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Avoiding the Tough Issues (Like Healthcare Reform)

by John Moore | October 16, 2008

Typically, we do not cover political policy issues regarding healthcare (at least we don’t write about them anymore than we absolutely have to) as there are plenty of others to turn to for such analysis (hint: search on, “health wonk review”).  That being said, did read a good article this morning by the folks at Univ of Penn’s Wharton School.

The article takes a broad look at “entitlement reform” beginning with Social Security and quickly moving to healthcare with some comparison/contrast analysis by Wharton professors of the two competing candidates proposals.  Found the most insightful comments coming towards the end from Wharton Health Care Mgmt & professor of medicine, David Asch who stated:

“Though it is not a perfect system, it is what we have right now, and I worry that getting rid of it in one fell swoop would be extremely dangerous,” (editor’s note: he’s referring to McCain’s plan) Asch says. He acknowledges that making consumers more responsible for health care spending might work to reduce costs and target medical resources more effectively. But the system is not yet equipped to give consumers the information about health care quality or pricing they would need to make the right decisions. “It’s not like when you go into a store to buy a TV and you know what the TV will cost,” he says. “Allowing patients to have skin in the game only works if they have the information [with] which a reasonable person could make a decision.”

And therein lies the problem, visibility to healthcare pricing is extremely opaque despite such efforts as Aetna’s SmartSource and various state and federal agency initiatives.

It is still extremely difficult for a consumer to know exactly what the price will be for a given procedure and even if they see that price, say posted on a hospital’s website, it is likely to be far higher than what an insurer would pay for the exact same procedure.  Insurers negotiate steep discounts with providers and since this is considered proprietary and a competitive advantage by insurers, they sure won’t be sharing the information with others anytime soon.

Even employers can be challenged to get to the bottom of true pricing.  At the WHCC conference last April, Safeway CEO Steve Burd stated that they did a quick survey for a common diagnostic procedure and in a ten mile radius of their corporate campus found a 10x difference in pricing ($600 to $6000. for the exact same procedure).

So where does IT and Internet-based services come into all of this?

As employers increasingly push ever higher deductible plans, HSAs and consumer-directed health plans (CDHP) on their employees, employers will seek tools that they can offer their employees to assist them in making wise and economical choices, thus lessening some of the pain.  Based on our cursory review of solutions targeting the employer market, it is difficult to find any that provide this type of capability outside of an existing insurer.

If you know of such a solution, we sure would like to hear about it.

Come to think of it, this could actually evolve into an interesting research project that looks at the various ways employers are tackling this problem. Thoughts?

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