Innovation Precedes Inauguration

Published July 1, 2008

For months, we’ve heard why only this or that presidential candidate can be trusted to fix health care. One often gets the impression the system is static and the health care industry is sitting on its hands until our next president takes the oath in 2009.

In fact, however, the changes taking place in the health care system right now are so many and so rapid they’re almost impossible to keep up with. Following is an overview–a snapshot that will become obsolete even as it’s written–of the exciting developments taking place today.

Old Dogs, New Tricks

Insurance companies are not known for embracing change, but in the past couple of years many insurers have been taking on stubborn challenges and making significant strides.

Relatively objective provider rating tools, for example, are commonplace among insurers now. While not yet perfect, the ratings do offer consumers a useful guide to how doctors and hospitals stack up in terms of quality and cost. It’s also becoming more common for insurance companies to help members measure their health (achieving and maintaining good health being the point of health care, after all).

Yet another insurance innovation is the development of pared-down, affordable policies. These policies often attract healthy but cash-strapped young adults who might otherwise forgo insurance altogether.

Also, insurers are offering multi-year policies. In addition to making premiums more predictable, such policies strengthen insurance companies’ incentive to make long-term investments in policyholders’ health.

Care Providers Adapting

Insurers aren’t the only traditional players doing nontraditional things in health care. Care providers are making exciting changes to their businesses, too. In some areas, for example, it’s now possible to buy your routine basic care directly from your doctor, for a flat and affordable monthly fee.

Nor are insurance companies the only ones giving cost and quality information about providers. Many doctors and hospitals are now doing the same–Alegent Health’s My Cost estimation tool is a great example.

Finally, providers are going retail. Retail clinics–numbering more than 800 as of January–let consumers get appropriate care for minor medical conditions in locations such as malls and discount stores. These clinics offer longer hours than most traditional clinics, and treatment costs much less than a trip to the emergency room.

Big Dogs

A second breed of innovators consists of established firms that until recently transacted little or no direct business in the health care realm. Corporate titans such as Google, Microsoft, and Wal-Mart have ventured into health care, bringing with them capital and ambition.

Wal-Mart’s contributions to health care include $4 prescription drugs and the RediClinic retail clinics that sublet space in many of its stores. RediClinic is part-owned by Revolution Health Group, launched in 2005 by AOL co-founder Steve Case.

Google and Microsoft are focusing on personal health records, introducing Google Health and HealthVault, respectively. These offerings aim to enable individuals to manage their own health records, unlike the current system under which health records are typically stored by insurance companies and care providers.

New Blood

Today’s health care landscape also includes novel firms that didn’t exist a few years ago. Companies such as Redbrick Health,, and Medical Nomad represent not just new services but new categories. They reward employers for helping employees get and stay healthy.

Internet entrepreneurs are also making things better. For example, consumers can now go online and, with relative ease, find the best local value for LASIK surgery or plan a trip to Hong Kong for joint replacement surgery.

Promises, Promises

It’s worth noting a common thread runs through the aforementioned innovations. All are centered on the individual consumer: more convenient and affordable ways to get care, more choice in policies and payment methods, and more tools for making decisions and managing one’s health.

Demand for these nascent services was sparked by the emergence of health savings accounts in 2004, which in turn unleashed competitive forces by giving consumers just a little ownership of their own health care.

Considering the great progress that is resulting from even this small measure of freedom, it seems clear we’d be wise to put more faith in the promise of the market this November, and less in the promises of politicians.

William Snyder ([email protected]) is a policy advisor to The Heartland Institute.

For more information …

Alegent Health’s “My Cost” Health Care Cost Estimation Tool:

Microsoft HealthVault: