Consumer Direct Health Care
Our Healthcare system accounts for over 18% of the US economy which is about the size of the total economy of China. It is a complex and tangled web that has produced a large medical industrial complex comprised of providers, insurers, governments and other entities. Is hard to get a handle on it as evidenced by our continued national debate that vacillates between the advantages of a single-payer system to a patient centered free market capitalistic approach. Our current system is a combination of the two approaches. In any event, todays system is not patient centered or consumer oriented. Dr. Clark Havighurst, Professor emeritus of law at Duke University stated it this way "Today the healthcare industry functions under regulatory rules that benefit hospitals and insurance companies more than the average patient”.
A system based on democratic capitalism and free enterprise that emphasizes consumer choice is worth consideration. Dr.Regina Herzlinger, a Harvard professor commenting on our healthcare system has written: "Choice enables competition and competition fuels innovation, and innovation increases productivity. In other words, we all get more for our money because of choice”. The key elements of choice are decisions based on price and quality in a free market. Available information on both of these are sorely lacking in todays’ health care delivery system. Prices for healthcare services vary greatly by provider, and it is difficult to find prices in order to compare and choose between available services. Effective measures of quality are harder to develop and currently there are few measures of quality readily accessible by the public. Further, the present system is dominated by many monopolies which also limit choices. Dr. Havighurst has commented on this. “The eye-popping price of hospital aspirin -$30 a pill in some cases - is one small manifestation of the hospital’s monopoly power … Populists can truly say that such monopolies, with market power amplified by conventional health insurance, are redistributing wealth from ordinary people to an already privileged class of doctors and hospital administrators”.
Currently much more attention has been paid to initiating consumer oriented health care services. An example of a consumer driven provider is the emergence of “Minute Clinics”. These providers meet the need and are used for urgent care and related services. They post their prices and are open with extended hours. Another example of a consumer driven option is the recent development of large catastrophic health insurance policies along with health care savings accounts (HSA’s). These plans are based on the proposition that healthcare consumers can shop effectively for healthcare services. If the consumer can make wise choices and achieve a surplus in their HSA, they get to keep this surplus to accumulate over time and be used for health expenses later in life. Another option with the HSA concept is the development of direct primary care. Under this model, the patient pays a monthly fee to their primary care physician to cover all healthcare expenses for the year. This money is taken out of their HSA account. It has been shown that the use of HSA’s can reduce health care utilization by up to 30%.
We are currently undergoing a vigorous healthcare debate about the proper role of government and the role of the free market. Unfortunately we are divided along party lines for solutions to this great question. A consumer driven healthcare approach seems to have the most favorable features that are in line with our health care free market economy. It would be important in a consumer directed healthcare approach to require all citizens to purchase health insurance similar to our requirement for automobile insurance. There should be a limit on the tax deductibility for health insurance as it is important to equalize tax benefits. Moreover, private individuals should receive the same tax benefits as those covered by insurance from their employer. It it is important to provide tax credits for those who are underemployed and in poverty.
The system would promote choice by encouraging competition among providers and allowing new providers to enter into the market. This is particularly difficult in the hospital market as they have effective lobbying power that safeguards their dominance in markets. The system should open up to creative destruction, and allow free markets to develop new kinds of packages of service that would meet the needs of the healthcare consumer.
Another important requirement of a consumer driven healthcare system is the implementation of health care malpractice reform. This reform should establish separate legal adjudication venues for healthcare malpractice claims. This would allow physicians and other providers to pay less attention to defensive medicine and become more responsive to the individual consumer.
The government and insurance companies should provide price information as an initial effort in price transparency. Providers should be required to post prices and quality of care information for the consumer. An initial task in this area would be HHS listing prices for the top 25 CPT codes. This would help begin the development of price competition.
Competition would encourage innovation in our healthcare system. The consumer would be empowered and be encouraged to take responsibility for their health. It is debatable whether or not the average consumer can assume responsibility for their health, and make wise choices. A consumer driven healthcare system assumes that most consumers can make wise choices and make decisions about their healthcare when proper information on the quality and price are available. There is a history in healthcare of assuming patients are not able to make good healthcare decisions. This is especially true of lower income patients.
We have a healthcare delivery system that provides excellent care. However, we need to provide health insurance coverage to the approximately 40 million people who do not currently have adequate health insurance. Health insurance benefit requirements should be allowed to be flexible. This would provide more options to those purchasing health insurance. This would lower the cost of insurance to the consumer.
It is unfortunate that our present national debate on health care is so bitterly divided. The best solutions can be found by honest and open debate. The further development of our local health care system will be significantly affected by whichever health care legislation is decided upon. Whatever options develop it will be important to emphasize lower costs and putting the consumer back in charge of their health care.