Steve Case’s Revolution Health has announced its first investments in the health care arena. They include a company that finds doctors and provides scheduling services; a health information firm; search firm targeting health issues; and two companies focused on insurance.
Case’s new company was announced three months ago to great fanfare, focusing on several areas:
–provide consumers with access to data on physician and hospital cost and quality
–lower health insurance costs by streamlining the purchasing process
–enable consumers to rapidly access their personal health care data at convenient locations
These initial investments appear to be somewhat in line with those priorities, although there are already many companies providing similar or identical services with significant revenue streams.
myDNA.com appears to be an advertising supported health information site, similar to others pervading the web. 1-800 Schedule is another web site that appears to be ad-supported. It does provide directories of providers, but there are no quality rankings, ratings, or profiles beyond basic info.
ExtendBenefits is an individual health insurance firm that also supports HSA administration. They claim 500,000 members and base their pitch on lower costs (claiming individual health benefit programs are 1/4 to 1/2 the cost of group programs (?)). ExtendBenefits is staffed by execs from eHealthInsurance and technology folk. There is an interesting article on their site quoting the CEO of Pitney Bowes on health insurance costs. One of the salient parts of the article follows:
“The same thinking has been applied to psychiatric and substance-abuse cases. The company set up an eight-session early-action program to make sure covered employees in these situations were seen early and often by professionals before they were released for more intensive treatment. Although this is more expensive in the short run, says Critelli, in the long term the program “saves money by getting better results from more data.”
Pitney Bowes has also found that substantially decreasing the cost of medications borne by employees results in fewer of them discontinuing their long-term treatments, which would invite more serious conditions and hospital visits. The company considers screening and diagnostic procedures a critical component of prevention strategies but found through data analysis that some diagnostic tools

Six large national employers have begun to offer employee-paid, low cost low coverage health insurance plans to part-time workers. The plans are provided by United HealthGroup, Cigna and Humana to employees without other health coverage. Plans range from a discount card providing lower cost prescriptions, medical and dental checkups to high-deductible programs with and without pre-existing condition limitations.
According to the New York Times,
“UnitedHealth Group is offering the discount card and four levels of limited coverage in all 50 states at monthly premiums ranging from $59 to $149. In 15 states, United will also offer high-deductible policies that cover major medical costs, under the same group rules with no add-on charges for people with preconditions.
The major medical premiums vary based on an enrollee’s age, sex and location. Humana will offer the high-deductible policies to individuals in 17 states and Cigna will offer them in Arizona only. Under these individual contracts, premiums may also be higher for those with preconditions.”
The program is offered to workers at Sears, Federal-Mogul, IBM, GE, and EMC as well as to independent contractors at Avon Products.
Credit goes to the employers and the not-for-profit group that is sponsoring the initiative, the HR Policy Association.
We’ll be following this closely to assess the results, market acceptance, and as time goes on, profitability of the program.
What does this mean for you?
An interesting experiment to watch and learn from. Possiblya way to stem the tide of uninsurance that is increasing costs for employers and employees as the uninsured population’s care is paid for by those with coverage.

Wellpoint is continuing to consolidate its hold on the nation’s Blues plans with its recent announcement regarding the pending deal to acquire Wellchoice, the holding company that owns New York’s Empire Blue Cross and Blue Shield.
The transaction is valued at $6.5 billion in cash and stock, is scheduled to close in the first quarter of 2006, subject to regulatory approvals.
This continues the trend towards consolidation in the industry, following such notable deals as Coventry-First Health, United-Oxford, United-Pacificare, Anthem-Wellpoint and Aetna-HMS.
According to California HealthLine;
“The (Wall Street) Journal reports that slowed membership increases, large premium increases becoming less common and the fact that size helps insurers negotiate rates with providers has contributed to the trend of consolidation in the insurance industry (Martinez, Wall Street Journal, 9/28). Gary Claxton, a Kaiser Family Foundation vice president and director of the Health Care Marketplace Project, said, “If you want to grow, you have to look at new markets or consolidation.” He said that insurers have been unable to grow by adding new employers or members, so consolidation is their only option.”
Claxton’s comments echo earlier statements here. With Wall Street’s insatiable thirst for growth and continuously improving quarters, health plan execs are desparately seeking new business. There are now 13 remaining publicly traded health plans, and speculation is rampant that the smaller will continue to be acquired by the larger as health care Pac-Man continues. Coventry may be next on the list.
What does this mean for you?
Opportunities for speculation in stocks. Fewer choices in health plans. Confusion regarding who owns which health plan.

As the number of employers offering health insurance declines and Medicaid enrollment increases, the people left without health insurance coverage tend to be members of families where the parent(s) have jobs without coverage.
A new study released by the University of California – Berkeley indicates that less than half of the state’s children will be covered by employer-sponsored plans within five years if premium costs continue to escalate at double digit rates. Of the rest, 14% would have no coverage at all, and the rest would be insured by tax-payer funded governmental programs.
What does this mean for you?
Higher taxes, larger deficits, and increased cost-shifting from providers to insured patients will accelerate the death spiral of the US health care system.

I have been engaged in an email debate with a libertarian about the value of “freedom of choice”, impact of payment sources on health care expenditures and inflation thereof, and potential impact of consumerism on health care costs.
He is of the opinion that health care costs are best addressed by patients paying their own way – at least that’s what I think he is saying. Leaving aside the question of how someone of modest means pays for a knee replacement much less a heart transplant, the debate spurred me to further investigate who pays what, and who incurs what kind of charges.
My theory is that consumer-directed health plans will have little to no impact on total health care costs, that they are really cost-shifting from employers to employees. I’m not making a value statement about cost-shifting, just stating a fact. By the way, most employers also don’t believe CDHPs will have any material impact on health care expenses.
The thinking behind my theory is the belief that most costs are incurred by people who spend way more than their health spending account would hold, and therefore their behavior is not influenced to any significant degree by the funds leaving their spending account.
Here’s the support for my theory. (thanks to George Halvorson of the Kaiser Family Foundation for some of the statistics)
Healthy people – 70% of people spend less than $1000 per year on health care costs. These folks are not contributing to the nation’s, or their employer’s, health care costs in any meaningful way. So, while they may make a “better decision” about health care because they are spending their own dollars, the impact is on the margin.
Catastrophic patients – about 5% of the population, those with really expensive acute or chronic conditions, such as serious heart disease, advanced arthritis, cancer, or significant multiple morbidities, are also not affected – they’ll blow through their MSA account balance in a month or two, after which the insurance company or Medicare or Medicaid pays the rest. So, no funds out of their pockets, and realistically, no way for them to pay the huge costs of their health care. By the way, the top one percent of the population that falls into this category spends 40% of all health care dollars, the top five percent that falls into this category spends over 50% of all health care dollars.
OK, that leaves the medium users. The remaining part of the population consumes more than $1000 in health care (a typical MSA plan deductible), and therefore might be more influenced by finances than the other two groups. But there’s a problem here. Studies indicate that a significant percentage of people with high deductible plans tend to not fill prescriptions, not seek care, and otherwise “under-utilize” health care due to financial reasons.
Well, their costs are constrained, at least for today. But what if they are not taking their hypertension medications and suffer a stroke? What if they don’t get a mammogram and their breast cancer is not diagnosed until it is marginally “curable”? They’ll become part of the top 5%, where costs are really uncontrollable.
Some libertarians will claim that their decisions are their responsibility. Not so in health care. There is ample evidence that the costs of the uninsured are borne by private payers; in fact about a thousand dollars of the average family’s insurance premium goes to pay for uncompensated care. So, free marketers, who base their policy theories on the merits of the invisible hand, miss the fundamental problem – there is not, and never will be, a free market in health care. One can intellectually debate the merits and benefits of the free market, but that discourse is irrelevant in the real world.
In the real world, people seek care, all of us end up paying for it, and in the US we pay 40% more for health care than in any other industrialized country. And none of the so-called free-market initiatives will in any meaningful way change that.
True change will come from applying more science to the art of health care. Data mining, outcomes analysis, intelligent reimbursement based on that analysis, and financial incentives for insureds that factor in lifestyle choices are all necessary. But consumerism alone will do nothing to hold down health care inflation.
What does this mean for you?
Avoid ideologically-based solutions, and stick to the facts. If the facts don’t support your position, find another position.