David Cutler: preference

Transcript context

…Why is hospital price transparency so hard to achieve? We’ve passed laws — good laws, in my opinion. The Trump people were for them and doubled down on the issue. When hospitals don’t do it, they get a slap on the wrist. Maybe they’re sent a letter in the mail. Voters seem to like the idea. Why has that been such a tough slog? It was one of the very few things that the Trump administration did that I really enjoyed, and that I give them credit for, was their attempt to push this. Everything that we know in healthcare is that people have difficulty choosing on the basis of price and quality. It goes back a little bit to some of the behavioral issues that we were talking about, but I think it’s slightly different. If you go to the doctor, and the doctor says you should take medication X, and you go to the pharmacy, and the pharmacy says that’ll be $30, a fair number of people will walk away and say, “I don’t have $30. ” What we would hope they would do is go to their doctor and say, “Doctor, is there any way that there could be a cheaper medicine that might work because $30 is hard for me this month? ” In practice, people are extremely uncomfortable doing that. They really don’t like to go to their doctor and say, “Doctor, how do I trade off the money here versus the medicine?” As a result, they wind up not taking the medicine, and then they avoid the doctor because they’re ashamed to admit to the doctor. People really don’t like the money being involved in the medical care part. They’re also very afraid of the quality part, of having that quality discussion. For example, before you’d buy a TV, you’d look up and see what are the different characteristics and so on. Yet, before you do surgery, people rarely look up, how good is that surgeon? What’s that surgeon’s record? What questions should I ask of that surgeon? They’ll ask it of the TV. They’ll ask it of the refrigerator, but they will not ask it of the surgeon, nor will they ask it of the referring doctor. They won’t say, “Doctor, are you sure this is the right person?” and so on. It’s almost like they don’t want to put that doubt. They don’t want to say, “Look, I’m not sure you’re the right person or this is the right thing for me.” The net effect is that when these data are out there, they just don’t get widely used. Hospitals don’t want to put it out there because they don’t want to be compared. If the patients are not going to complain that much, they say, “Fine, I’ll just do the minimum possible. Sometimes I won’t even comply. There’s no burning need for me to put that information out there.” How do we explain the cross-sectional variation there? Because I agree with what you said, but if I look, say, today, at the vaccines, there are really quite a few Americans who obsess over Moderna versus Pfizer, this versus that. Maybe some of what they think is wrong, but they spend enormous amounts of time on social media consuming information about vaccines. They don’t seem to be put off by nervousness. Yet, when it comes to the brain surgeon, there’s nothing, right? Very hard to find out anything, and that’s endogenous because, in part, the demand isn’t there. What accounts for that difference?…

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