Riding the Wave of Consumerism

Published July 1, 2003

The first annual Consumer Directed Health Care Conference (CDHCC) was held in Las Vegas April 7-9 and was a huge success, with some 700 attendees and 45 exhibitors. Little doubt remains that “consumerism” is the next wave in health care financing and delivery.

The CDHCC delved deeply into case studies to show how consumer-driven care is working out in real life. Yet success brings it own challenges. All kinds of old ideas and products are trying to ride the wave of consumerism–without making any real change.

Tiered Payment Systems

This idea started with prescription drug benefits, where health plans would direct patients to lower-cost medications by charging a nominal co-payment for generics, higher for name brands, and still higher for off-formulary drugs. Now some health plans are trying to apply the same principle to hospitals and physicians.

Tiered programs may help some employers lower their costs at the margin, but they are in no sense consumer-directed. Some committee decides who is worthy of getting the lower co-payment and who is not, continuing to divorce the consumer from the true cost of care.

A more consumer-empowering approach would be a system of coinsurance that requires the patient to pay a percentage of the actual fee. Better yet, consumers can be encouraged to apply their own shopping skills with a cash account out of which they pay for health care expenses.

Evidence-Based Medicine

Of course medicine should be based on the best available evidence. That is the purpose of medical schools, medical journals, Grand Rounds in hospitals, continuing education programs, peer review, and all the rest. The problem comes in how the information is applied.

There is a movement afoot in the health care industry to develop and enforce “practice protocols.” Enforcement would include both carrots and sticks. The carrots include paying more to compliant physicians and exempting them from malpractice disputes. The sticks include dropping non-compliant physicians from networks, paying them less, and in some cases even taking away their license to practice.

The premise of this movement–that some health care professionals somewhere already know the best thing to do in all circumstances–is flawed. They do not. And what they think they know today will often turn out to be wrong tomorrow. It seems every week new research comes along debunking the conventional wisdom of yesterday.

How quickly will the bureaucracy be able to amend its protocols once they are put down on paper and bound there with red tape? And how will the bureaucracy overcome the resistance to change from interests invested in the current protocol?

This sort of evidence-based medicine will quickly become a political boondoggle subject to intense lobbying by some groups wanting the protocol changed and others satisfied with the status quo. Meanwhile, physicians will not be allowed to use their best judgment to treat their own patients.

The worst thing about this idea is that it has yet to be debated in any serious way. It represents the worst aspects of the hubris and group-think that characterize much of health policy in the United States.

Employer Paternalism

One consultant at the conference described the contortions he went through when a client wanted to cut its health care costs by 15 percent. The employer wanted to cut costs … but it also wanted to cover all the services it used to cover and impose economizing behaviors on the employees without inconveniencing anyone.

It was like pushing down on a balloon, he said. A push over here would result in the balloon popping up over there.

No one seems to have the nerve to tell employers cutting their costs is the easiest thing around–all they need to do is apply defined contribution. The employer decides how much it wants to spend next year, makes that money available, and lets employees decide what sort of health coverage they want to buy with it. It is not the job of the employer to make these decisions.

Major Strides Made

Don’t get me wrong. The conference itself was great–a major advance in the growth of consumerism in health care. These observations simply highlight how far we have to go.

Almost all of the major vendors were there to highlight their products and marketing strategies, including case studies with major accounts. Plenty of time was spent on information technologies and patient support. There were sessions on how best to educate employees about consumer-directed care, and also on how to apply consumer-directed principles to drug, vision, dental, and alternative medicine benefits.

In some cases, competitors were throwing shots across the bows of their rivals, explaining how their products were superior to others. At the same time there was a lot of networking and commerce going on in the hallways as potential partners sized each other up.

Refreshingly, there was very little politicking. Members of Congress were hardly ever mentioned, legislation was of little concern, few speakers came from Washington, DC. Not a single politician was on the program.

The closest the conference came to hearing from official Washington were the live videoconferences from Newt Gingrich and Mark McClellan. Consumer-driven health care is based solidly in the market, and that in itself is encouraging.

The conference was organized by Skip Brickley and his staff at The Emergent Group. They deserve accolades for putting together a landmark event. Their service to the movement continues in the form of an excellent Web site that includes copies of almost all the presentations delivered at the conference, bios of the speakers, and links to most of the exhibitors.

Greg Scandlen is director of the Galen Institute’s Center for Consumer Driven Health Care and assistant editor of Health Care News. His email address is [email protected].

More Information

Much of the content from the first annual Consumer Directed Health Care Conference (CDHCC), held April 7-9, is available on the Internet. Point your Web browser to http://www.cdhcc.com/old.