Steve Case, late of AOL-TimeWarner, has made a huge bet on consumer-driven health care with his investments in Revolution Health Group. Case and fellow investors including Colin Powell, Jim Barksdale (Netscape), Steve Wiggins (Oxford Health Plan), Franklin Raines (Fannie Mae) are planning to purchase at least seven (unnamed) companies to form the core of an entity that will (at least according to the USA Today article):
–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 guys are not fooling around – Case intends to invest $500 million of his own money in the venture, and the other partners’ pedigrees and personal fortunes will certainly make Revolution one of the larger new ventures in the health care business.
The question is, does the premise of the idea, consumer-directed health care, make sense?
Sort of, but not really.
To illustrate, here is a quote from Colin Powell from the article about shoppers looking for a TV;
“they can go on the Internet and “within a second and a half, get hundreds of choices of where to buy,” along with information about the TV, the seller and any additional charges. “Why should that not apply to health care?” he asks.”
Well, Mr. Secretary, buying a TV is not exactly the same as trying to find out what to do about a lump in your neck, a gradual loss of nighttime vision, or general sense of fatigue. When buying a TV, you already know what the solution is. The issue with health care is a big chunk of the effort and expense is associated with trying to answer the “what’s the problem” question.
The other significant problem w the whole “consumer-directed” idea is the nature of health care as an economic good. As Matthew Holt of “the Health Care Blog” has noted repeatedly, health care is not a typical economic good, it is not like guns or butter. People use different criteria when deciding what is worth spending when they or their loved ones are at risk. Case in point.
My daughter was admitted to a local emergency clinic with an adverse reaction to a medication. She was stabilized, appeared to be doing fine, was not in paid, fully alert and conversational. As the clinic neared closing time, the doc suggested that she be sent on to Yale for further observation before discharge, as there was some information that the reaction could lead to a problem with her breathing. She was breathing fine, talking, and appeared normal.
We are insured under a high-deductible MSA plan, so any charges would come out of our pocket. I thought about it for a few seconds, than agreed. I also agreed to have her brought over in an ambulance for the fifteen minute trip. I knew full well that the risk was minimal, the costs would be over $2000 for this “preventive” measure, and I would pay all that out of my own pocket. Was the very small risk worth the outrageously inflated cost?
You bet your life it was.
The net here is I do not believe health care’s cost problem can be addressed in any significant way by this drive to consumer-directed health care. In addition to the emotional buying decision process noted above, it is also instructive to remember that a significant portion of total health care dollars are spent on treatment in the last six months of life; and that a majority of the health care dollars go to treat individuals with serious chronic conditions who get almost all their care paid for.
While better educating individuals will undoubtedly help them solve their individual health issues, and perhaps cut a few cents off their bills, it will do nothing to reduce the national health care tab.
