Review
of Consumer Driven Health Care
by Roger D. Blackwell, Ph.D., and Thomas E. Williams, M.D.,
Ph.D., with Alan A. Ayers, MSA MAcc, foreword by Bernadine
Healy, M.D.
Book Publishing Associates, 2005
$17.95 paper, 208 pages, ISBN 0976744902
The annual
cost to cover a family in an employer-sponsored family health
plan is about $10,000 and rising, forcing many employers to
shift greater responsibility to their workers. That
trend will ultimately transform the U.S. health care system,
according to a new book by the well-known Ohio State University
marketing professor Robert Blackwell and his co-authors.
Consumer
Driven Health Care: How a Health Savings Account May Save
Your Job and Solve America's "Two Trillion Dollar Crisis"
predicts a fundamental shift in the way Americans interact
with institutional health care. Blackwell's prescription
for the U.S. health care system is a market-based solution:
Consumer-driven health care.
HSAs Create Incentives
One of
the book's recurring themes is that incentives matter.
The authors say incentives will increasingly empower consumers
by encouraging responsibility through choice and control.
Patients need incentives to be wise consumers of medical services.
Consumer-driven
health plans, such as health savings accounts (HSAs), provide
this incentive by having patients pay incidental medical bills
from their HSA. Consequently, patients with HSAs have
an incentive to conserve health care dollars the way they
safeguard their own money.
While
most experts now agree that third-party payment of medical
bills increases consumption of medical services and boosts
health care spending, less obvious is the loss of patient
autonomy that occurs when third parties make decisions with
respect to how health dollars are spent. Third parties
will always ration care by spending only on disease, rather
than investing in disease prevention.
With the
right incentives, the authors note, Americans will increasingly
focus on preventing diseases instead of waiting until conditions
become costly to treat. This means consumers who maintain
better health should benefit economically. Under the current
system, in order to "win" the health insurance lottery,
you must become sick.
Incentives Transform Providers
Incentives
also matter for providers, the book argues. Transforming
health care institutions requires that they become patient-centered.
This happens
when consumers control the dollars health care providers receive.
When patients have more choice and control over their health
care dollars, health care institutions have to provide medical
products and services consumers want at competitive prices
or go out of business.
Sounds
impossible? Consumer Driven Health Care predicts Americans
will take back control of their health from a system dominated
by third parties more concerned with "sick care"
than a medical marketplace serving patients' needs.
According to Blackwell and his coauthors, consumerism can
revolutionize health care the same way it changed the distribution
of other goods and services.
Singapore Model Impresses
Singapore
is an example of a patient-centered health care system.
A recent report by Canadian health economist Cynthia Ramsay,
explored in Blackwell's book, found Singapore has the best
health care system in the world.
Workers
in Singapore are required to save about 6 to 8 percent of
their income in Medisave accounts (similar to HSAs).
Consequently, the Singapore government avoids the type of
"free care" provided to low-income people in the
United States. Instead, it uses a system of varying
co-payments for low-income people to pay for medical services.
Although
the government subsidizes some of the cost of services provided
to low-income people, all citizens have financial incentives
to conserve resources. According to Blackwell, "when
consumers are in control, they evaluate their options and
choose the lowest cost, most efficient providers."
Advantages Abound
The results
have been rather impressive:
- In
Singapore, 55 percent of surgeries are performed in less
expensive outpatient clinics, whereas 87 percent of surgeries
in the United States are performed in hospitals;
- Surgeries
performed in hospitals cost more than the same surgery performed
in an outpatient clinic; thus, only serious procedures requiring
a hospital stay are performed in hospitals;
- When
patients do enter hospitals in Singapore, they tend to have
shorter stays; for instance, the average length of stay
is 4.8 days in Singapore compared to 6.2 days in the United
States; and
- Hospitals
in Singapore have an occupancy rate of 74 percent, versus
64 percent in the United States, indicating the former operate
more efficiently,
People
who take care of themselves and practice disease prevention
also benefit from lower costs and better health. Overall,
Singapore spends only 3.9 percent of gross domestic product
on its health care system--about one-fourth the share spent
by the United States.
"Medical Tourism" Growing
Examples
of free-market medicine can be found in other areas as well.
A new concept known as "medical tourism" gives patients
the option of treating expensive conditions in low-cost, high-quality
health centers located in parts of the world where prices
are significantly lower.
Patients
who opt for this type of "medical outsourcing" often
find they can pay for surgical procedures, airfare, and lodging
abroad (often in luxurious facilities located in scenic tourist
destinations) and still spend only a fraction of what the
procedure would cost in the United States, notes Blackwell.
In addition,
not all medical consultations require an in-person visit,
the book notes. Some of these (reading radiology scans
or interpreting lab results) can be outsourced to countries
such as India, where quality is high but costs are lower.
Consumers purchasing medical services with an HSA might opt
to make this tradeoff.
It is
clear that as health insurance premiums rise, workers will
be forced to take greater responsibility for their health
care decisions. This will transform the U.S. health
care system as patients who control more of their health care
dollars demand value for their money. The result will
be a patient-centered health care system that offers high-quality
medical services at a price Americans can afford.
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