizens to spend some portion of their own money and behave like consumers when using health care. Some have strong objections to even using the word consumer because, they argue, health care is not like other products. (1)

Unfortunately, because people feel strongly about this issue, information is polarized to represent extremes:

Those AGAINST Consumer-Driven Care Argue: Those FOR Consumer-Driven Care Argue:
  • It means more cost to the individual.
  • It discourages use of necessary care by forcing people to make difficult choices based on affordability.
  • This sometimes results in harmful decisions that put the poorest and sickest at disproportionate risk.
  • Health care is not a desired product, but a fundamental need that should not be evaluated based on cost.
  • Because most decisions are complex, patients need medical professionals to make time-sensitive, highly sophisticated and technical decisions on their behalf.
  • Cost is the only real motivator.
  • It is the only way to reduce demand.
  • It helps people become engaged and informed about their care.
  • This leads to smarter spending, less unnecessary care, and more ownership.
  • It does not reduce use of necessary care.
  • These factors reduce overall cost mistakes, and risky procedures.
  • People are capable of understanding complex issues and deserve to be informed about the health services they receive.

Neither position is completely accurate, and both largely miss an important point.  

What does being a consumer mean?

Too often, the consumer versus patient debate is centered on money, which is too bad, because money is just a mechanism to create the real difference – involvement in and ownership of choice. Who ultimately should decide what happens to your body?

The goal of consumerism is not to save money by limiting care, but to encourage and empower individuals to make informed choices. Like a home buyer who doesn’t inquire about safety, quality, or price, too often we agree to medical services without knowing all our options, or their benefits and risks. Why does money matter? Because we behave differently when we pay for things ourselves. When we hold the purse and write the check, we are more likely to ask about the price, value, and safety of any product.

And ask we should.

The leading government agency on healthcare quality says this:

The single most important way you can help to prevent errors is to be an active member of your health care team. That means taking part in every decision about your health care. Patients who are more involved with their care tend to get better results. (3)

Those concerned about the risks of consumerism focus almost exclusively on the risks of not receiving necessary care. But there is another side to this. One of the least quoted results from the famous RAND health insurance experiment, which examined utilization differences between people with high and low deductibles, is their conclusion that those who got free care were exposed to more harm than good because they had higher rates of inappropriate treatment than those who paid for their care. (4) Those sheltered from expense were simultaneously exposed to greater risk from over-treatment.

In a system that generates income by providing more and more services, the only party paying attention to the necessary care question is the purchaser. Right now, the purchaser is most often government and employers. Shouldn’t we, the people receiving the care, have the greatest say in the matter?

We can—but only when we become the purchaser.

We can encourage involvement through purchasing, and add other features to mitigate other concerns.

Cost-sharing works to reduce cost. It is a blunt instrument and will not improve quality in and of itself, but it does activate other helpful behaviors. (5) Assume we provide a high-deductible health plan, say $2,500. (Note: a high deductible alone is not a consumer-directed plan.)

Problem: People will avoid necessary care because they cannot afford $2,500.
Answer: Deposit $2,500 in a health spending account to use on medical services and allow money to accumulate over time. Out-of-pocket cost goes to zero.

Problem: Someone who has an emergency at the beginning of the first year will not have accumulated enough money to cover their expenses.
Answer: Front-load the account the first year.

Problem: People might still avoid important preventive care because they want to save money.
Answer: Provide primary care, preventive services, and basic medications at no cost for those who establish a relationship with a primary care doctor.

Problem: Medical decisions are way too complex for lay people.
Answer: Provide detailed information about price and quality, and access to a nurse who can help people navigate decisions.

Problem: People are afraid to question doctors and ask for a second opinion.
Answer: When educating about the plan, also educate about patient rights and safety.

Designs with these features do promote informed decisions, encourage use of necessary care, and (whether one wants to consider this a positive feature or not) save money.

Rejecting any consumer role because, when misused, it might be detrimental is like abolishing GPS because a few users might use it to go to places we don’t like. In the vast majority of cases, it helps guide better decisions.

As long as money is misunderstood to be the end game of consumerism, the debate is winless. It is merely a tool, a vehicle to encourage patient participation, ownership of health, and informed choices. Consumer-focused efforts are not an effort to limit care by imposing rules, but instead exactly the opposite. Leave out the ‘consumer’ label if you wish, but don’t assume that distancing patients from direct involvement in choices, i.e., buying them, is safer or healthier for anyone.


  1. Krugman, P. (April 21, 2011). Patients are not consumers. The New York Times. Retrieved from
  2. Hobson, K. (April 22, 2011). Are ‘patients’ the same as ‘consumers’? The Wall Street Journal. Retrieved from
  3. Agency for Healthcare Research and Quality (AHRQ). (February, 2000). 20 tips to help prevent medical errors: Patient fact sheet. Retrieved from
  4. Newhouse, J.  P. (1993). Free for all?: Lessons from the RAND Health Insurance Experiment. Retrieved from
  5. RAND Corporation. (September 16, 2010). The health insurance experiment: A classic RAND study speaks to the current health care reform debate. Retrieved from
Wendy Lynch is Principal at Lynch Consulting, and a regular contributor to Care & Cost.

2 thoughts on “Being A Consumer Isn’t Just About Money, But About Choice

  1. I think this analysis leaves out one important point: people already pay for their health care, either through insurance premiums (in a private setting) or through taxation (in a public setting). If the submission is that people care more when they’re paying directly than they do when they’re “pre-paying” through an insurance plan (private or public), I think more evidence is required to support that distinction.

    The spirit of your argument is sound – we definitely need to find ways to engage patients / consumers in decisions about their health care. But I’m not convinced that an out of pocket payment upon receipt of service is the best way to achieve that increased level of engagement. I think, instead, we need to do a better job of drawing the linkage between the tax dollars (or insurance premiums) people pay to support their health systems, the outcomes they’re buying with those financial outlays, and the negative side-effects of the services they receive. We also need to eliminate all financial incentives care providers have in recommending different treatment alternatives.

    When patients / consumers are provided with all of the information they need to make decisions, in a manner that makes it clear that it’s okay to question the care provider, their engagement in the process can only increase. Before we embrace out of pocket payment – and its unequivocal negative consequences – we should first exhaust all efforts to ensure patients are truly provided a holistic picture of all of their treatment alternatives.

    1. Danton,
      Thanks for your comments. I completely agree about the need for better information, educating everyone about where their money goes, and removing physician incentives for add-on services.
      What evidence has shown me is that we do spend our own money more carefully than we spend OPM (other people’s money). That applies even when we have supposedly “paid” for services already through premiums or taxes. When individuals see their account balances — own money — increasing, they simply are more likely to ask “what does this cost?” Much more than when the bill will be paid by an insurance policy.
      If we can harness the increased level of engagement that causes, in ways that also keep people healthy, it can shift the market.

      Thanks again

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