“It has gotten so ridiculous that a provider locked into the 3rd party payment system cannot even tell his patient what his services will cost over the phone.” —Utah Association of Health Underwriters

Back in the first part of the 20th Century, there was a great deal of concern over lack of access to adequate health care. There were particular problems with high cost events, such as serious illness or injury. The solution was health insurance, which began as catastrophic insurance for most people. But scope creep, helped along by continual clamor for increasing coverage, gradually expanded coverage and cost.

As more people obtained more coverage, medical costs climbed to the point of concern. The solution was to work to contain costs through managed care systems. But this has turned out to only exacerbate the problems it intended to solve.

Managed health care did effect some efficiencies, but it went wrong because it cut the major cost containment and quality control factor out of the loop: the consumer. Patients are now simply medical products rather than health care consumers. They are denied real cost information. The costs paid by consumers have no direct connection to the amount and quality of the services consumed. This has distorted the health care market, causing both providers and patients to act irresponsibly and inefficiently.

The UAHW argues in this position paper that THE ONLY way to reduce health care cost inflation is to restore Consumerism to the health care industry. Consumerism exists when buyers have a broad variety of choices, “accurate price information,” and the ability “to evaluate the product or service so they know if it fulfills their needs or desires.”

In Utah today, there is a very broad selection of health insurance plans available. But pricing information and knowledge of provider outcomes are guarded as “corporate top-secret[s].”

When the doctor came into my Dad’s hospital room and told him he absolutely needed a pacemaker/defibrillator installed, we had no idea how much it would cost, how beneficial it would be, or what kind of track record this doctor had. It took many months after the surgery and combing through hoards of billings from numerous different sources to get any kind of idea what this thing cost. Dad now says that knowing what he knows today, he would have refused the procedure. But a lot of people made a good chunk of change from it, mostly at taxpayer expense.

I have had my car at the mechanic and had the mechanic suggest a procedure that was not initially agreed to. And then I have been able to quickly find out from competitors what they would charge for the procedure and get their opinion on its necessity. While it is possible to get a second medical opinion (usually by waiting for weeks for an appointment), just try going out and getting a competing cost estimate on a prescribed procedure.

I agree with the UAHU when it says, “We have to give consumers the tools to behave rationally in the market. Those changes will release the market forces that will ultimately tame the ridiculous cost spiral which is causing our national health care expense crisis.”

Before you go whining about underserving the poor among us, nobody is suggesting any such thing. Those that are unable to afford care should be able to get the care they actually need. There are ways to address these needs as well that require taxpayer funds, but can still be made more efficien than at present.

The UAHU doesn’t take the silly position that broad Consumerism can be imposed in one fell swoop. Rather, they suggest implementing it “one procedure at a time,” excluding the handful of procedures that “do not lend themselves to Consumerism.” When Consumerism is in place, insurance companies will return to “being financial institutions rather being intermediaries between doctors and patients,” and government intervention will not be minimized.

The association admits that the road to consumerizing the health care market won’t be easy. But they argue that since it is the only way to actually contain costs while increasing quality, it is the only rational way to go. Their plan for accomplishing this goal can be found here.

This is not nearly as radical as it may seem. “Consumerism,” contends the UAHU “is actually the natural state of health care commerce.” Today the market is performing poorly because it is in an unnatural state. Also, there is already a good track record for Consumerism in health care in certain market segments. We just need to follow the existing successful examples.
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