Enthoven and Herzlinger on consumer-driven health care
Is consumer-driven health care a good idea?
Family Practice News
April 1, 2006
Point
Regina Herzlinger, D.B.A., is chair of the business school at Harvard University, Boston.
Unlike the automotive industry, there is no Henry Ford in the health insurance industry to make things cheaper, and there are few choices of health insurance policies. Consumer-driven health care will liberate the Henry Fords of health insurance and allow them to offer more options.
Consumer-driven health care will also liberate health care providers.
Remember that 20% of the health care users account for 80% of health care costs. So you will see health care “focused factories” that concentrate on the sick. Initially, they will focus by procedure or patient group, but more importantly, they will focus on diseases and disabilities. For instance, diabetes patients with numerous comorbidities really need a team to help manage their disease. In a consumer-driven health care system, the Henry Fords of health care will be motivated to organize teams that help these patients or address such underserved populations as African Americans who have sickle cell disease. Consumers will respond to insurance policies that offer these focused factories.
The consumer-driven health care industry will also need a J.D. Power - someone to monitor health care quality the way J.D. Power monitors automobile quality. This kind of business will emerge, as it does in every consumer-driven market.
Counterpoint
Alain Enthoven, Ph.D., is professor emeritus at the Stanford (Calif.) University business school.
The main appeal of consumer-driven health plans is to employers who are eager to find ways to move costs back to employees. The costs are shifted to people with chronic conditions, who usually will reach and exceed their deductibles.
Consumer-driven health plans, especially those with health savings accounts, are great for the healthy and wealthy, who will take it up in a hurry and who can benefit from the tax shelter these plans provide. So while these plans could catch on rapidly, the result will give Americans one more reason to doubt the fairness of our private health care financing and delivery system.
High-deductible consumer-driven health plans are based on the idea that the key to economy is to keep people away from the doctor. That might be true in acute care and in disaggregated fee for service, where there is a lot of unnecessary surgery, but it will not be true in our society, where so many people have or will soon have chronic diseases.
High-deductible consumer-driven health plans move in the wrong direction, distancing people from health care rather than reaching out to support them, to improve their lifestyles, and to manage their chronic conditions so they can avoid hospitals and more costly complications.
I think consumer-driven health plans will lead to the underfunding of primary care and prevention, and will reinforce the present trend of young American doctors who forsake primary care for the “sub-sub-subspecialties”
of radiology, in which they can make a whole lot of money. It will draw more resources into the open-ended fee-for-service sector, whose appetite is insatiable.
http://www.familypracticenews.com/article/PIIS0300707306729115/fulltext
Comment:
By Don McCanne, M.D.
These noted authorities from prestigious schools of business have continued to promote their versions of how we can make competition in the marketplace work to improve the way we fund health care. Professor Enthoven advocates for his model of managed competition (though not in this point-counterpoint), and Professor Herzlinger advocates for her model of consumer-driven health care.
History is in the process of discarding most of the elements of managed competition, while Professor Enthoven explains why the consumer-driven approach will never work either.
Neither managed competition nor the consumer-driven model are free market models anyway. Both rely on third party payers to control prices, and both restrict choice to providers selected by the third party payers.
A single payer system would also control prices, but it would do so through mechanisms that would improve resource allocation for the benefit of all of us rather through the current mechanisms that are designed to benefit the third party payers at the cost of efficiency and equity.
Regarding choice of physicians, hospitals and other providers, whereas managed competition and consumer-driven products restrict choices by contracting, a single payer system allows free choice of all providers. It is ironic that these market models are more oppressive to the health care consumer than would be a government-administered single payer system.