Commentary: Hm Os: Listen To Your Patients Or ElseKeith H. Hammonds
And so it has come to pass that, once again, health-care reform perishes. It had no chance, really. Caught up in Monica-rama and the prospect of impeachment proceedings, legislators readily ditched their comparatively tame effort to make the managed-care industry play nice. When Congress folds its tent on Oct. 9, the putative Patient Bill of Rights will quietly expire.
This is a rare bit of good news for HMOs, currently suffering their third annual profit drought. The bill of rights, after all, was hardly industry-friendly. Various versions would have given consumers freer rein to sue their plans for personal injury; required external review processes to appeal insurers' coverage decisions; and guaranteed payment for emergency room treatment.
So HMOs dodged a bullet. Phew. Now, if managed-care insurers have any instinct for self-preservation--and recent evidence makes that debatable--they'll figure out how patient protection became a cause celebre in the first place. Find the right answer, and they have a chance to regain validity as a central pillar of the nation's health system. Ignore the lessons, and they're dead.
FRUGAL CHOICES. Lesson No.1: Health care is becoming a consumer-driven industry again. For 50 years, employers and the government have paid most people's medical bills, insulating patients from any real decision-making roles. Today, employers are starting to back off, making workers pay more of the tab but also giving them more flexibility in health coverage options. Consultants Booz Allen & Hamilton says as many as 60% of very large companies are mulling a shift to "defined contribution" health benefits. Rather than guaranteeing certain medical coverage, these employers offer a fixed sum toward insurance, leaving employees to pay the difference.
So consumers increasingly are empowered to purchase their own medical care, with considerable financial incentive to seek value. Here's where lesson No. 2 comes in: Consumers don't like HMOs. No matter that HMOs' care appears to be as medically sound as any other. Americans are far more likely to trust their physician than they are the insurer, which is often perceived as meddling needlessly.
Patient-protection legislation would have eased consumer angst by forcing insurers to accept some measure of accountability. With HMOs' black boxes pried open, patients at least would have enough information to make sound decisions and get a clear picture of what was and wasn't covered. "There's a need for some ground rules...to protect people from anxiety," says Robert Blendon, a Harvard University professor of health policy.
Without Congress' protection, consumers simply will seek it out in the marketplace. Already, patients have forced insurers to broaden their networks of doctors and hospitals, so that most networks look pretty much alike, or have pressed to see doctors outside the network altogether. Good-bye, cost containment.
Consumers will throw even more weight around as employers force them to take on a larger share of their health costs. The result will be "insurers' marginalization," says medical economist J.D. Kleinke, author of Bleeding Edge, a critique of the health-care system. Consumers are likely to choose dealing directly with doctors and hospitals, just as they did before HMOs became the norm.
Envision the ultimate consumer-driven health-care market--something Booz Allen partner Philip Lathrop calls "HMOs 'R' Us." In this world, consumers armed with defined-contribution dollars from employers choose from a multitude of physicians and plans at an online supermarket--much as investors scout out mutual funds. The information at their disposal is nearly limitless; so are their options.
Will they choose HMOs, best-known at present for their bureaucracy and callousness? The supermarket scenario is at least a decade off, but the managed-care industry would do well to consider the ramifications right away. Many industry execs won't bother. Medicine is too complex for the average Joe, they say, and the data that would help people make informed decisions don't yet exist. That's true--for now. HMOs may be surprised at what's possible, though, when unhappy patients get handed the purse strings.