Wednesday, February 21, 2007
Consumer driven health care
Here is an interesting post on market driven health care from National Center Blog's David Hogberg, who picks a bone with someone named Matthew Holt.
Holt uses LASIK eye-surgery as an argument against consumer driven health care. Since LASIK cost has fallen 30 inflation-adjusted percentage points in the last decade and since customer satisfaction averages 93 percent, it seems a poor example. Apparently, Mr. Holt's complaints are that consumers are not well enough informed, and that advertising fails to reveal that the services of all providers are not identical.
The National Center Blog does a fine job of pointing out that this objection is basically twaddle, but let me add a bit, including a personal experience and some prognostication.
I'm near the front edge of the baby boomer cohort and until very recently, had had no experience with any medical condition that could be considered chronic, i.e. with long term implications. The short version of the story is that at the urging of my better half I undertook a sleep study to find a cure for what she claimed was a snoring problem.
The diagnosis of sleep apnea offered a choice of 60 percent successful surgery requiring an overnight stay in an ICU and 4 weeks of recovery, much of it very painful, or a potentially uncomfortable machine which I would probably have to use every night for the rest of my life.
I decided I'd try the machine first. I was naturally interested in the comfort features most likely to allow me to avoid surgery. So, I did some research. There is no central information source for these machines, but there are many vendors on the internet and a multitude of discussion groups and even blogs. I discovered a great deal about the machines through advertising, and I settled on certain features.
Armed with an idea about what I should look for, much in the way I would research a car or a major appliance, I obtained a second opinion and a prescription for this "Class A Medical Device." I expected my final decision to be made after a visit to some kind of showroom where I could estimate the utility for travel, the control functions, features I may not have already discovered and general reputation of various manufacturer's offerings. That is, I wanted to speak with a salesman.
Such a place only exists on the internet. Instead, I received a call from the respiratory technician of my doctor's choice, who informed me he had a particular device ready and could deliver it in a couple of days. I asked about the features that were important to me, features that had never been discussed with me by anyone in the not-consumer driven health care arena. I was informed that I did not need those features because my prescription did not specify them. I informed him that since I would likely be using this thing for the rest of my life, I thought the features did matter. After a great deal of goofing about with a health care system that had already decided I was not competent to participate in this decision, I got what I wanted.
The point is that the "health care system" isn't really prepared for consumer choice. The prognostication is, that as more baby boomers bump into such issues, they will bring both their expectations of consumer choice and their intransigent feelings of "specialness" to bear in ways the health care system had better get ready to appreciate, even if Matthew Holt never does.
LASIK enjoys 93% customer satisfaction because it involves cutting your eyes with a laser. I bet people tend to be interested in the success rates even more than I was with my machine.
Now, add to that the fact that a Health Savings Account combines the tax reduction advantages of a traditional IRA with the tax avoidance advantages of a Roth IRA. That is, contributions to an HSA are tax deductible and, if you spend the proceeds on health care they are never taxed.
You can pass on an HSA as an inheritance. You will not be able to do that with Mr. Holt's opinion.
Consumer interest in medical care is clear, and the market will supply more and more information as baby boomers demand it. We haven't had a free market in health care for decades and we don't have one now. Speculation about the dearth of this market is premature.