Consumer Power Report #174

Published April 20, 2009

I’d say the Tea Parties were a tremendous success. President Barack Obama went to Europe to apologize for the United States being “arrogant, dismissive, and derisive” towards Europe in the past. And then his allies turn around to be even more arrogant, dismissive, and derisive towards hundreds of thousands of fellow Americans who are concerned about runaway spending and intrusive government. I think it is known as projection in psychiatric circles.

Those critics who repeat the charge that the tea party-goers have nothing to contribute to solving today’s problems might want to look at–an excellent essay by Peter Ferrara in the American Spectator. He culls a number of solutions offered by Paul Ryan, Newt Gingrich, and other free-marketeers on a wide range of issues, including health care.

But it can’t be said often enough that these are not Republican versus Democrat issues. These political partisans have got to stop thinking that one party (theirs) does everything right and the other one does everything wrong. It just doesn’t work that way. George W. Bush did a lot of very good things, and a number of pretty bad things. Obama, too, will do some things right and some things wrong.

In health care, most Republicans are no better than most Democrats. I was having a discussion with a friend about the Republicans being likely to go along with a federal “health insurance exchange,” mandatory coverage, and income-based premiums. He pointed out that a lot of Republicans have supported means-testing for Medicare so basing premiums on income isn’t much of a departure.

I expect that is true. But the implications are profound. Medicare is a government entitlement program. Private health insurance is a voluntary contract. These are fundamentally different concepts. Private contracts require true prices. How else can you know if the contract is worth entering into? Prices are vital signals of value. Income-based premiums mean there is no underlying value. The government will determine what the cost is to you, independent of the actual cost or value of the product.

But people who have been in Washington too long (Republican or Democrat) start looking at everything as if it is a government program. Whatever happened to term limits?



Independence Blue Cross in Philadelphia has released new information about its experience with consumer-driven health. Most of the results are not surprising, things like, “health care consumers who choose high-deductible health plans (HDHPs) are more likely than members of other health plans to choose lower cost care options, such as generics versus brand drugs, and take better care of their health.”

More particularly, however, the group finds HDHP enrollees are “more engaged,” especially “when it comes to managing a chronic condition.” The press release adds, “Fifty-seven percent of HDHP members with chronic conditions say they are actively involved in treatment decisions, versus 37 percent of members who are in other managed care plans.”

The release also says enrollment is growing fast in the Philadelphia are, with Independence seeing a 109 percent increase in HDHP enrollment in 2008. It also says that while most consumers still rely on traditional sources of information like their friends, family members, and personal physicians, more are turning to their health plans for information, especially for cost information.

And employers are increasingly likely to offer wellness programs to employees. “Half of employers surveyed said they are likely to offer a wellness rewards program to their workforce and believe it will lead to healthier employees. Nearly 85 percent of the surveyed employers believe that the best way to control health care costs is for people to take better care of themselves. Approximately two-thirds of consumers would be likely to participate in incentive programs if offered.”

SOURCE: Independence Blue Cross

Yet Forrester Research finds that “Health Plans are falling short on engaging and empowering their CDH plan members,” according to an article in Inside Consumer-Directed Care. The article notes that 40 percent of insured adults now have some form of health spending account (including FSAs), and though they are more engaged than their counterparts, “It’s nothing to write home about.” FSAs still have the biggest market penetration of the account-based plans, but enrollment is stagnant while HRAs and HSAs are “growing at a healthy clip.”

The piece cites Carl Doty of Forrester as faulting health plans with being “still caught in a B2B mindset when they should be operating from a D2C mindset.” Most communications from health plans to their members is in the form of Explanations of Benefits (EOBs), that no one reads, for example. HSA owners are the most engaged and the most likely to visit their health plan’s Web site, but they don’t find much reason to go back. “Well over half of those surveyed said they had not visited their insurer’s Web site in the past 12 months.”

And while health plan and employers may be enthusiastic about wellness programs, consumers are not. They largely ignore the messages from health insurers because they don’t trust them.

Mr. Doty has some suggestions on how plans could improve customer engagement by taking lessons from companies in other industries that are “consumer-centric trailblazers,” like Proctor & Gamble, Harrah’s Entertainment, and Geico.

SOURCE: Inside Consumer-Directed Care, Vol. 7 No. 8, April 17, 2009 (not available online)

The Pittsburgh Post-Gazette writes about a meeting of the Pittsburgh Business Group on Health that featured a presentation by Ted Nussbaum of Watson Wyatt.

The article starts out saying, “The employers who are most successful at containing health-care costs are doing it without raising workers’ premiums. Instead, they’re using cash incentives to entice employees toward consumer-driven health plans, such as medical savings accounts and health reimbursement arrangements.”

The article quotes Mr. Nussbaum as saying, “Employees may pay as much as 50 percent less” for premiums than those enrolled in more traditional point-of-service or preferred provider plans.

SOURCE: Pittsburgh Post-Gazette

And HealthLeaders-Interstudy “reports that more employers are opting for consumer-driven health plans as a way to reduce costs during the economic depression,” according to an article in Health Care Finance News.

The article quotes Paula Wade as saying, “We’re seeing increases in CDHP enrollment across the board both in places like Minnesota, where employers were early adopters of high-deductible plans, and now in areas like North Carolina that have been hit hard by the economic downturn.” But she also thinks the new federal COBRA subsidy may deter some individuals from enrolling in lower-cost CDHPs.

SOURCE: Health Care Finance News


Last issue we said the Lewin Group reports need to be taken with a big grain of salt because the firm always managed to arrive at the conclusions its sponsors are hoping for.

The firm had issued a report predicting that 119 million privately insured Americans would opt for a public program like Medicare if one were offered by the Obama administration. We’re not sure who funded that report, but it was seized on to illustrate that a public program would be the ruination of private coverage.

Now, Lewin is the source of a report (I don’t use the term “study” for propaganda) by FamiliesUSA that claims “one-third of all Americans lack insurance.” This hysteria was picked up by newspapers all across the country. One person counted stories in 200 papers that reported the information uncritically.

Mmm, hmmmm. I issued a press statement noting, “Reading the study, it turns out that Families USA arrived at these numbers by manipulating data from a bunch of different surveys and extrapolating them over a two-year period. So, it would include everyone who has changed jobs in the past two years. They have ‘lost’ their health insurance when they went from one job to another job, even though the new job might also have provided coverage. It also includes all the people who are already eligible for a public program but haven’t bothered to sign-up, and all the kids who graduated from college and didn’t immediately get coverage, and all the new immigrants, legal or not, who aren’t eligible for public programs in any case.”

And, in fact, the problem of the uninsured is not a crisis and is not growing, as illustrated in the accompanying graphic. But don’t tell that to the 200 newspapers that reported the FamiliesUSA numbers.

SOURCE: < ahrefe="">Red; Employee Benefit Research Institute, Issue Brief #321, September 2008


Deloitte has issued a new survey of consumerism in health care. This is worth paying close attention to because, unlike most policy surveys, it takes a marketing approach to looking at a complex and diverse population. It divides the population into six segments, based not on demographics but on attitudes, and it recognizes that each segment has different values and priorities. Different strategies are needed to reach different population segments.

This sort of analysis is alien in Washington and in health policy arenas where people are all treated the same, except for, perhaps, financial need.

There is a wealth of information here about consumer hopes and fears on a whole range of topics–wellness, traditional and alternative health services, information technology, health care financing, and health policy.

In his forward, Executive Director Paul Keckley sums it up better than I can. He says:

The results of this study are conclusive: Consumers want better performance from their health care system. They think it is wasteful, inefficient, complex and expensive. They are frustrated that the tools useful to them in making decisions about their health are not readily available. They like innovations that result in lower costs and more convenience. They want better value for the dollars they spend and believe fundamental changes are necessary to achieve these goals.

Although the health care consumer market is complex, it is imperative that providers, payors, policymakers, device, pharmaceutical, technology, and biotech organizations understand and respond to consumers’ expressed concerns, interests, and needs. Engaging consumers appropriately is fundamental to health care reform. Consumerism in health care is a trend, not a fad.

SOURCE: Deloitte Center for Health Solutions


The ACLU put out a video illustrating what could happen when privacy is violated. Unfortunately, this strikes a little to close to the bone to be entirely comical, especially in these days when employers are actively firing people who smoke, who are overweight, who don’t exercise, or who have dependents who do any of those things.


My Heartland colleague Maureen Martin read the “HITECH” bill (the health IT provisions in the stimulus package) and came away pretty concerned from a civil libertarian point of view. She writes, “Despite supposedly heightened privacy provisions, the details of HITECH are chilling. These, of course, are the very details most members of Congress didn’t bother reading before voting for the bill.”

She goes on, “Health information is anything to do with ‘the past, present, or future physical or mental health or condition of an individual.’ It includes information known to ‘healthcare providers.’ Health information is not just what our doctors and nurses know but also information from any source that is known to our employers, schools and universities, which are now all defined as healthcare providers.”

And, she says, although people with access to your records are “sworn to secrecy,” there are few consequences to violations. “If the disclosure is accidental or unintentional, nothing happens. Those whose disclosures are willful may face prosecution for fines from $10,000 to $100,000. But there are two reasons why this consequence is lame. First, crimes involving specific intent are notoriously difficult to prove. Second, there are no funds for more government prosecutors, who will likely view many privacy violations as too trivial to bother with, even if they are a big deal to the individual involved.”

Ms. Martin is one of the finest attorneys I know. If she is worried, I am worried.

SOURCE: Network World

Writing in USAToday, Mimi Hall notes the pros and cons of health IT. She cites one medical practice that has gone all-digital and the physicians love it. It turns out this “seven-doctor practice went digital when it was bought by MedStar Health, so the doctors didn’t have to pay for the switch.”

She says, “The federal government plans to set up regional centers, staffed by ‘geek squads,’ to help offices get their systems up and running, and those who don’t take steps to go digital will face graduated penalties beginning in 2015.”

But, “Questions about the effort are being raised by health care experts. Avalere Health, a research company for government and industry, released a study last month showing that it will cost the average doctor or small medical practice about $124,000 to upgrade to computers over the period that the government incentives are offered, 2011-15. Those incentives, the study said, would add up to $44,000 per office at best.”

Hall quotes Jonathan Oberlander, a University of North Carolina School of Medicine professor, as saying, “There’s not much reason to believe that this is going to save significant amounts of money.”

The article concludes, “Without proper protections, health IT could end up harming patients, says Ashley Katz of the group Patient Privacy Rights. If patients don’t feel certain their records are protected from employers, creditors and marketers, they may not tell their doctors the truth about certain conditions or behaviors, she says.”


Healthcare IT News reports consumer demand for health IT is strong. It cites the Deloitte study (cited above) in saying, “While only 9 percent of consumers surveyed have an electronic personal health record, 42 percent are interested in establishing PHRs connected online to their physicians. Fifty-five percent want the ability to communicate with their doctor via e-mail to exchange health information and get answers to questions. Fifty-seven percent reported they’d be interested in scheduling appointments, buying prescriptions and completing other transactions online if their information is protected.”

But, “Despite strong consumer demand, many are still concerned about the privacy and security of their medical information. Nearly four in 10 consumers surveyed (38 percent) are very concerned about the privacy and security of personal health information.”

SOURCE: Health Care IT News