Consumer Perception of Health – The Cost of Happiness

Consumer perception drives most of the success or failure of an industry. When consumers perceive a need for a product or service, an industry has a limitless ability to expand, innovate and thrive. In the health care industry, the product consumers crave (and need) is health and wellness. Health and wellness is an essential quality of life factor that many consumers are willing to pay a high price to achieve.

Consumer perception of health has expanded drastically in the last 30 years. A long time ago, it was adequate to just “feel” well. Today, health is also defined as adequate preventative care, supporting healthy lifestyle choices for long-term health and adequate access to health care. All three of these factors are heavily influenced by consumer health care insurance availability and affordability. Subsequently, health care insurance availability and affordability is influenced by market threats and health care market equilibrium.

The largest group of health care consumers in America today is the Baby Boomer generation (approximately 76 million Americans). This generation is faced with rising costs as the health care industry faces its most turbulent time in history due to staffing shortages, decreasing insurance reimbursements and staggering malpractice costs within the industry. Compounding decreasing private insurance reimbursements, this generation is also facing a Medicare crisis as they reach age 65.

To complicate matters, as this generation ages they are faced with new health care problems and chronic conditions that demand treatment for wellness. As the consumer perception of health and wellness becomes more complicated, so does the demand for healthcare. When compared to figures from 1984, a significant amount of Americans show higher levels of preference in terms of which hospital and which provider they use for long-term care. Surprisingly enough, regardless of age, a higher percentage of Americans also show an increased use of specialists (2010 PRC National Consumer Perception Study).

Health care is unlike most other goods as consumers actively seek out methods and resources to safeguard their intangible sense of wellness. Consumer motivation to safeguard health is directly proportional to the long-term benefits of wellbeing and marginal “health stock”. Consumers recognize that better health leads to less sick days, increased productivity and higher pay. Americans especially are preceptive to health care specialists and care due to the high internal locus of control associated with Western culture. Western ideals espouse self-determination that’s driven by a strong sense of internal control. Health-seeking behavior is a prime marker of this cognitive view of one’s external environment. As a result, American culture encourages and rewards this behavior.

Today’s long-term wellbeing is driven by the three factors discussed earlier: preventative care, support for healthy lifestyle and access to care. As these three items are met (with increasing costs), a consumer’s sense of “health stock” rises. Health stock is the perception of consumer control over one’s health and consumer satisfaction with health care in relation to resources spent. Resources can be defined as time, money or even travel to healthcare access.

Today, the cost of consumer happiness in relation to health stock and perceived wellness is higher than ever. In 1990, the total cost of the health care industry was approximately $714 billion. In 2008, this cost tripled to $2.3 trillion. Compared to the rest of the world, the American health care industry has expanded exponentially in terms of cost while accessibility has risen only marginally. This increased demand has led to an increased cost as market threats keep the industry turbulent.


Anderson, G., & Frogner, B. (2008). Health Spending In OECD Countries: Obtaining Value Per Dollar Health Affairs, 27 (6), 1718-1727 DOI: 10.1377/hlthaff.27.6.1718

Branscome, J. July 2006. Employer-Sponsored Single, Employee-Plus-One, and Family Health Insurance Coverage: Selection and Cost, 2004. Medical Expenditure Panel Survey & Agency for Healthcare Research and Quality (AHRQ), Statistical Brief #134.

Grossman, M. (1972). On the Concept of Health Capital and the Demand for Health Journal of Political Economy, 80 (2) DOI: 10.1086/259880

PRC, 2010. 2010 PRC National Consumer Perception Study: Snapshot of America.

Brett Huffman, MS

Brett Huffman, MS, holds a Bachelor of Science in Biology, and soon, a Master of Science in Space Studies (Astrophysics). He is a full-time writer with over ten years experience in Biology and research in Psychology.
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