The Correlates of Cost-Conscious Behavior Among Elderly Consumers of Health Care Services

Abstract

Congress and the president have taken a number of steps to control Medicare costs, including shifting Medicare reimbursement to prospective payment based on diagnosis-related groups (DRGs) and increasing the coinsurance and deductible payments (cost sharing) required of Medicare enrollees. The cost-sharing approach assumes that elderly consumers, when faced by the potential for increased out-of-pocket expenditures, will curtail unnecessary use of health services and shop for services and products using price as a guide. Interviews with 398 noninstitutionalized Medicare enrollees determined the extent to which their behavior as consumers of health services meets the expectations of the cost-sharing approach. The mean score of 2.08 on a 12-item market behavior index indicates that most elderly respondents failed to engage m cost-conscious behaviors. Higher scores on the index were correlated with measures of the time costs associated with obtaining health services and satisfaction with the quality of care.