The Psychology of Cost Control

15 Dec

It would be nice to think that there is a clear-cut way to control health care costs and that if politicians would just quit bickering back and forth we could follow the steps to bring costs under control. Of course, there are some sure-fire cost control options, like single-payer with global budgeting, but the political feasibility of that sort of thing is just too low to be given a second look right now. But what about something that seems a little more rational and reasonable–even to the free-market anti-government folks–like cost-effectiveness guidelines? As consumers, we do this every day, right? Isn’t that how we ended up with sayings like “How much bang for the buck?” That certainly implies that too little “bang” is poor use of the “buck” and that at some point–perhaps the market price–you’re getting a proper amount of “bang.” We should do this in health care, no?

Well, according to Peter Ubel, the cost-effectiveness analysis most of us conduct ourselves is subject to some pretty serious psychological constraints. In a recent article, he examines how physicians, when offered two treatments with identical costs and identical benefits to patients, responded in favor of one while being opposed to the other. The only difference was that one intervention was already in use, while the other intervention was hypothetical. This was actually the basis of a study he conducted a decade ago, but people don’t change that quickly, so his findings are still extremely relevant today.

His three psychological factors can be summed up as:

  1. People have a strong aversion to loss — they could use cost-effectiveness criteria to justify not adopting a new test, but they didn’t want to use it to justify getting rid of what they were already using.
  2. A belief that early cancer detection is always better than later detection — which Dr. Ubel points out is not supported by the medical literature.
  3. People have a limited attention span — so they don’t make decisions by examining all of the important factors, just some of them.

Of course, I’ve really just summarized his work, and you should go read it for yourself, because the implications are important. Politics may pose a challenge to health reform that controls costs, but at the end of the day, it is our psychology–our human nature–that suggests that we have to want to control costs, and I’m not sure we’re there yet.

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Posted by on December 15, 2009 in Uncategorized


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