Sunday, July 25, 2010

Consumer Directed Health Care Can Work!

On Thursday during a break in the cloudy/rainy weather in Vermont, I took the 3/4 mile hike up to Lake Pleiad, a mountain lake that's a favorite swimming spot. The weather was dicey and there was only one other person there, a large man with two large tattoos, who, I learned, had been a bouncer in a bar, but now now worked for a small manufacturing company.

I asked about the health insurance the company provided. Here's my reconstruction of what he said:
It's a health savings account type of thing. I have a $5,000 deductible. It's a good deal because the employer puts some money into the savings account. The deductible is a lot of money, but I'd only have to spend it all if I went into the hospital. I'd rather take that risk and have a lower monthly premium, even though a 'lower premium' is still a lot! Doctor visits and tests don't come to all that much. I don't just take a doctor's word about things - I ask a lot of questions. 'What could this test show? Would the results make us do anything different? How important is it?' Sometimes they give me a good answer, and I'm satisfied, but sometime it seems like they didn't really have a good reason, and I don't do it. You've got to ask questions!"
I asked him if the deductible got him to ask more questions. It did. "When you're laying out the money, you think about things more!"

I told him he'd made my day. He was doing just what the architects of high deductible health plans were hoping for. I said "if more people did what you do it would keep us doctors on our toes! We recommend a lot of things out of habit and they don't really need to be done. Do you encourage friends to ask questions the way you do?"

He did. A woman friend's gynecologist was recommending expensive tests on a regular basis. She didn't know why - "I just do what the doctor tells me I need to do." He said "you've got to ask!" When she did it turned out that the tests were really optional. She thanked him.

In 2009 approximately 23 million Americans had plans like the one my swimming companion had. If five percent asked questions the way he did that would be a million people. If that million persuaded five friends to do the same we'd be up to five million. To paraphrase the late Senator Everett Dirksen - "a million people here, a million people there - pretty soon we're talking real public education."

I spent thirty-five years of my practice life with a not-for-profit HMO. I think a group practice of that kind, in which patients and clinicians collaborate in planning the wisest way to use resources, is ideal. But that model didn't catch on widely, which is one reason consumer directed plans are selling like hotcakes.

I really admired and learned from my swimming companion. He was just a smart guy who thought for himself - not a health policy geek like me. If we had a groundswell of people like him who approached health care like prudent consumers it would be the strongest possible force for health reform!


Chris K. said...

I really like the asking questions advice. If you are the one footing the bill, you should definitely inquire more about tests and other medical services.

Jim Sabin said...

Hi Chris -

Thanks for your comment!

I think we should be asking the same kind of questions my swimming companion did whether or not we are footing the bill. But if the deductible gets us to do something we should be doing anyway, that's a good thing.



Anonymous said...

I know consumer directed health care can work. The Anabaptist population has been practicing consumerism in health care for decades through church-based "sickness funds." Responsibility for money spent, accountability to others, and principles of stewardship are critical in consumerism. I administer one such fund for a population of about 1,900 people, and, on average, our expenditure per capita is mere fraction of the national health care expenditure per person.

As a consumer, it can be very frustrating because of the "forces" in play which try to hide information. It's almost akin to a game of tug of war. Providers want to hide information,and consumers want more of it so that they can make a meaningful decision. If we could just get providers (including vendors) to be more transparent about both pricing and the value of a given test (cost vs. benefit), consumerism could work much better, and we would all be better off.

Jim Sabin said...

Dear Anonymous -

Thank you for your VERY interesting comment. I'm sorry for the delay in responding - I've been on vacation in Wyoming (where I still am, but with internet access today).

The Anabaptist experience has (a) highly relevant lessons for U.S. health policy but (b) is, alas, unusual. When social insurance started in the U.S. among immigrants in the 19th century, groups from the same villages met together. A purse was passed around. Those who were flush put in money. Those who were in need took money out. This was basic social cooperation.

It sounds as if the Anabaptist community 110+ years later is having a similar experience of social cooperation. And it also sounds as if your community uses common sense and thoughtful values in making medical "purchases," with the result of costs that are very low by U.S. standards.

If you haven't publicized the Anabaptist experience, I would encourage you to do so. Even though the fund you administer is for a small group, it yields large lessons. "Transparency" is a popular buzz-word now, but for your collaborative purchasing group it's a crucial necessity. Otherwise we're operating with blinders with regard to quality of care, value, and opportunity to decide what's best for our own lives.

Thank you for letting me and the readers of this blog know about your experience and perspective. I know that readers would appreciate any further thoughts you might want to share.



Anonymous said...

Jim, Thank you for your comments. As you say, "transparency" is critical for us!

I've recently gotten my MHA, and over the course of this "academic adventure," I've written numerous papers on the topic. But no, I haven't "publicized" anything.
One problem is that Anabaptists are such a small part of the population, and, as you say, our experience is so unusual, that I am not sure there would be any point in publicizing anything.

But I will be glad to share some of our main cost-saving measures:

1. We travel for health care if there are significant cost savings to be had.

e.g., one of our participants currently needs a rotator cuff surgery. Her local hospital priced the procedure at $28,000 with a pittance of a "prompt pay discount." She can travel about an hour away from her home and have the procedure done at a surgery center for less than $4500 (facility only)....See #2.

We use medical tourism if necessary. We saved an estimated $100,000 on a spinal fusion by going to India. (since then, we've found spinal providers in the States, and India is no longer necessary.)

My mother went to Mexico for a surgical procedure she needed. Lest you think the care is sub-par, she says she would return in an instant, and that is saying a LOT for her, the reluctant traveler. :)

2. We use a surgery center for anything and everything possible.

3. We stay OUT of hospitals for diagnostic tests such as pathology and diagnostic imaging, opting for freestanding imaging centers instead.

4. We will prepay or pay on the date of service or within 30 days of billing--whatever the provider specifies in order to get the prompt pay discount.

5. We negotiate ahead of time whenever possible.

6. We try to get Medicare-plus pricing whenever possible (e.g., Medicare + 20% or 120% of Medicare).

7. We have changed our reimbursement incentives so that the lower the amount spent on a [normal] maternity case, the lower the percentage of out of pocket expenses (e.g., out of pocket expenses for a home birth can be $160 for a couple (10%), whereas a hospital birth can be $2,000 (30%)). As a result, we are seeing an increasing trend of home births. This is significant for us because maternity is one of our biggest cost drivers.

8. Patients are allowed to see whatever provider they want, but if they seek care with a provider when there is a >>known<< lower-cost provider available who can provide comparable care, the patient is responsible for the difference in costs. A patient should have choice, but their choices should be made in light of their own dollars, and not someone else's.

9. We provide reimbursement for travel outside of the local area.

So that's it in a nutshell, although there are probably other things I'll think of later that I should have mentioned.

I should also underscore yet that we have found time and again that the cost of care has NO BEARING on the quality of care.

Jim Sabin said...

Dear Anonymous -

Wow - what your group is doing is breathtaking in its simplicity, fairness, and good sense!

I'm guessing that a significant component of your success is revealed by the pronouns you use - "we" and "our." If a far off insurance company asked its members to do the things the Anabaptist group does, the membership would be up in arms. But the prudent practices you describe appear to be seen by the group as "something we're doing for our common good."

The policy journal Health Affairs has a feature called "Narrative Matters," in which the authors tell personal stories with policy implications. I'd encourage you to look at some representative columns to see if your muse, combined with the work you did in the MHA program, inclines you to write about the Anabaptist program from the perspective of your personal experience as program manager.

THANK YOU for telling us more about what you and your group are doing!



Anonymous said...

No problem, Jim. It's my pleasure. Unfortunately, we are facing numerous challenges in light of the passage of "Obama Care."

I just wish common sense were contagious.