How to Empower and Engage Consumers

Apr 24, 2018

Dan Tasset is the Vice Chairman of NueHealth Holdings, the CEO of NueHealth Performance, and the Chairman of Nueterra Capital. His blog posts offer his experienced and innovative views on healthcare, healthcare reform, and related topics.

The goal of the payors and providers involved in healthcare should be to improve the value delivered to the consumer. Value equals clinical quality plus patient satisfaction divided by cost. Congress’ goal should be to adopt policy that creates market conditions that make that happen. Again, these policy changes should have foundational cornerstones of CONSUMER EMPOWERMENT, COMPETITION and INNOVATION. Nothing should be proposed, let alone passed, that is inconsistent with this foundation.

We must create market conditions and an environment where consumers have an incentive to consider the value of healthcare services, which most certainly includes price. Giving consumers incentives to consider price would make a huge difference. ObamaCare moved in the opposite direction, shielding consumers from having to care about prices. Its broad coverage requirements and misguided subsidies encourage bloated insurance policies, furthering the misguided idea that the purpose of coverage is to minimize out-of-pocket costs such as deductibles and co-pays. When insurance picks up the entire tab, the consumer has little or no reason to consider price and, therefore, the provider has no incentive to improve value by lowering costs.

Effective policy would put patients in charge of their own spending while giving them a way to gain from paying less. One policy example would be to broaden the availability of high-deductible insurance plans with fewer mandated coverage requirements. ObamaCare went in the wrong direction. Its essential benefits requirement raised prices on these plans and limited their availability. Data shows that prices on high-deductible plans rose two to five times higher than other types of coverage. Another policy example that would create a tool to motivate consumers to consider price is large, more liberal health savings accounts. These HSA accounts are generally used for non-catastrophic expenses, which account for the bulk of medical spend. When consumers have savings protected in HSAs, the cost of care drops without harmful effects on health. Studies have repeatedly shown this to be true. HSAs should be expanded and made available to all, including those on Medicare.

With greater adoption of high-deductible plans and policies that empower the consumer to save in HSAs, innovators will develop the technology and other systems to empower the patient to be a true consumer through deductible and co-pay cost-saving calculators and provider navigation assistance, just to name a few. If a good portion of Americans enrolled in this this type of coverage, it would reduce healthcare expenditures by hundreds of billions of dollars annually.

The information that patients need to assess value must be made radically more transparent and visible. Studies show that price transparency programs drastically reduce costs.

Another consumer empowerment policy example would be to adopt legislation that further promotes value-based purchasing for the patient. This is commonly referred to as value-based care by providers and payers. Imagine a process of purchasing an automobile where the consumer purchases the engine, the body of the car and other components all from different places, then pays yet another entity to assemble the automobile. Further, if the automobile falls apart weeks or months later he has to pay all over again. Yet that is precisely what happens in healthcare. The consumer of healthcare must be able to use a PROSPECTIVE bundled payment arrangement with both upside and downside risk assumed by the provider in addition to a warranty.

It would also be helpful for Congress, while dealing with tax reform, to introduce the right incentives to motivate patients to be true consumers of healthcare. Today employees aren’t taxed on the value of their health benefits and there is no limit to that exclusion. This creates counterproductive incentives that encourage higher demand for care and minimize concerns about costs. Similarly, ObamaCare’s premium subsidies and the tax credits proposed recently artificially prop up high insurance premiums for bloated coverage that minimizes out-of-pocket payments. This prevents the consumer from caring about the cost. If healthcare deductions are maintained, the tax code should cap them and limit eligibility to HSA contributions.

These are just a few of the numerous examples of policy changes that would lead to greater consumer empowerment and engagement.