Information asymmetry isn’t the only problem. Pricing varies widely between facilities and providers, and has little to do with the actual quality or value of the services received. And there’s no Kelley Blue Book for health care.

Health care is generally reactive by nature - treating a broken arm, for example - so preliminary research, and even the ability to choose when and where care will take place, is often out of the question. This is quite different from traditional consumer marketplaces, like the automobile industry, in which buyer and seller have equal access to information and bargaining power. In practice, it means that patients have no idea what a test, procedure, medication, or stay in a particular hospital will cost before receiving these services. This concept, introduced by economist Kenneth Arrow in the early 1960s, laid the groundwork for his pioneering study on health care economics. Information asymmetry occurs when consumers are at a severe disadvantage because they know far less about the services and goods than does the seller. It is almost impossible for patients and their caregivers to be savvy health care shoppers because health care, especially in the acute or emergency setting, is an asymmetric market. Given the current administration’s wavering health care agenda and lingering uncertainty around reform, payers will respond by transferring more financial risk onto patients and consumers. Providers will also feel the pain - they are pretty good about collecting initial copays from patients, but often have trouble collecting any costs not covered by insurance.

Such plans will force a large number of consumers to take greater responsibility for their health care costs and pay out of pocket for health care expenses, almost always without knowing the cost of the care they receive. These offer lower monthly premiums for a higher deductible, the amount of money people must pay toward their care before their insurance starts covering the costs. Exclusive analysis of biotech, pharma, and the life sciences Learn Moreįinancial toxicity: 1 in 3 cancer patients have to turn to friends or family to pay for careĪs we wait for details on what, if anything, will replace the Affordable Care Act, it’s likely that high-deductible health plans will play a significant role in health insurance.

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