American Consumers Want More from their Healthcare System

A new survey by the Deloitte Center for Health Solutions, part of Deloitte LLP, finds that many American consumers want more from their healthcare system than they’re currently getting – including greater online connection to health care providers and medical records, customized insurance coverage and wider access to emerging innovations such as retail clinics.

Deloitte’s 2008 Survey of Health Care Consumers, was conducted as an online poll of more than 3,000 Americans ages 18-75, and provides an important and timely perspective on health care consumerism.

Essentially, the survey debunks a number of myths that established players in the healthcare marketplace want us to believe about how the average American is not ready to accept more responsibility for managing their own healthcare decisions. Here are a few:

Myth: Consumers believe that the majority of doctors, hospitals and health plans are essentially alike and that care and service quality doesn’t vary considerably.

Fact: Consumers see distinctions in quality: They are paying attention to differences and want more information to make comparisons.

Myth: Consumers trust their doctor to make decisions for them.

Fact: The majority of consumers want to share decision-making with their doctor; only 20% are content to let their doctor control those decisions unilaterally.

Myth: Consumers pay little attention to prices for health care services.

Fact: Consumers are paying attention to prices for their prescriptions, office visits, hospital services and insurance premiums. They want tools to help them know in advance what those costs will be.


Myth: Consumers prefer to stay close to home for their doctor and hospital services.

Fact: Consumers will travel across state lines or country borders to save money or get better quality: They recognize that close at home may not mean “best at home.”

Myth: Consumers are afraid to use the Internet for clinical transactions in health care, fearing loss of privacy and security.

Fact: Consumers are comfortable using the Internet to exchange clinical information with their doctor, especially if it results in better coordination of care and improved service. (They believe their doctors should make greater use of the Internet to provide access to medical records, test results and other types of information.)

Myth: Consumers are not paying attention to health care in the 2008 Presidential campaign.

Fact: Consumers believe health care is a key political issue and many will vote based on health care issues alone.

This would indicate to me a population that is willing and eager to take on more responsibility for making health care choices, including seeking out lower cost and more convenient options including the use of email, the internet, and traveling abroad if necessary to receive less expensive care. Couple this with the fact that only 52 percent of consumers say they understand their insurance coverage and we have a cry for change.

Change must occur at the insurance plan level by giving consumers the ability to customize their coverage. The study found that a substantial number of consumers are increasingly drawn to non-allopathic (holistic, natural) approaches to care and to interventions that are less “chemically” based (biologics). Integration of non-allopathic and allopathic medicine is sought. Consumer-directed plans that utilize account-based programs such as health savings accounts and health reimbursement arrangements are a step in the direction of meeting this demand.

Change must also occur at the provider level. Providers from primary care physicians to major medical centers must come to terms with the fact that Americans expect their health care systems to be able to be convenient and to communicate with them they way everyone else does – electronically. It is ridiculous that we continue to fill out our medical histories on a sheet of paper every time we are introduced to a new provider.

This survey should help provide encouragement and impetus to those who are working to revamp the healthcare system from a consumer’s point of view.

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Massachusetts Mandatory Health Coverage Successful on Two Fronts

With many states and some of the presidential candidates advocating for mandatory health insurance coverage, all eyes are on the Commonwealth of Massachusetts, that enacted a mandatory coverage law in 2006, while Mitt Romney was governor.

Some good news was reported on Friday by Business Insurance that carried a story indicating that state officials had announced that premiums for individuals purchasing health insurance coverage through the Massachusetts’ health care reform program will likely rise by about 5% effective July 1.

“This is the first sign of a moderation in health care costs and we look forward to continuing to make health reform a success,” Massachusetts Secretary of Administration and Finance Leslie Kirwan said in a statement.

The Business Insurance piece reminds us that the program called “Commonwealth Choice,” provides nonsubsidized coverage to state residents who are not covered under group health care plans. It also points out that state officials say that while the coverage is not subsidized, the premiums are substantially lower than what enrollees would have paid in the personal lines market before the enactment of the state’s health care reform law. (This is no doubt attributable to the law of large numbers and the larger risk pool the law has created.)

In addition to these moderate rate increases (Buck Consultants reports that group plans across the country are expecting a 10.7% increase in 2008.) the state is claiming that since the 2006 law went into effect, about 75% of previously uninsured residents have found coverage with about 17,000 people participating in Commonwealth Choice.

Now that the plan is reporting success on both the access and the cost fronts, I look for talk of mandated health coverage to pick up steam in the state houses and in presidential politics.

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All Your Health Care Needs: $20 a Month.

Benjamin Brewer, MD, writes in a Wall Street Journal op-ed piece dated February 12, 2008, that he has always considered his practice to be a one-stop shop for nearly anything medical. He says that he can provide the initial evaluation for almost any problem and treatment for most things, and that his wife considers his practice to be his second home, considering all the time he spends there.

The Illinois Medicaid program considers Dr. Brewer’s office to be a “medical home” for recipients of public aid – about 1,700 of them. The idea is to provide an accessible, lower-cost entry into the healthcare system than a hospital emergency room. By becoming a “medical home” Dr. Brewer has agreed to take an “active, integrated approach to coordinating a patient’s medical care.”

No, he says, this is not a return of the managed care we saw in the 80s and 90s, but it is answering a need that he finds people from all walks of life are having – someone to coordinate their medical care. Dr. Brewer refers to a survey a he took of Wall Street Journal readers where 25% of the respondents said that they had lost track of “who is in charge” of their medical care. Worst of all these people reported a 100% increase in being hospitalized or using the emergency department in the last year compared to those with a single doctor coordinating their care.

This all got Dr. Brewer thinking that his practice covers 80% to 90% of what the average person would ever need a doctor for, and that he could have covered his salary for 2007 and the costs of all his staff and overhead for less than $20 per patient per month, including maternity and hospital care.

Most Americans, Dr. Brewer reasons, could afford a package that combined $20-per-month primary care, $4 generic pharmacy prescriptions and some catastrophic coverage. If the combination were tax-deductible for the individual, then he thinks it would be a slam dunk.

But then there is a catch: The Illinois Department of Insurance would send him to the slammer for running an unlicensed insurance company. That’s right. By taking on a little risk, he is considered to be in the insurance business. (Never mind the fact that that is what the Illinois Medicaid people have him doing.)

As Dr. Brewer concludes, Netflix can rent you 4 movies a month for $23.99, but he’s not allowed to rent you a medical home for less than you’d spend to watch a movie each week.

Again, I conclude that neither big government nor big business has the power to solve America’s health care cost and access issues, but they certainly do have the ability to block the path for innovators like Dr. Brewer to get the job done.

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The Carrot Works Better than the Stick

There is no wonder that health care is fueling much of the debate in this election year. A new report in the Kaiser Family Foundation’s Snapshots: Health Care Costs series examines changes in wages and benefits since the 1960s, and concludes that one way working families may be feeling the impact of rising health care costs is through smaller increases in their paychecks.

The report, looking at the same data used by the government to track changes in the U.S. economy over time, shows health insurance premiums growing four times faster than workers’ earnings from 2001 to 2007 (78 percent compared to 19 percent, respectively). No wonder workers and employers are paying increasing attention to health care costs.

Not only are increasing healthcare costs serving to stunt wage increases, they are decreasing the amount of non-health care benefits employers provide. As the chart below shows, non-health benefits increased as a share of total compensation from the 1960s to the 1980s, but have fallen modestly since. While at the same time, employer payments for health benefits have increased as a share of total compensation in every decade, reaching 7.2 percent of compensation in 2006.

Source: U.S. Department of Commerce, Bureau of Economic Analysis, National Income and Product Accounts, 1960-2006, Tables 1.1.5, 2.1, 6.11B, 6.11C, & 6.11D.
Note: Percentages shown are averages of annual shares for each time period.

While the debate continues to focus primarily on reaching some state of universal coverage, we hear very little in this arena about addresses these cost increases. It seems that no matter who is doing the paying – individuals through mandates, employers, or individuals through taxes – the problem will not be solved until a solution is found to the raising cost of health care.

It seems to me that personal responsibility can be the quickest way to right the ship. This means sharing some in the up-front costs of healthcare, but it also means employers providing and employees participating in wellness programs.

Thanks largely to employers banning smoking in the workplace, smoking rates have dropped to the lowest level since 1951, and the nation’s per capita consumption of tobacco have fallen to levels not seen since the early 1930s.[1]

If we can attack a health risk like smoking, why not go after the next items on the list: obesity, inactivity, diabetes and high blood pressure?

It is certainly easier said than done as benefits managers at Clarian Health in Indianapolis learned when they tried to implement a program to encourage wellness with increases in health insurance premiums tied to missed health goals, reports the Chicago Tribune.

A post on the Wall Street Journal’s Health Blog said:

Clarian set minimum standards for tobacco use, body mass index, blood pressure, blood glucose and cholesterol, the Tribune reports. Employees who didn’t meet the targets and weren’t working toward them would wind up paying as much as $30 more per paycheck for health insurance, the newspaper said.

The reaction from some of the health system’s 13,000 employees was less than positive. “Some of them quite frankly didn’t get the essence of what we were trying to do,” Sheriee Ladd, Clarian’s vice president of human resources, told the Tribune.

So Clarian changed the plan, offering extra money in paychecks of employees who meet the health standards or are following a plan to improve.

That seemed to mollify most everyone. The revised program drawing 95% participation during this past fall’s enrollment period.

There you have it. Once again it is proven that the carrot works better than the stick. We just need more carrot farmers.

[1] Smoking In U.S. Declines Sharply, Washington Post, Thursday, March 9, 2006; Page A01 Understands Healthcare Consumerism and Transparency.

I can recall reading several news reports lately about the need for health care pricing transparency. It seems that the story usually begins by laying out the need for transparency to encourage individuals to shop around for medical care and to become better consumers of health care services. Next, the story usually shifts to a health system executive who talks about how their pricing is all out on the company website, but that hardly anyone goes there to find out what things cost, and therefore, the whole idea will just never catch on.

Well, yeah, if I have cancer, or if I am having a heart attack, I am not going to go to some hospital system’s website to shop prices on procedures I know nothing about, or may, or may not need. But, let’s say I have a sore ankle and a high deductible insurance plan. I would certainly shop for someone who will check out my pain and recommend treatment — especially if they made it easy for me to do and to understand.

Enter According to a story published on its creators want to do for health care what Travelocity did for airline tickets. Here is an excerpt from this news story:

Ankle pain? Click on the matching body part and two options pop up. For $199, doctors at Sports and Orthopaedic Specialists will check out your ankle, review your medical history and recommend treatment. TRIA Orthopaedic Center lists a similar package for $213 — and a reminder that they are the team doctors for the Vikings and Timberwolves. What did patients think? Read user reviews. Will your health plan pay? Tap in your details and find out.

Now that is consumerism and that is transparency delivered in a way that a layperson can understand and at a price point where it makes sense for an individual to spend some time shopping around. Not too many people ever tried booking their own flights on the green screens of the old Saber System. Nor did they shop for the best fares when there was a travel agent (insert insurance carrier) sitting between them and the information.

This once again shows that innovation in health care is not going to be driven by the big carriers and the big health care providers. It will come from small entrepreneurial groups like the team that created Why Carol? Because it just sounds friendly. That alone tells me that is light years closer to the consumer on this issue than all the large systems who think that they are being transparent with their pricing by putting data out a website in what amounts to no more than a dump of procedures and billed charges on today’s equivalent of a green screen.

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