Wednesday, May 2, 2012

Customer-Driven Health Care Gets Respect

In Hopeful Sign, Health Spending Is Flattening Out –

After my posts of the last two weeks which spoke to the growth of health care spending (link) and the coming-of-age of customer-driven health care (link), I was intrigued to see the same story break in the mainstream media, such as the New York Times article linked above. It looks like the Times reads Forbes  ;-).

It’s terrific to see thought leaders affirm the concept that empowering customers and giving them the right economic incentives can “bend the cost curve” (i.e., reduce the real growth rate of U.S. health care expenditure) to a significant extent. And the growth of High Deductible Health Plans (HDHPs), which provide this empowerment and incentive to a large extent, is a very positive trend. They have grown 4x in market share since 2006 to 13%.

A couple of comments on this coverage, which was also carried in the Boston Globe (owned by the New York Times), and picked up or paralleled by other media including, e.g., VC blogger Fred Wilson.

1. We should think of plan sponsors as customers in addition to individuals; hence I use the term “customer-driven health care”, not “consumer-driven”. Most plan sponsors are trying to provide their members with quality health care at a cost the sponsor can afford, and they want to make sure their members get the best value for the large part of the compensation dollar that they allocate to health care. Plan sponsors have options, scale, and resources that individuals lack. They can and will play a large role in health care reform by channeling their money and members towards health care offerings that are cost-effective and tailored to individual member needs and circumstances.

2. The New York Times article raises a concern about people with HDHPs underspending on some types of preventative care: “[HDHP] enrollees cut back on some care that tended to save money in the long run, like vaccinations.” Other data (cited here), however, indicates that HDHP enrollees receive many types of preventative care at higher rates than individuals covered by more-comprehensive PPO plans. Skimping on preventive measures is definitely a risk; it merits monitoring and probably will require some form of intervention.

This is very good news nonetheless. I hope it is the start of a new era in U.S. health care.

View the original article here

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