Consumer Driven Healthcare (CDH) Arrives…17 Years Later!

A recent Omaha World Herald article featured an article titled “Let the Comparison Shopping Begin”.  It’s about time!  Back in 1996, the large scale health care reform law of its day – The Health Insurance Portability and Accountability Act (HIPAA) – included an extremely important provision referred to as the “Medical Savings Account (MSA) pilot project”.  What we didn’t realize at the time, was this provision represented the birth of so called “consumer driven healthcare” or CDH.  The idea was quite simple.  Instead of relying on comprehensive health insurance coverage as the single source of funding of ALL health care; offer instead a two (2) pronged approach.  1. A tax free, interest bearing spending account, used for lower, more predictable costs; and 2. A higher deductible, reduced premium health insurance plan for higher, unpredictable costs.  In addition to establishing some “skin in the game” to improve healthcare use and consumption, this approach reduces both administrative (fewer claims to process) and claims related healthcare costs.

Unlike virtually ANY good or service in our economy, healthcare delivery and financing relies on an antiquated, cumbersome, and extremely complicated system involving 3rd party payers/processors, thousands of codes, and an elusive source for pricing known as the “chargemaster”.  In short, buyers, aka patients, have in many cases a blank check with which to purchase any quantity, type, and variety of healthcare they deem necessary, regardless of cost, necessity, or even actual benefit.  The result?  Well, among other things, the result is nearly 20% (or $2.7 trillion) of our nation’s gross domestic product (GDP) is comprised of healthcare spending. By comparison, India, with over 1 billion residents, spends about $1.5 trillion.  And our healthcare spend continues to grow at a rate of 6% per year!

So here we are, 17 YEARS AFTER the passage of HIPAA, and folks are starting to realize the necessity of transforming our healthcare system into a consumer based model, complete with price and quality transparency.  It’s about time!  One only has to look at how much the cost of lasik eye surgery, a procedure typically purchased like a consumer product, has plunged over the last several years, to see the impact of consumerism in reducing our nation’s bloated healthcare spending.  Now, if we can get the detractors and disbelievers of CDH to come to the table, we may finally be able to start actually reforming healthcare!!