POLICY: Can Consumerism Save Healthcare? by Brian Klepper

THCB welcomes back old friend Brian Klepper from the Center for Practical Health Reform. He’s been asked to help various newspapers through the maze of consumer-driven health care, and here’s his take on the matter. You’ll note he gives it an easy ride, in that he doesn’t descend into the mire of risk pooling. Here’s Brian’s take:

In January’s State of the Union Address, President Bush called for expanding Health Savings Accounts (HSAs) as one sensible approach to curb rising healthcare costs. An HSA is a tax-favored healthcare-dedicated savings account that a patient controls. Combined with out-of-pocket requirements and a High Deductible (also called “Consumer Directed”) Health Plan (HDHP), these financing devices can provide comprehensive coverage. Federal 2006 HDHP family coverage guidelines call for deductibles of at least $2,100, with maximum out-of-pocket expenses of $10,500. To his credit, the President also proposed tax changes that would give individuals the same advantages employers already enjoy when they buy health insurance.                                                              The main logic and “sell” of these plans is that HSAs and HDHPs give patients more “skin in the game,” more awareness of healthcare costs, and more control over healthcare spending. The increased involvement in healthcare decision-making encourages healthier lifestyles and smarter healthcare purchasing decisions. In turn, the changes in patients’ buying behaviors will drive down healthcare costs.The reality may be somewhat different.First, there’s little question that HSAs and HDHPs will become major forces in the health insurance market the same way that managed care did in the 1990’s. They’re less costly for employers than conventional plans, so there’s every reason to believe that the market will grow quickly. A recent Kaiser Family Foundation study found that 20 percent of employers offering health insurance already make HDHPs available. Nearly every major health plan now offers an HDHP. And the health insurance industry association, AHIP, claims that HDHP enrollment tripled in the last 10 months, to 3 million lives.The deeper question is why. Are HDHPs becoming more popular because they urge patients to be more sensitive to cost? Or are they successful because, as the scale of healthcare cost has grown out-of-reach, skinnier benefits and higher out-of-pocket costs constitute a lower cost insurance alternative?Both. Employers clearly see HDHPs as a less expensive way to continue offering health coverage. It’s also apparent that, when care costs employees more, they’ll ask more questions.But studies also show that half of employers offering HDHPs do not help fund the HSAs. This may not be a problem for high-income or some middle-income workers. But if you’re low-income – one-quarter of workers make less than $18,800 per year and one-third of families make less than $35,000 – the increased out-of-pocket requirement can be onerous, especially if there’s a serious medical problem. Hospitals and many doctors are already experiencing rapidly increasing bad debt associated with these plans, because HDHPs without funded HSAs are, for many people, simply coverage that can’t be accessed. How about information that helps consumers become better purchasers? There are good Web sites that help patients learn more about their conditions and treatments. But so far, even though inexpensive evaluation tools exist, consumers still can’t get much information on the pricing and performance of hospitals, doctors and drugs. It’s hard to be an effective shopper if you don’t know what things cost or how the vendors stack up. Will consumerism significantly impact out-of-control health care costs? In truth, patients’ diagnostic and treatment choices represent a tiny portion of larger healthcare cost. The real money is associated with chronic disease and catastrophes. In those cases, healthcare professionals, not patients, guide the purchasing decisions. That’s exactly as it should be. But for consumerism to work, healthcare professionals must then be publicly accountable for their financial and clinical results.More to the point, unless consumers have access to robust information about pricing and performance, mechanisms like HSAs and HDHPs won’t really impact cost so much as finance it, merely guiding how the money flows. Even Regina Herzlinger, a renowned conservative Harvard-based healthcare economist, challenged Mr. Bush on this. “Health savings accounts are being touted as a way to control costs, and I very much doubt that claim.”The real roots of our healthcare crisis reside in the ways suppliers and clinicians are rewarded to deliver goods and services that are inappropriate, unnecessary and wasteful. Most healthcare experts agree that half or more of healthcare cost is due to these factors. Making healthcare affordable, stable and sustainable once again will require the infusion of skills and tools – compatible information technology platforms, clinical/administrative practice standards, pricing/performance transparency, payment that’s tied to outcomes – that other industries have long taken for granted. No matter how it’s pitched, consumerism just won’t get us there if these other components aren’t available to support the process.When it’s more mature, healthcare consumerism will likely include the mechanisms that help patients become better buyers and impact cost. Until then, HSAs and HDHPs are less expensive, slimmed down, short-term solutions that can work well if you’re healthy or financially secure. But they’ll do little to address our rapidly collapsing healthcare system. And as a national solution, they’re inadequate and oversold.

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  1. Aw, this was a very nice post. In thought I would like to put in writing like this moreover – taking time and precise effort to make a very good article… but what can I say… I procrastinate alot and on no account seem to get something done.

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  3. Is there any precedence for a US insurance company paying for a procedure performed by a foreign doctor in a foreign country? Is there any legislative discussions about having insurance companies allow this in situations where the only alternatives in the US are much more expensive and offer a less favorable outcome (have a much greater chance of causing disability, and may lead to further surgeries)?

  4. You folks are Great! I have no views at this time, as I am a student for Health Administration. WOW! Great talks and reviews—I have gotten great insights! I am here to ask you folks about consumerism/innovations in healthcare in regards to CatScans for a thesis. Everyone gets them and every doc orders them. I would like to have some relevant data that supports WHY CT is so popular (as if I didn’t know!) and how this is affecting consumerism. We now have “pay out of pocket” institutions for the ordering of CT’s and other imaging modalitie, just because you want one!! I need help in this area!
    Your responses will be appreciated and I can be reached at huskeyb4@aol.com or brian.huskey@tuomey.com.
    I thank you in advance!

  5. You’ve left out the best innovative medical model of all, Personal Pediatrics administrative support system for pediatricians. The aforementioned companies ( miute clinic and take care health systems ) are one direction that medicine is headed, for those that like a nurse to be on the front lines of their care and get a pap smear on their way out of Walmart. For those that value their time and the time and comfort of their children, consider a high deductible combined with an MSA credit card to pay for Personal Pediatrics care coming to a neighborhood near you. We are a marriage of tech and service that enables pediatricians to return to the original way our craft was practiced. Remember full coverage insurance in 2006 pays for an hour wait to see a nurse in a typical profitable pediatrics office. Doctors are just overseeing the operation. Combining the yearly retainer with a high deductible will actually save you money and have personalized service for your children. Take a look at my blog and watch the story unfold. Personal Pediatrics.blogspot.com

  6. And then there is the issue of Medicaid…Did anyone see Newt Gingrich’s latest blog this week on the subject? He takes on the issue of consumerism but specifically what’s going to happen to Medicaid or vice versa. I think I found it at http://consumerhealthworld.com. Interesting food for thought.

  7. There is another issue here that should be addressed. A single payer system eliminates choice. The fact is HSA’s are dependent on the purchaser being educated and understanding what they are buying and how it can be used as a retirement/investment vehicle. Small business owners can now offer both health care benefits and a retirement plan in one affordable package thus allowing small businesses to compete for talent in the workforce, instead of everyone looking for the corporate job. With HSA’s you can have enough put away that you can finance your premiums while looking for another job. People will no longer stay in a job they hate just for their benefits. If college graduates who are healthy, are taught that the first purchase they should make is an HSA they can keep that low premium a healthy young person gets without the fear of skyrocketing rates if their health takes a downturn because the premium, once set, can only go up based on inflation. You can have that premium for ever. The college graduate if healthy for the first 10 years in the workforce will never have to worry about deductibles or financial burden regardless of the severity of a future health condition because his HSA has been funded. We need to stop looking at the lowest common denominator in our society to determine what we need because we are all going to wind up with the lowest level of care. There will be a portion of the population that is not going to fit into this model but that population will be easier to deal with at the governmental level if 80% of the population is covered and has savings that they never had. That 20% of the working population will require the government to offer a comprehensive plan like medicare that works for them. It will not be perfect but it can be enough.

  8. Science recognizes the beauty of simplicity. When competing theories claim to explain the same phenomenon, scientists break the tie based on which offers the simpler, more elegant explanation. Those in government and industry who are trying to unravel the Gordian knot of hospital pricing would do well to adopt a similar guiding principle.
    An array of experts have testified on Capitol Hill that the prices some hospitals charge are at best illogical and at worst illegal, immoral or some combination of the three. How this came to be is no longer important—the reasons are many and re-hashing them accomplishes nothing. Figuring out how to fix the mess is all that matters now.
    Ironically, the federal government (more specifically, the Centers for Medicare and Medicaid services) already has information that most consumers and business leaders can immediately comprehend and use to make informed decisions about how fair or unfair hospital prices are. Think of it as a Rosetta stone for deciphering hospital charges. It’s called a cost-to-charge ratio and Medicare has been calculating and cataloging them for every hospital in the country since the Medicare program was invented in the 1960s.
    Simply put, a cost-to-charge ratio reflects average mark up—the difference between a hospitals’ cost to provide a service and the prices it charges. Medicare calculates separate cost-to-charge ratios for inpatient and outpatient services using each hospital’s own accounting data. Hospitals are required to submit Medicare Cost Reports annually and the data they provide is used by Medicare to set future prices. It is also widely used by policy analysts and researchers interested in hospital costs. Like any metric, to be useful, cost-to-charge ratios must be based on valid data, and Medicare relies on laws and regulations to keep hospitals honest. Cost reports are treated like claims filed with the government and, because false claims carry steep penalties, most hospitals make some effort to submit reasonably accurate information.
    What ordinary citizens can do with cost-to-charge ratios is immediately see what the spread is between a hospital’s actual costs of providing patient care and what they charge for it. For example, many hospital have outpatient cost-to-charge ratios in the range of .30. That means that for a procedure costing $3,000 (such as an MRI or CT scan), these hospitals incur costs of $900—a spread of $2,100. Most consumers can understand and use that kind of pricing information. If nothing else, the uninsured could use it to negotiate fair discounts off charges and insured consumers could use it to compare prices for services not covered by their plans. Ideally, insurance companies and others who contract with hospitals directly would arm themselves with this information whenever they sit down at the negotiating table.
    The information is already in the public domain as it is published each year as part of Medicare’s annual rulemaking for its inpatient and outpatient prospective payment systems. So why doesn’t Medicare make this information readily available to consumers and other interested parties? Good question. Maybe for the same reason Congress wouldn’t let Medicare negotiate prices with drug companies—too many powerful interests have a stake in the status quo. Whatever the reasons, this seemingly simple calculation: cost/charge could hold the key to driving down the price of health care.

  9. The only way to finally come to grips with this insane system is for every American to drop having insurance which would almost immediately force the healthcare system to its knees where it needs to go. Insurance keeps people feeling less responsible for their own healthcare and forces people like me who have spent less than $1,000 in my 48 years on all of my medical care and drugs combined paying way too much for insurance should I opt to buy it which I choose not to do. There are too many completely unnecessary tests being done, unnecessary procedures and medications being provided. Also I firmly believe we could drop the entire cost of healthcare by 75% if we would simply use common sense – exercise appropriately, eat right, keep stress down, sleep well, etc.

  10. Why do you say that single Payer is the only solution that will provide universal healthcare and lower the overall costs of h/c in the USA? I’m not saying you’re wrong, I just wonder why you think there are no other possibilties.

  11. The president’s pushing HSA’s is a diversion of the addressing of the real healthcare crisis. Some form of universal healthcare is the only solution in the USA. Further, Single Payer is the only solution that will provide universal healthcare and lower the overall costs of h/c in the USA. The fact that there is no political will to propose this, and that the pharmaceutical and insurance industries have two highly paid lobbyists in WDC for every one of our elected senators and congressmen, does not in any way change this reality. When leadership bubbles up thru grass roots, corporate sensibility, or some currently unknown influential alliances…the demand will overpower all of the existing myths and unproven barriers.

  12. In response to the post above, I don’t know who’s representing consumers in HIT & RHIOs, but I suggest it requires folks with determination, confidence, respect, talent, honesty and integrity, wisdom, compassion, an open mind, a clear view of the big picture, and a vision of what is possible; along with interests and motivations sharply focused in one direction: Realizing substantial and sustainable benefits to consumers, society, and the world.
    I believe enabling people like these to guide the transformation of the healthcare system would do wonders.

  13. Trap, I don’t know if that article is anything to take to the bank. It’s filled with so many qualifications, misdirections, etc., that it’s virtually impossible to tell where he gets his final number from. The section on Tort Reform really cracked me up. He puts this completely arbitrary number on the value of the deterrance of having a Tort System saying that the lives saved + the payouts to the injured = $33 Billion. What? How do you just arbitrarily put a dollar value on saving the lives of several thousand people. In addition he discusses at length how imprecise these numbers are and then concludes by picking a number seemingly out of thin air to measure the “waste” from a particular set of regulations.
    It’s little wonder this article was published by the CATO Institute and not a peer-reviewed journal.

  14. More support for the importance of the mind-body connection: Linking depression and heart disease.
    New Mayo Clinic research finds that “Depression has also been shown to be a precursor to heart disease. In one study of postmenopausal women, investigators found that those with symptoms of depression were 50 percent more likely to develop or die from heart disease than those without such symptoms, even though they had no prior history of heart disease.” http://go.reuters.com/newsArticle.jhtml?type=healthNews&storyID=11380752&src=rss/healthNews

  15. Re: “Professor Conover’s projected savings from deregulation of $167 billion, even if we assume it’s accurate (and I don’t) will save us a grand total of 8.35 percent. Well, that’s just great. Seeing as spending increased 7.9 percent last year, your great idea will buy put us just a little over a year. Well, happy freakin’ days are here again!”

    Sorry Rick, but you are confusing “expenditures” with “opportunity costs”. Conover is not saying that regulation equals $339.2 billion (his actual estimate of regulation’s total opportunity costs) in expenditures, but rather that regulation decreases economic efficiency by a value of $339.2. It’s more abstract than tallying annual health expenditures.
    Still, let’s assume your original point holds. Are you really scoffing at saving 170 BILLION dollars? Remember that Conover accounts for the benefits (+ $170 billion) and costs (- $340 billion) of health regulation and then concludes that the world of healthcare would be better off by 170 billion dollars without regulation. I’ll say this again: healthcare would be better off by 170 billion dollars.
    Is this really laughable? And does it make any sense to belittle the number by comparing it to the rate of increase in health expenditures, which gets quoted so often as the death knell of the current health system? If that rate of increase is so important, than a greater amount of savings should be even more so.
    And how about another number: 7 million. It is the total number of people forced to go without insurance because of the high costs of regulation, as estimated by Conover. Is that funny also?
    Please respond.
    Trapier K. Michael

  16. Re: “Trap — You gotta stop quoting Cato on our health care discussions (as opposed to our illegal drug discussions) until they come up with more than 2 sentences about how to deal with the 20% of the population who make up 90% of the costs.”
    Fair point…but the study I quoted was authored by a professor at the Duke University Center for Health, Law, Policy and Management. Hopefully Duke is a credible factory for ideas, even if you think Cato is not.
    Trapier K. Michael

  17. I concur with Jon and Eric.
    Jon – You appear to be calling for a transformation our healthcare system from being primarily “fix it and pay for it when it breaks” process to a more balanced approach of “keep it from breaking as long as possible, and when it does, fix it and keep it fixed as long as possible.”
    I suggest that the latter requires a wellness focus that not only seeks out and implements the most cost-effective interventions when people get sick, but invests significantly in patient education and wellness programs. The evidence shows that consumer healthcare education and wellness programs add much to people’s health and well-being. And by preventing illness, money is saved through reduced utilization of healthcare resources.
    Patient education is any combination of learning experiences that influence behavior changes needed to maintain and improve health through changes in knowledge, attitudes and skills. It requires more than simply giving patients written instructions, a pamphlet to read, lists of resources, or a video to watch; effective patient education includes discussion, demonstration, and active participation.
    Research shows the benefits of consumer education to include:
    • Improvements in patient satisfaction
    • Better health maintenance and healthcare outcomes
    • Better self-care and adherence to the health care plan and follow-up care
    • More empowered patient decision making
    • Fewer complications
    • Reduced healthcare costs
    • Decrease patient demands on the healthcare system
    • Earlier detection of problems and timelier outpatient intervention
    • Decreasing hospitalizations
    • Reduced absenteeism from school and work
    • Better coping skills.
    Whereas patient education is typically done in a provider’s facility, wellness programs are typically done in workplace settings to promote employee health.
    Wellness programs may include:
    • Health risk appraisal profile identifying areas in which the participant is doing well, areas in need of improvement, and risk factors to address
    • Newsletters and self-care books providing health education across a range of topics
    • Targeted mailings with information on particular health problems of individual participants
    • Around-the-clock access to nurses for health information and advice
    • Lifestyle management for consisting of counseling on high-priority behavioral change
    • Awareness programs, educational classes, and interventions such as exercise, nutrition preventive health care, stress management, and smoking cessation
    • Office visit vouchers for high-risk groups that pay for the first few visits to an individual’s personal physician, which is designed to encourage preventive care services and following up on potential problems.
    Research shows the benefits of wellness programs to include:
    • Reduced health care costs
    • Reduced absenteeism
    • Reduced employee turnover
    • Increased productivity
    • Reduced employee risk for chronic diseases.
    Paying providers to improve the long-term benefits through implementation of preventative care on a wide scale would, health economists argue, would largely eliminate complications from diseases such as diabetes from the American medical system. The quality improvement gained from such intervention could save as much as $30 billion over 10 years, thereby offsetting the cost of implementing the preventative measures, according to a recent NY Times article.
    In addition, there should be ample support of research on diet (e.g., nutrition, supplements), healthy lifestyles, coping skills, and other factors affecting wellness, which can be turned into concrete, understandable action steps for the consumer to follow to promote one’s health.

  18. Jon- you are correct, of course. I have been pilloried here several times for implying a role in ‘enforcing’ healthier behaviors. The concern, not completely unfounded, is that government intrusion into personal lives is bad (which is true). However, as you correctly state, the government already does this in so many ways.
    Imagine the political firestorm if food stamps were good for vitamins and apples, but not cheetos and ding-dongs or hot dogs. That is what should happen, but what would likely happen is that vitamins would just be added and no one would buy them– and everyone else will be blamed for not ‘educating’ people enough about nutrition. It is far from a panacea, but it is at least a constructive step.

  19. I work for a company that publishes b2b magazines in the health and nutrition field. I am also the president of an industry-funded not-for-profit that has funded studies on the cost savings potential of certain nutritional supplements. I am not qualified to comment on the various theories about how to shift money around, who should pay for what, etc. However, I think one of the keys to fixing the broken system is to keep people healthy. One of our studies, performed by The Lewin Group, ended with a conservative estimate that more than 730,000 hip fractures could be prevented in people over age 65 in the next 5 years by ensuring that these people receive adequate calcium and vitamin D. The study projected a savings of more than $13 billion during this time due to this reduction in fractures. We have similar studies on a variety of other nutrients. My point is that with the population aging, people retiring earlier than ever, technological advances creating amazing but expensive treatment options, etc., we need to keep people healthy. It is not a new concept. “An ounce of prevention is worth a pound of cure.” Parallel to the discussion of how to fix our system of treating sickness, we need to consider how to to stimulate wellness. For example, right now it is not possible to purchase a simple children’s vitamin with food stamps, though it is okay to purchase such nutritionally void “foods” as soda and snacks. And we wonder why childhood obesity is so out of control? Or why something called “adult onset diabetes” is now called “type II diabetes” since it is now so common among kids. If we want to reduce the stress being placed on the health care system, we need to reduce the number of people getting sick.

  20. Eric – I share your concern about middlemen and HIT cost.
    It would be great to have non-profit group(s) without any political or industrial ties – probably consumer run with *trusted* consultants/advisors from other stakeholder groups – who would serve as “watchdogs.” How do you they can be trusted? I suppose their words and actions will reveal the true motives.
    Anyway, the kind of IT you’ve mentioned is a crucial piece to the solution, imo. In the white paper, we discuss current HIT tools and present a blueprint for a fully integrated, interoperable, cross-disciplinary, patient-lifecycle HIT system with decision support, alerts/warnings, outcomes assessment, workflow/process management, biosurveillance, and business intelligence functions. This system can be built, sold, operated, and maintained at relatively low cost.
    The blueprint emerged from the collaboration of two small HIT businesses (mine being one) who were previously competing as prime contractors for the 2/5 small-business set-aside in the ONCHIT RFP this past summer. The government, however, in their infinite wisdom, decided to give the money to a fourth large IT company rather than fund any of the consortiums of small businesses that sent them proposals.
    I would say the primary functions of the IT tools you currently use center around data and information management, i.e., input – storage – access/output. If your EMR has CPOE-type functions that include medication monitoring, then you also have some decision-support capabilities.
    I contend that the future of HIT would offer a great deal more decision support to all stakeholders. For example, such an HIT system would assist with diagnostic and evidence-based treatment selection decisions, establishing and updating plans of care (PoCs) based on flexible evidence-based practice guidelines, aligning hospital resources with the execution of PoC orders, and coordinating a patient’s PoC (inpatient and outpatient) across providers and facilities.
    This next generation of HIT would also automatically deliver treatment process data (e.g., examining variance from clinical pathways) and clinical & financial outcomes data to teams of researchers/academicians who analyze and interpret the data, collaborate with subject matter experts in consensus groups to establish and evolve evidence-based practice guidelines, and disseminate the guidelines as needed.
    And the tools would do several other things, including helping detect and manage outbreaks and bioterrorist attacks, assisting first responders in handling victims in an emergency, linking providers within and between RHIOs, speeding adjudication and reconciliation of claims, supporting collaboration via virtual forums, and providing knowledge management tools.
    We know how to do this using existing HIT tools, legacy systems, and IT infrastructures; using new tools on the drawing board; and using an innovative, secure, clean, simple, inexpensive P2P/decentralized architecture of publisher-subscriber “nodes” that communicate via SMTP (e-mail) or other cost-effective means. This proposed system is also very flexible and can accommodate any existing and future data standards and formats, as well as work with any third-party applications.
    So, we have a very well-thought-out model and strategy, over 15 years in the making (e.g., I proposed the development of a “national health data system” to our government in ’93); extensive cross-disciplinary experience and knowledge; and a breakthrough HIT blueprint incorporating our “disruptive technology.”
    We also have a history of being attacked for our ideas, and of simply being ignored and dismissed.
    Our greatest challenge right now, therefore, is just being heard and taken seriously.

    I’d be pleased to send you a copy, Eric … Figure mid-March. I’m also going to put a link to this blog on our wiki because I’ve found THCB and the FierceHealthcare newsletter extremely valuable as a source of timely information and stimulating dialogue!

  21. Rick- part of the problem is that I am not fishing. I am looking for ideas- and am finding nothing but ‘publicly financed elections’. Enough said. That works at the DailyKos, but usually not here at THCB.
    Steve- send me a copy when it is available… I am very interested. My initial concern about have a new ‘middleman’ available to shepherd people through the world of health insurance and healthcare is nothing more than a way for a new group to grab a piece of a $2 trillion pie.
    I think IT in healthcare is great– we have an EMR, digital xray, and a modern ‘back end’ system in our office. We all walk around with tablet PCs, dictate in to digital recorders and email our audio files that get automatically uploaded into the EMR by noon the following day.
    But look at IT in banking… yes it has made nearly everyone’s life easier (ATM, onlibe bill pay, online transfer, etc.). But from a cost to the average, individual consumer, has it become cheaper? Or are there now a seemingly infinite number of points at which consumers get charged? My sense is the latter.

  22. Yes, Matt is fine man … as is his blog.
    Well, Eric, having been bestowed with such awesome power, I would start with what’s necessary for people to change systems, i.e., awareness. I would make all healthcare stakeholders (consumers/the public, purchasers, providers, payers, pharmacies, researchers, policy makers, etc.) aware of three things:
    • The current healthcare situation. Some people know the problems in detail; some only know it’s too expensive; many are unaware of the high rate and consequence of errors and omissions, of practice variations, of “information overload” within a “knowledge void,” and of the inhumane burden our current system is putting on the elderly and working poor.
    • The strengths and weaknesses of potential solutions now in the spotlight, such as HSA and P4P.
    • The benefits, drivers, and impediments to implementing the kind of model I’ve described earlier.
    I would then encourage people to engage in open, honest dialogue about these things in order to emerge new insights and creative ideas for address the challenges to changing such a complex and entrenched system. I would frame this dialogue in a way that transforms fear, helplessness and hopeless into constructive action by focusing on ways to realize a compassionate vision of wellness for all. I would also foster international, cross-disciplinary collaboration between researchers, practitioners, and consumers. I would seek out respected thought leaders who could motivate people from the top-down (policy makers) and bottom-up (grass roots) in order to get funding for driving the necessary initiatives. And I would demonstrate how inexpensive HIT systems can help drive this entire process.
    Actually, I’m currently completing an in-depth white paper (containing 300 references) in collaboration with a consortium of small IT companies, which covers the key issues, and presents a comprehensive model for transforming the American healthcare system. I’ll be offering it freely and will publish it to a public wiki as a kind of evergreen encyclopedia to which people can contribute their thoughts and engage in discussion.

  23. Sorry, Eric, but I ain’t bitin’ at the “what would you do first” bait. Trapier was over-simplifying and citing shallow evidence, and I called him on it was all. You know as well as I do that incentives are dysfunctional throughout the system. No one thing will fix this, and chipping away at the problems one by one will only introduce new intertias and disincentives to reform.
    If you want to put a gun to my head as to what I’d do first, it has nothing to do with the healthcare delivery system. I’d mandate publicly funded elections for Congress and the President. Considering the failures of leadership and corruption that now exist, the argument can be made that there is a federal interest in doing so. After that, attempts at reform would be more likely to be “evidence-based,” so to speak, than driven by politics or payoffs. What a concept!

  24. Steve- you are to be commended for taking the time to give such a well thought out answer to our questions. This is what helps make Matthew’s site the best ‘healthcare policy blog’.
    I would like to pose another question to you, if you do not mind.
    Assuming your comments are correct: what would you do first? I am giving you the power.

  25. Actually, Tom, I’m a clinical psychologist who left practice in ‘98 after spending almost two decades of R&D inventing an outcomes-based, decision-support, cross-disciplinary EHR, and after being kicked around for several years because I called for the establishment of collaborative practitioner-researcher networks to improve mental healthcare efficacy.
    Anyway, let me start with Eric’s questions (and I apologize in advance for the length of this post). Personalized, whole-person, coordinated care is an approach to healthcare delivery that is:
    • Personalized, i.e., tailored to the specific needs of the individual patient by taking into account the person’s age, gender, genetics, environment, concomitant treatments, quality of life preferences, and other factors that may be relevant to a high-quality plan of care
    • Whole-person focused, i.e., considers all aspects of a person that may affect compliance and outcomes, including one’s physiology, psychology, and culture
    • Coordinated, i.e., when multiple caregivers are involved in the same episode of care or in managing a patient’s chronic condition, each person should know what the others are doing to eliminate redundancies and omissions.
    So, “personalized, whole-person, coordinated care” focuses on delivering high-quality care by tailoring treatment to a patients’ particular needs and preferences, considering all relevant aspects of patients’ bodies and lives, and assuring all caregivers involved with that patient work in a coordinated manner.
    Healthcare fidelity is a term used by Woolf, S.H. and Johnson, R.E. (2005) to describe how well systems delivering healthcare enable providers to give patients the precise interventions they need when they need them. Fidelity exists only when healthcare systems enable:
    • Patients to make their care needs known to providers through adequate access and communication
    • Clinicians to have the time, knowledge, skill, and attention necessary to recognize a patient needs and intervention
    • Interventions to be delivered properly, safely, and in a coordinated manner.
    A high-fidelity healthcare system:
    • Makes it possible for coordinated teams of clinicians to render care across the entire healthcare continuum
    • Assures that providers have adequate resources, and competent information and decision support tools
    • Is fully committed to consumer-centered care.
    Fidelity of care in America, unfortunately, has suffered because we currently spend huge amounts of money on developing new drugs and devices that deliver only modest improvement in the quality of care, as well as spending vast sums on administration and competition for patients that have no beneficial impact on quality. By consuming resources that could be used for increasing fidelity, this misalignment of priorities and focus may cost more lives than it saves and ultimately causes health outcomes to suffer. A strong case can be made, therefore, for spending less on these activities and more on systems for improving the fidelity of care, which would:
    • Offer universal health insurance
    • Remove financial barriers to care for the poor and address other causes of disparities
    • Restructure delivery systems and realign reimbursement to promote the most effective treatments and to replace current fragmentation with seamless delivery
    • Provide open access, e-mail consultations, and other innovations to ensure timely assistance and fewer errors
    • Invest in information systems to connect patients with the finest educational resources, decision aids, and computerized patient records
    • Enable communities to build integrated linkages between health care professionals and civic partners—such as, work sites, schools, and churches—to help patients implement medical advice after they leave the provider’s facility
    • Encourage providers to make fidelity a higher priority and promote it in daily practice
    • Allocate more funding for translational research that studies how to increase the effectiveness and efficiency of healthcare delivery
    • Identify systematically the opportunities—the potentially innovative new technologies, methods for closing the health care treatment gaps, and population health approaches—to improve health
    • Utilize a hybrid business approach that merges America’s focus on profitability with business strategy focusing on social responsibility and public health.
    Thus, personalized, whole-person, coordinated care in a high-fidelity healthcare system is a piece of a comprehensive strategy that would not only lead to continually improving care, but would also help control healthcare costs by reducing costly errors, omissions, and ineffective interventions, and by increasing efficacy and efficiency so patients would become well more quickly and stay well longer.
    As for Tom’s issues with HSAs with HDHPs, here’s my understanding.
    Critics say:
    • The reason healthcare costs are raising isn’t because people visit their doctors too often; instead, it’s because of expensive procedures that will still be covered by the new consumer-driven health plans.
    • It is doubtful that shifting to higher-deductible plans will reduce health-care inflation and, even if it does, whether the government should encourage this trend with more tax cuts.
    • It is unrealistic for the typical consumer to make complex decisions about what forms of care are worth the expense, which would result in people not receiving the care they need, including essential preventive medical care. Poorer workers and people with chronic illnesses will suffer the most.
    • Current healthcare quality indicators used today do not strongly motivate consumer choice of providers. And the type of information available to for selecting providers is sparse and suspect.
    • The uninsured people will not be helped because they do not face high-enough marginal tax rates to gain much benefit from the tax deductions. And if many healthy workers to give up their employer-based coverage, it could undermine the entire structure of employer-based coverage in small firms.
    • Families already struggling with high out-of-pocket healthcare expenses will likely have to devote an increasingly larger share of their budgets to healthcare. Even Medicaid beneficiaries, who have generally been protected against high costs, are at risk, and the most vulnerable families may face high debt, bankruptcy, or loss of insurance as consumer co-pays increase. People are significantly greater chance of spending a large share of one’s income on out-of-pocket health care expenses than with comprehensive health plans.
    Despite these concerns, HSAs may be one factor that helps lower healthcare costs for some people, but only if consumers are able to determine when they need care, what care they need, where they should receive it, and if their money will run out given a catastrophic illness. One suggestion is to use “Infomediaries,” which are businesses that advise consumers about their treatment and provider options. This is similar to the independent agents who give consumers information about the technical performance, reliability, customer satisfaction, and prices of products and services for automobiles and other products. Using such independent advisers in healthcare might help payers overcome consumers’ current lack of trust in them and enable consumers to make more informed decisions.
    HSAs will also force payers to deal with the changing influence of various players in the value chain, as well as a possible shift in the order of current winners and losers. Those payers how succeed with have made the right strategic choices, developed new operational skills, or fored new alliances and partnerships with companies from outside the industry to gain needed capabilities.

  26. Specific policy implications would likely mean admitting that some small group of enlightened individuals (generally consisting of people they agree with, if not actually themselves) should be empowered with determining for all what healthcare is appropriate for everybody- who shall get treatment, who shall not, whose ‘needs’ are greater, who gets to live.
    Restrictive managed care in the 1990s tried this in the private sector and the US population rejected it wholesale.
    If anyone thinks that we could find these enlightened individuals that would be immune to influence among any of the political parties in this country… well you get the idea.
    Plus, Tom, I presume that you, like me, are still waiting for Steve and/ or Rick to answer the basic questions posed about their posts.

  27. Oh, Eric. Give Steve a break. He’s a consultant. They talk like that. If he spoke English, you wouldn’t have to pay him to translate.
    I find myself nodding vaguely in approval with Steve’s points. I mean, who could be against quality, wellness and cost-effectiveness? But down here in the muck and mire of policymaking and corporate planning, we have to decide whether to subsizidize health savings accounts. That is, after all, what Brian Klepper is grappling with.
    Envisioning a better health care system is certainly worth doing. But decisions are being made right now. I’m impatient with Steve and Marc’s debate (unfairly, I admit, since I’m imposing standards that they never bought into) because it avoids picking sides in any of the contentious debates underway in health care policy circa 2006. I don’t want to assume the absence of policy implications in Steve’s ideas that could be implemented this year, but I’m not seeing them.

  28. Steve- what is ‘personalized, whole-person, coordinated care’? What is high fidelity healthcare?
    If I stipulate that those two things would make healthcare ‘better’, how would they make healthcare cheaper?

  29. Marc,
    I find our conversation helpful and thank you for your thoughts.
    I do agree with you statement: Irrespective of the debate on the different health care systems proposed, i.e. single payer, multi-payer or a combination of the two, without a universal coverage and universal enrollment policy, nothing will change
    I agree with this from moral perspective, as much as anything else.
    Anyway, while I’m heartened that our country is finally adding quality/wellness/cost-effectiveness to the proposed solutions (rather than just focusing on fiscal maneuvering as with capitation and other failed monetary-only strategies of the past), I’m seeing little serious discussion on how quality will be measured and how it will be continuous improved – issues, I contend, that are vital to controlling costs. If everyone received highly effective care and prevention services delivered in a very economical/efficient manner, I don’t think we’d be having a healthcare crisis!
    The challenge is to shift our priorities toward funding and deploying strategies that enable all stakeholders to get the knowledge and motivation they need to make valid decisions for effective & affordable treatment and prevention. This can be done by focusing our resources on such things as collaboration, research, and knowledge management; the development and use of valid practice guidelines, clinical pathways, and useful decision-support tools; delivery of personalized, “whole-person,” coordinated care; patient education and wellness programs; establishment of a high-fidelity healthcare system; and the investigation and consideration of non-traditional interventions.
    Is this too much to ask of our nation?

  30. Rick- please define the problem, in your own terms: is it the total cost of healthcare? is it the quality? is it the access?
    You cannot have all three. Please rank those three (and others if you deem them necessary).
    Now, you are in charge. What would you do first?

  31. Trapier,
    “First, Rick, I don’t think there is an example of a less regulated system.”
    Exactly my point. More regulated systems are delivering better care at lower price all over the world.
    Thanks, also, for quantifying the number that the good professor thinks we’ll save through deregulation. Since U.S. healthcare spending now hovers around $2 trillion per annum, Professor Conover’s projected savings from deregulation of $167 billion, even if we assume it’s accurate (and I don’t) will save us a grand total of 8.35 percent. Well, that’s just great. Seeing as spending increased 7.9 percent last year, your great idea will buy put us just a little over a year. Well, happy freakin’ days are here again!

  32. Steve, while I agree with everying you said concerning the patient life-cycle wellness approach, I contend that without implementation of your last statement
    Blockquote>Development of a sane payment system that encourages continuous quality improvement, while controlling costs and insuring everyone through shared risk
    nothing will improve.
    As long as everyone is permitted to participate in our health care system, but only certain individuals have any financial obligation to pay for care, hospitals and doctors will to be squeezed to the point that health care will suffer. Costs will continue to rise, and no amount of continuous quality improvement, HSA’s or other far out ideas will change that.
    Irrespective of the debate on the different health care systems proposed, i.e. single payer, multi-payer or a combination of the two, without a universal coverage and universal enrollment policy, nothing will change.
    I think you implied that, but I thought I would emphasize that

  33. Thanks, Marc.
    It sounds like we agree that body (physiology, disease, bodily insults, genetics, etc.), mind (psychology, cognitions, perceptions, emotions, beliefs, experiences, etc.) and environment are ALL important considerations in diagnosis, treatment, and prevention; even though they affect different healthcare problems in different ways. Some would even argue that “spirit” (i.e., some “cosmic life force” constituting the essence of “being”) is also important.
    But these issues detract from the essence of what I’m trying say about fiscal maneuvering strategies in the healthcare debate.
    My point is that debates about how to pay for the 20% of the population who make up 90% of the costs should have the same focus as how to pay for the other 80%: Spend money wisely by focusing on finding ways to give all people the care they need in the most effective and efficient way possible, along with the most effective and efficient wellness/prevention services.
    These interventions may focus on the body, on the mind, or on both. They may sometimes involve the same plan of care for broad (largely heterogeneous) diagnostic groups, as with today’s process-measures of quality. Or they may be personalized plans of care that cut diagnostic groups into small cohorts based on patient particulars such as genetics; that base diagnostic and treatment decisions on evolving, evidence-based practice guidelines; and that use quality metrics based on clinical outcomes of efficacy and cost-effectiveness.
    This patient life-cycle wellness approach, I contend, would lower overall costs through a “cradle to grave” continuous improvement model for transforming the current reactive healthcare system — that operates on a “fix it and pay for it when it breaks” process — to a quality driven approach that includes:
    • Proactive maintenance & preventions programs
    • Personalized care supported by secure, economical, and useful health information technologies for exchanging patient data, studying clinical outcomes, guiding evidence-based treatment decisions, reducing errors and omissions, and assuring appropriate continuity of care for every episode of care
    • Development of a sane payment system that encourages continuous quality improvement, while controlling costs and insuring everyone through shared risk.

  34. Consumerism is indeed the key to any practical solution.
    Yes, it is true that healthcare market failure is real since no one wants to compete for “liabilities”. So there should be some kind of universal coverage to spread the risk across the society. Consumers (voters) too are afraid of medical bankruptcy.
    But if this is done by instituting a single payor (government monopoly) we are going to have lots of angry consumers (voters) not happy with service they are getting for whatever reason. So it is as reasonable to allow a private “premium” market to let off the steam of demand.
    This sounds like an “equilibrium” state where we will ultimately end up. The question is only when and anything that will encourage information openness and transparency will help us get there faster.
    Details here: Open Medicine vs. Single-Payor Healthcare.

  35. Trap — You gotta stop quoting Cato on our health care discussions (as opposed to our illegal drug discussions) until they come up with more than 2 sentences about how to deal with the 20% of the population who make up 90% of the costs. The Cannon/tanner book had literally 2 lines on then issue

  36. I knew you would ask for that article disputing the claim about psychological effects. It is buried deep in a newsgroup I belong to on leukemia and lymphoma. I will have to review the archives, and see if I can resurrect it.
    As far as psychological effects effecting disease outcomes, I will certainly agree that maladaptive behaviors can be exacerbate problems, and undo stress can lead to conditions such as ulcers, hypertension and even heart disease, and eliminating those outside influences can lead to improvements of those conditions. Even the restricting caffeine intake has led to the elimination of migranes in many people.
    But I was not talking about somatizing patients, I was talking about actual diagnosed diseases, i.e. leukemia, lymphoma, were there is no empirical evidence that indicates a good outlook on life will aid in the progression or healing of the disease.
    I will find that reference and email it to you.

  37. Re: “Deregulation” as a solution to the healthcare cost problems is yet another red herring, same as tort reform was in regard to medical malpractice insurance rates. Please show me the example of where a less regulated health delivery system has worked.
    First, Rick, I don’t think there is an example of a less regulated system.
    Second, Duke University professor Christopher Conover estimates the overall cost of regulation (after accounting for its benefits) is a $169 billion dollar loss…
    Trapier K. Michael

  38. Thanks for you comments, Mark.
    The healthcare fidelity concept involves a number of important characteristics, of which good communication between patients and providers is one. See Woolf, S.H. and Johnson, R.E. (2005). The Break-Even Point: When Medical Advances Are Less Important Than Improving the Fidelity With Which They Are Delivered. Annals of Family Medicine; 3(6), 545-552. Available at http://annalsfm.highwire.org/cgi/reprint/3/6/545
    Concerning the mind-body connection and its impact on healthcare costs, there are many studies about this issue, which points to the value of psychological care in numerous ways. See, for example:
    Pautler, T. (1991). A Cost-Effective Mind-Body Approach to Psychosomatic Disorders. In Anchor. K. N. (Ed.), Handbook of Medical Psychotherapy: Cost-Effective Strategies in Mental Health. New York: Hogrefe & Huber.
    Cummings, N. (1993). Somatization: When Physical Symptoms Have No Medical Cause. In Goleman, D. & Gurin, J. (Eds.), Mind Body Medicine. New York: Consumers Union.
    VandenBos, G. R. (1993). U.S. Mental Health Policy: Proactive Evolution in the Midst of Healthcare Reform. American Psychologist, 48, 287.
    Friedman, R., Myers, P., Sobel, D., Caudill, M. & Benson, H. (1995). Behavioral Medicine, Clinical Health Psychology, and Cost Offset. Health Psychology, 14, 6, 509-518.
    Smith, G.R., Rost, K., Kashner, T.M. (1995). A Trial of the Effect of a Standardized Psychiatric Consultation of Health Outcomes and Costs in Somatizing Patients. Archives of General Psychiatry, 52, 238-243.
    Sturm, R.S., Wells, K.B. (1995). How Can Care for Depression Become More Cost-Effective. JAMA, 273, 51-58.
    Following is a list of some of the physical/medical disorders with concomitant psychological/behavioral problems, which I’ve compiled over the years from several sources, including Synopsis of Psychiatry:
    • Disturbances of physiology that are related in some way to situational/psychological conditions, but without actual permanent end-organ damage, include migraines, functional bowel disease and types of chronic pain.
    • Disturbances where actual physiological and psychological pathologies are evident include hypertension, peptic-ulcer disease, hyperthyroidism, asthma and chronic skin disorders.
    • Disturbances in autoimmunity tend to appear or flare up with significant life changes and stress.
    • Illnesses such as coronary heart disease and cancer that may be helped with adjunctive treatments which promote changes in patients’ behaviors (e.g., improve eating, sleeping, and exercise habits) and psychological states (e.g., reducing resentful anger and stress-proneness).
    • Maladaptive behaviors and attitudes that have obvious deleterious health effects on oneself and/or others, such as substance and alcohol abuse, anorexia, bulimia, obesity, smoking, unsafe sex, recklessness, suicidal tendencies, and abusive behavior toward others.
    See also http://bmj.bmjjournals.com/cgi/content/full/324/7353/1536
    BTW, I’d love to have read any articles/research to the contrary!

  39. Steve, sounds like you have a job for life! And don’t you think it would be better if all that was accomplished before trying to force “consumerism” on the consumers of health care.
    I did want to make some comments on two things you proposed. The first one, if I understand you correctly, is the need to healthcare fidelity where

    Patients …make their care needs known to providers through adequate access and communication.

    If patients could do that, we wouldn’t need doctors. I guess that would certainly reduce costs though.
    And the last comment where you state that

    Psychological problems cause, exacerbate, or impede healing of many physical illnesses.

    There is no empirical evidence, that I am aware of, indicating that to be true. In fact I have read many (well at least one) article indicating just the opposite effect. It certainly may help a person to feel better psychologically, but there it is no evidence that it will exacerbate a health problem.

  40. For HSA and P4P to work, an essential key is having valid measures of care quality (safety, effectiveness, efficiency, affordability, timeliness, and availability), which are widely disseminated and presented in a way that truly helps consumers choose the best value in personalized care. We also need a way to help providers deliver ever-better care through clinical (diagnostic and treatment) decision support, evidence-based practice guidelines, the systematic wide-spread collection and analysis of process and outcomes data from field and lab, and a “high-fidelity” healthcare system that gives providers the time and resources necessary to give all patients the precise interventions they need, properly delivered at the time they are needed. This requires an entirely new level of HIT tools, incentives, and motivation than we now have.
    As such, in addition to examining fiscal strategies, we should be focusing most of our discussions on such things as:
    1. How to measure healthcare quality. Using a few dozen generic process metrics only measure provider compliance; they do not measure healthcare quality. Not only do they address just a tiny fraction of healthcare problems, but they fail to evaluate clinical outcomes and costs, which are, of course, essential.
    2. How to have healthcare fidelity. This term is used to describe how well systems delivering healthcare enable providers to give patients the precise interventions they need when they need them. Fidelity exists only when healthcare systems enable;
    • Patients to make their care needs known to providers through adequate access and communication
    • Clinicians to have the time, knowledge, skill, and attention necessary to recognize a patient needs and intervention
    • Interventions to be delivered properly, safely, and in a coordinated manner.
    A high-fidelity healthcare system:
    • Makes it possible for coordinated teams of clinicians to render care across the entire healthcare continuum
    • Assures that providers have adequate resources, and competent information and decision support tools
    • Is fully committed to consumer-centered care.
    3. How to develop and evolve HIT tools comprising a patient-centered, whole-person, birth-to-death view focused on continually improving care and wellness through use of data management and decision-support tools by all stakeholders across the entire healthcare continuum. These tools must be truly useful in clinical practice and research; help continually improve care quality through effective decision support; and enable the collection, analysis and use of treatment and outcomes data to improve healthcare quality.
    4. How to collaborate to improve care quality with evidence-based practice guidelines.
    5. How to offer effective patient education, wellness programs, and patient decision aids.
    6. How to deliver biopsychosocial healthcare, which is the integration of biomedical and psychological (mental, behavioral) healthcare. It is an integrated mind-body healthcare approach appropriate for many patients, which that leads to lower overall healthcare expenditures, better treatment outcomes, and enhanced patient satisfaction and well-being for four main reasons:
    • Up to half of all primary care physicians’ cases are either accompanied by, or constitute, psychological problems.
    • Psychological problems cause, exacerbate, or impede healing of many physical illnesses.
    • Psychological treatment helps remedy many physical problems and thus reduces overall medical costs.
    • Behavioral healthcare improves people’s emotional, mental, and physical functioning, which leads to increased productivity and a better quality of life.
    7. How to support research complementary & alternative medicine and human genetics & genomics.

  41. Brian Klepper gets at a point that is often overlooked. Consumerism as it relates to quality of care has been a rising force in our economy. The obstacles are difficult: the complexity of outcome measurement, the tension between adequately representing that complexity and providing meaningful choices to consumers, the limited time budget of the providers who provide the source data, the opposition of those providers for both principled and self-interested reasons.
    But consumers care deeply about the quality of their care, as seen by the explosion of web-based health care resources. They do not need the additional incentive of simulated uninsurance through a high-deductible health plan. The yoking of quality-oriented consumerism to HDHPs implicitly suggests that consumers would not seek high-quality care in the absence of an HDHP. I’d like to see the research backing up that claim.
    Price-based consumerism is a different matter. Will consumers make better choices if they know the cost of each medical service and pay that cost? Again, the obstacles are difficult, but in this case it’s not clear that providing clear price signals to consumers would be a good thing. A recent Rand study, for example, found that patients paying a $10 copay for cholesterol-lowering drugs were 6-10% more likely to comply with doctors’ orders to take the drugs than patients paying a $20 copay. They concluded that reducing copays would “avert nearly 80,000 hospitalizations and more than 31,000 emergency room visits each year.”
    There appears to be evidence that HSAs benefit some employers through a one-time cost reduction (without any reduction in cost trends over time) and perhaps by rewarding young and healthy employees with lower healthcare costs. But that’s simply a cost transfer to older, sicker and poorer employees, not a byproduct of efficiencies accrued by consumerism. I await evidence that the El Dorado of HDHP-enabled consumerism really exists.

  42. “Deregulation” as a solution to the healthcare cost problems is yet another red herring, same as tort reform was in regard to medical malpractice insurance rates. Please show me the example of where a less regulated health delivery system has worked. To find less regulated health delivery systems, you have to look at the third world for examples. Surely that’s not where we’re going to look for examples of success? Show me the evidence of what savings we can hope for from deregulation. 5 percent savings? 7 percent? Big Effen Deal!! I promise I won’t spend it all in one place.
    Concentrating on regulation as the root of all evil is intellectually dishonest. When our healthcare delivery system costs 30-plus percent more of our GDP than the next closest modern nation, with poorer results, our failures are not of laws but of leadership. We’re in an unfortunate place where someone needs to tell a lot of people, both in corporate America and folks at home, “No.” Until you can find a leader with the stones to do that, you’re just kicking the same problem further down the road by focusing on deregulation.

  43. Consumerism in health care is such a misnomer. It’s not like health care can be purchased off the shelf in grocery stores or at auto dealers. It’s highly individualized and regionalized, and is not one size fits all. Neither can we rely on competition from China and India to keep prices under control.
    Even if there was supposed good pricing and performance evaluations of doctors and hospitals, how would one factor in the complexities of the procedures performed by the doctors and the hospitals? How would it factor in a patients likelihood to respond to the treatment,i.e. the physical condition of the patient, how far along the disease had progressed in the patient, or even a persons DNA?
    Health care is not an exact science. Everyone is different, and we will all react to treatments and medications differently.
    HSAs and HDHPs do nothing more than transfer the burden of health care from employers to employees.
    That in itself isn’t necessarily bad, but as long as a policy exists that permits everyone to participate and receive health care, yet only makes certain people pay for it, health care costs will continue to rise.
    Is deregulation an answer, well maybe if I really knew what deregulation meant. If it meant that everyone could purchase insurance on a level playing field, and doctors and hospitals could refuse to treat patients that did not have insurance or the means to pay for care, then that might work.
    But if it means that health insurance companies could pick and choose who they wanted to insure, and leave everyone else to figure out how to pay for health care at prices that are already out of control, than it is not a solution.

  44. Man, I’m glad to see my free-market readers are awake early! Dmitry is right. Consumerism does not equal HDHP. And Eric is right, CDHP/HDHP is here to stay until it gets folded into the single payer system that it will help create…by causing the system collapse in about 10-20 years.
    If the political right doesn’t listen to Brian’s sensible reform alternatives that will happen for sure….just a question of time and suffering. But 10% annual increases eventually run in what Einstein called the most powerful force (Compound interest)

  45. Re: “unless consumers have access to robust information about pricing and performance, mechanisms like HSAs and HDHPs won’t really impact cost…”
    But for- and non-profit entrepreneurs have responded to the new demand for health information with various visionary health information ventures…

    WebMD Health (www.webmd.com)
    Subimo (www.subimo.com)
    Healthline (www.healthline.com)
    Healthia (www.healthia.com)
    Interfit Health (www.interfit.com)
    Wondir (www.wondir.com)
    myDNA (www.mydna.com)
    Consumer Reports (www.consumerreports.org)
    MayoClinic.com (www.mayoclinic.com)

    Meanwhile new models of healthcare provision are experimenting with upfront pricing…

    MinuteClinic (www.minuteclinic.com)
    RediClinic (www.rediclinic.com)
    CashDoctor (www.cashdoctor.com)
    SimpleCare (www.simplecare.com)

    And insurnace companies are beginning to expose their previously proprietary negotiated prices…

    G Boulton, “Health Plan Lifts Veil On Charges,” Milwaukee Journal-Sentinel, 23 February 2006, http://www.jsonline.com/story/index.aspx?id=403820

    And this amazing marketplace response is happening despite the claim that “patients’ diagnostic and treatment choices represent a tiny portion of larger healthcare cost” and therefore mute the HSA’s ability to induce competitive marketplace behavior.
    Trapier K. Michael

  46. Brian- the only way to guarantee that medicine allows for the improvements you claim are so necessary is to remove the overarching impediment of government regulation- which, by the way, happens to be one thing that separates healthcare from other industries.
    P4P, outcomes based payments- whatever you want to call it- do not work when the system creates a ceiling of payment, but allows for the ‘floor’ to move closer to zero.
    From our very worthwhile and enjoyable conversations, I think you know that CDHP and HSAs are here to stay. They are not the panacea like some claim. They may be a step toward the deregulation of health insurance where a small number of private insurers control private healthcare decisions.
    The best first steps that could be taken: allow medicare providers (including hospitals) to offer services at prices above or below the set medicare rate. How would this make such a difference?
    Briefly- total doctor/ provider payments in Part B: approx $300 billion in 2005. Total healthcare spending in 2005: $2 trillion, of which about 25% goes to providers (not just doctors). That means medicare pays about 60% of provider money. Deregulating the market would be the boon to consumers, in the form of lower prices, that occurred after the airline deregulation.
    Step 2: at least mention the role of the individual in managing one’s own health.

  47. Consumerism is already here and is happening whether or not HDHP and HSA catch on.
    Of course financing mechanism and out-of-pocket cost could be a huge influencer with transparency of information just as important. But consumerism should not be equated with HSA/HDHP.
    Even today people want access to the best care they can get, delivered the way they want. Without enough info their choices today are “imperfect” but they do exist.
    The only question is when consumerism reaches the tipping point to turn the system upside down.