The False Promise of Consumer Choice

Faced with mounting costs of health insurance for its employees, the state of Missouri hired a consultant from PriceWaterhouseCoopers to help it figure out what to do. The consultant concluded that there were no answers to be found in other states, nor would it help to shop the state’s business around to different insurance carriers. Instead, the consultant suggested that Missouri offer “two plan choices” to its employees, in order to, as a Wall Street Journal reporter put it, “try to soften the rising cost for employees.” 3 One plan had low monthly premiums but high co-payments. The other had high monthly premiums but lower co-payments. The idea, of course, was that healthier employees would choose the plan with lower monthly premiums, and sicker employees would choose the one with the lower co-pays. Both plans, however, increased employee cost-sharing compared to the previous year’s plan. The Missouri story encapsulates the thrust of American health policy over the last thirty years: substitute free markets, market competition, and consumer sovereignty for the system of professional authority, non-profit and voluntary agencies, and bureaucratic regulation that once governed the medical sector. In these times, the new buzzwords for market reform are “consumer choice,” “consumer direction,” “consumer empowerment,” and “ownership.”