We have the tools to reduce the cost of health care, contain cost increases, reduce the number of uninsured and improve quality and service to the patient. These changes can be accomplished in a very short period of time and with no government involvement or expense.
No corporation or group of corporations, no insurance company regardless of how big and no government can create the changes necessary to improve the quality, expand access and control the costs of health care.
Only the tremendous power of consumerism has the ability to create these changes. But how do we unleash this power? It’s simpler than you may think. Health insurance plans (regardless of if they are employer based (insured or self insured), individual insurance or government run plans) have distorted the health care delivery market.
The market distortion is a result of the economic incentives and strategies that have been used by the health insurance industry over the past 60 years to control plan costs. Plans contain a variety of benefit building blocks including physician benefits, a lab and testing benefits, a hospital benefit and other benefit components.
These separate benefit components were originally intended to help the payers (insurance companies and self insured plans) control costs. The provider market has responded by dividing the bill along the same lines. As a result even the simplest procedure can result in numerous bills from numerous provider sources. In this environment consumerism can not function.
Health Savings Accounts, which are designed to provide employees with incentives to be consumers, are handicapped. Because of the fractionated nature of the marketplace, providers cannot tell the consumer what the total bill for a service will be. An estimate (probably with one or more of the components missing) is the best you can get.
So, the consumer is flying blind when is comes to buying some of the most important services in his or her life. In areas where health benefits do not apply we see a totally different presentation of the health care service.
In these areas, the consumer is central and has the information and clarity of price and quality to function as a consumer. In these areas, normal competitive economic forces are at work on a daily basis.
Quality is improved, customer convenience is required and prices are competitive. Cosmetic surgery is an example of this system at work. Most cosmetic surgery is elective and therefore not covered by health benefit plans. If Ms. Jones wants a “breast enlargement” the cosmetic surgeon presents his or her credentials, describes what needs to occur and presents a single price for the service.
The surgeon has assembled the “team” that will provide the service. The surgeon, assistant surgeon, anesthesiologist, radiologist, laboratory services, facility costs, pre care and post care are all included. The surgeon has also developed a single price for the service which includes all of the “team’s” fees. The consumer can evaluate the proposed procedure, the “team’s” credentials and the price. Comparisons can be made and normal consumerism functions.
At least 80 percent of the services that we as Americans purchase can be presented in this all inclusive “Global” format. Benefit plans can be modified to support the Global program. For example, if the Global is $10,000 the benefit plan could pay $9,000. The employee would be advised of the $9,000 benefit and those providers who are prepared to accept the $10,000 fee. The employee, being a free American consumer, can choose to use one of the participating provider “teams” or take the $9,000 and go shopping.
This approach unleashes the tremendous power of consumerism. It will drive quality up, access up, response to patient needs up and prices down. More companies and individuals will be able to afford insurance reducing the number of uninsured. Governments at all levels can adopt this plan reducing benefit costs and reducing taxes. Medicare can adopt this plan reducing its costs and extending the program’s solvency. History can help to predict the future.
In 1984, I assembled the first PPO (Preferred Provider Organization) in the state of Wisconsin. It was not until 1994, ten years later, that the concept gained wide acceptance. In 1995 and 1996, in large part due to PPOs, the cost of health benefit plans increased by less than 1 percent. Today, over 80 percent of private sector health care is provided thru PPO’s.
In 2000, my Wisconsin PPO had over 100 Global procedures. Most cardiac procedures, all podiatric services, many orthopedic services, child deliveries and even some cancer treatments were on the list. I sold the company in 2001 and the Global program was not continued by the new owner. Now, 10 years later, this concept is ready for acceptance.
Integrated hospital systems in Boston, Milwaukee and other cities are developing Global programs to respond to consumer demand. The current government proposals will cement in the inefficiencies of the old system and kill the evolution of normal market based consumer focused health care. I ask that our elected representatives grant the health care industry a one year window to fix the system. Global programs will be a major part of that effort as will wellness programs and fair underwriting rules.
But first do no harm. Don’t destroy the world’s finest health care delivery system.
Richard Blomquist (former owner Associates for Health Care) is president of Blomquist Benefits LLC in Milwaukee.
