Without Patient-Centered Health Plans, It’s the Same Tired Script

As the next act of the Massachusetts health care drama plays out on Beacon Hill, the same characters return to the stage with a tired script. The ostensible hero of the production, the patient, is left to watch the tragedy from the back row.

Legislation being debated on Beacon Hill ignores patient-centered health plans and health savings accounts, or HSAs, which are lower-premium insurance plans that direct pre-tax dollars into a bank account to cover an individual’s current health care and save money for future medical expenses. An HSA is the most direct way to engage patients in the health system. They cover out-of-pocket medical, dental, and vision expenses, are fully portable, and owned by individuals for their entire lives.

Unlike the self-interested solutions of insurers, providers, and government, HSAs are a proven way to contain the cost of care.

Nationwide, 11.4 million people of all ages and income levels purchase patient-centered plans, up over 250 percent from 2006, when they were created. Among HSA account holders, fully half earn less than $60,000; almost three-quarters have children; and about half are over 40.

Safeway, one of America’s largest supermarket chains, rolled out a patient-centered plan in 2006; per capita health care spending shrank 13 percent, and costs remained flat for four consecutive years.

Safeway’s plans have reduced employee obesity and smoking rates to roughly 30 percent below national averages. This health dividend is priceless as 70 percent of health care costs are directly related to lifestyle decisions.

The research community and highly regulated states like Massachusetts have been slow to catch on. Drawing on the one-year impact of patient-centered health plans at American companies, a recent RAND survey appearing in Health Affairs concluded that if there were 100 percent participation in HSAs, annual savings would be an estimated $125 billion, or 9 percent of total health care spending with those with employer insurance. These savings were not due to healthier HSA populations, as such factors were controlled in the study.

These estimates understate long-term savings; as patients become savvy consumers and providers compete on price and quality, the results are likely to resemble the 12 to 17 percent annual savings suggested in a 2009 study by the American Academy of Actuaries.

Given these incentives for consumer control, why is momentum building on Beacon Hill for another government-centered “fix” to the health care market? Government intervention, after all, gave us preferential tax treatment for employer plans, low Medicaid reimbursement levels that have shifted costs to private insurers, and a mother lode of expensive regulations. Yet, once again, we turn to government to fix problems of its own creation.

The Senate and House “health care 2.0” bills promote a new capitated payment system to special health care provider organizations defined by the government. When HMO laws shifted risk to providers in the 1990s, consumers revolted. Yet we are repeating the same strategy, hoping for a better outcome, asking providers to change global payments and tame the health care sector that accounts for 18 percent of our state economy.

A recent Massachusetts Medical Society survey found that only 44 percent of doctors believe the “global payment” scheme will decrease spending; just 19 percent believe it will improve the quality of care. And for good reason. There is little evidence that “global payments” routinely save money or correlate with better care.

Meanwhile government “reformers” ignore hard evidence that patient-centered care results in less spending per episode, broader utilization of generic versus brand-name drugs, less emphasis on specialists, and a lower rate of inpatient hospitalization.

Aren’t these the goals of government-driven payment reform?

The political class is simply play-acting at reform and thoughtful policymaking. In reality, what we are watching is a rehashing of old ideas that have not worked. Rather than imposing price controls and new mandates, taxes, civil fines, surcharges, and assessments, policymakers should put patients at the center of a new generation of reform efforts. Only by placing the patient center stage will this drama have anything close to a happy ending.

Joshua Archambault is director of health care policy at the Pioneer Institute. He is also the co-author of The Great Experiment. This post first appeared in the Boston Globe.

13 replies »

  1. Sounds tempting, but it is just more overhead to squeeze the margin. Anything, except actual care delivery, done in real time impairs efficiencies and adds costs and increases time per encounter.

    “Real time” does not mean “normal time”.

  2. Its a shame to see how insurance companies are always the big winners, and the hard working MD’s are on the losing side! As if doctors don’t have enough overhead between high malpractice insurance premiums, maintaining an office, equipment and staff. They also have to fight to get paid from both patients AND health insurers! Seeing my father’s pains first hand, I felt there had to be a better way for doctors to be paid fairly and timely for all their hard work. In the last 2 years, patient responsibility for payment has risen from 8% to 30%, and this percentage is expected to grow even more over time. It is now even more imperative that proper, and efficient billing systems are implemented for a medical practice to survive!

    There are new technologies for automating patient payment systems. To be specific, fully integrated eligibility AND payment solutions that interface with PMS/EMR systems. A medical office can verify & estimate patient insurance coverage in real time, and calculate patient balance owed, and the patient can then pay the entire balance with their credit, debit, check, or ACH account, OR they sign a pre printed agreement that gives authorization to the medical office to charge their card a set amount each month until the balance is paid in full. This system THEN automatically posts payment data into a patient’s record, avoiding double data entry

    Solutions for eliminating patient bad debt, and reducing billing costs are just as important to the modern practice as is the implementation of a quality EHR/EMR solution!

  3. Maybe you could tell us how much you negotiate off the cost of a doctor visit and what reasons you give the doc for wanting a discount.

    As well not many docs keep track, or want to, about how much they charge for certain procedures, that’s usually left to the office manager or billing clerks.

    “I’m pissed that my health savings account now won’t let me pay for over-the-counter items. It’s my money!”

    Not completely, it’s your TAX FREE money.

  4. “You learn more in the last paragraphs than in the first.”

    Yes, we do.

    “The financial ramifications remain unclear. In the short term, Safeway’s program probably boosts medical expenses because the screenings prompt people to seek treatment for newly detected problems, Shachmut said.

    In assessing the economic impact of incentives, it might be helpful to know how health-care expenses for employees in the voluntary Healthy Measures program compare with those for the rest of the Safeway work force.

    Shachmut declined to provide such information. “We frankly haven’t been disclosing that,” he said.”

  5. Peter1.. Looking back at the article, I’m realizing that it is talking about a patient-centered plan and that Safeway is doing a decent job with their experiment.

    I’m also realizing that this article you’re referencing is horribly written and there is a distinct slant to it. You learn more in the last paragraphs than in the first.

  6. First the article you reference speaks to Safeway rewarding “good” health behavior to cut costs, not to a patient-centered health plan.

    Secondly, if price negotiation becomes too much of a hassle for patients, then patients will go elsewhere. This gives an incentive to the medical practice to have a clear low price for good service.

    Capitalism is a b*ch isn’t it?

    So in essence, you are complaining and not contributing to the discussion.

    Your health is your responsibility. Health Insurance is not Health Care and frankly has made us dependent on Big Health.

    I have health issues that normal allopathic medical care can’t/won’t solve, so I want the freedom to educate myself and pay for and try alternative treatment plans. Our plans should give us the freedom to do that.

    I’m pissed that my health savings account now won’t let me pay for over-the-counter items. It’s my money! This needs to be changed back to how it was before.

  7. Insurance companies that continue to take advantage of those truly in need or the elderly should be ashamed of themselves. Everyone knows that there is plenty of room for improvement in our health care system. Insurance companies should not be adding to the problem by taking advantage of people seeking a product they believe to be the answer. Look further at KeyToLaw.com for legal help.

  8. “Safeway, one of America’s largest supermarket chains, rolled out a patient-centered plan in 2006; per capita health care spending shrank 13 percent, and costs remained flat for four consecutive years.”

    Fact or myth?


    Now get Safeway to stop marketing junk food to children.

    “Meanwhile government “reformers” ignore hard evidence that patient-centered care results in less spending per episode, broader utilization of generic versus brand-name drugs, less emphasis on specialists, and a lower rate of inpatient hospitalization.”

    So does being uninsured, but that doesn’t mean people are healthier, it just means they self diagnose longer and delay care. Having the patient assume the risk is always cheaper on company books than having the company taking the risk. Their will be winners and losers in the affordability of co-pays and deductibles and how much money is left after the bills have been paid.

    Survey providers and see if they negotiate their prices, or even post their prices – I think you’ll find they resist that like getting their teeth pulled. Ask patients if they want to spend the first 5-10 minutes of a 15 minute appointment haggling over price.

  9. MD, Will you charge less or even negotiate with a patient “holding the money”?

  10. The only real “patient-centered healthplan” will be when the patient is holding the money. available, not the government and not an insurance company.

    Everything else is BS