To paraphrase one of television's first computer-animated characters, Max Headroom, you know how to tell when a health-insurance president is lying? His lips move. Or, more to the point, he gives a talk to a local chamber of commerce explaining why healthcare costs are rising so quickly.
The president in question is Mike McCallister, the CEO of Humana, which last year launched a "grassroots" organization for healthcare reform called ChangeNow4Health. That group's ostensible goal is to bring together individuals, employers, health plans and medical providers to "set parochial interests aside in favor of the greater good" -- here defined as fixing the healthcare system. Yes, it's really that vague, which should be your first clue that something other than pure altruism is at work here.
The ChangeNow4Health site features a variety of educational "resources" -- video, talking points, weirdly anonymous blogs -- that include a white paper attributed to McCallister (PDF link) apparently based on a presentation he made to the Greater Miami Chamber of Commerce just over a year ago. Titled "Change Healthcare Now," the paper is essentially a brief for expanding "consumer-directed" healthcare -- which is basically a plan to shift many healthcare expenses onto individuals via high-deductible insurance plans.
In the course of making the case for high-deductible plans -- which are supposed to turn people into cost-saving "medical consumers," but which also typically leave individuals on the hook for anywhere from $2,000 to $10,000 of their annual healthcare expenses -- McCallister offers some pretty astonishing howlers. For instance, after noting the seemingly uncontrollable rise in healthcare spending, he argues:
We as Americans are absolutely insatiable in our desire to use healthcare. Yet study after study tells us that somewhere between 20% and 50% of healthcare delivered in the United States does not add any value. In a $2 trillion business, think about the opportunities you could create if you could begin to rationalize that spending. The question is how to do it.The problem, of course, is that such "overtreatment" isn't really caused by overinsured hypochondriacs who head to the ER every time they get the sniffles. In fact, it's primarily a consequence of the counterintuitive fact that medical supply -- that is, the availability of things such as intensive-care beds, surgical centers and high-tech equipment -- tends to create its own demand. Patient choice has relatively little to do with the vast sums wasted in overtreatment -- in fact, people are often overtreated because they're uninformed about the alternatives, and sometimes explicitly against their wishes, particularly near the end of life.
You don't have to take my word for it. Check out the first chapter of the recently published 2008 Dartmouth Atlas of Health Care (warning: large PDF) for a quick summary of what more than 30 years of research has revealed about the way healthcare is actually delivered. Of course, McCallister knows all this -- if he didn't, he'd have no business running one of the nation's largest health plans. It's just that such facts are inconveniently at odds with his preferred "solution."
What should employers be doing? The first thing is to stop treating healthcare as a commodity. Health insurance should not be an annual purchase. This is heavy lifting, and companies need to hook up with good insurance payers and then stick with those companies over a number of years to come up with joint strategies for educating employees in changing the way they think about health insurance.In other words, the Humana CEO would like to lock in his customers for longer terms, while simultaneously making individuals pay more for their healthcare. This makes perfect sense for Humana. Whether individuals or businesses get much benefit out of it, of course, is much murkier. If an company's preferred healthcare provider turns out to have claims-processing problems on the scale that, say, UnitedHealth Group has had over the past year, it would just have to grit its teeth until the insurer gets around to fixing them. That sounds like a real bargain. (In fairness, reducing churn might also spur health plans to invest more in preventive care and electronic medical-record systems.)
What can consumers do to change healthcare now? As soon as they start demanding simplicity, transparency and guidance, the marketplace will respond. As consumers, you demand and get exactly those things in other areas of your economic life. Before you go to buy a used car, you know everything about it. You have compared it to other cars. You know its safety. You know its price. You know the cost of financing it. And you know everything it does from the standpoint of performance. You know everything. You are all-powerful in buying that vehicle.Because everyone makes healthcare decisions the way they buy cars, don't they? Someone who's just suffered a heart attack has all the time in the world to compare hospital-quality ratings and to choose an an affordable cardiologist -- or is it a heart surgeon? -- to carry out the procedure she needs.
McCallister approvingly quotes Michael Porter -- whose book on reforming healthcare I still haven't finished, largely because the prose isn't anywhere near as engaging as the ideas -- about the screwed-up incentives and prevalence of zero-sum competition in healthcare. Unsurprisingly, though, he fails to address Porter's critique of consumer-driven healthcare:
The notion of consumer-driven health care oversimplifies the problem. Consumers will never be medical experts, nor should they be expected to be. Consumers should not be forced to play roles abdicated by health plans. Consumers should not have to manage and coordinate their own care across a fractured care cycle.McCallister does make some good points elsewhere in the paper, particularly about the need for better data about the quality and effectiveness of medical care. But in failing to really address the shortcomings of his own industry, which stem from the basic fact that health plans make money by insuring the healthy and avoiding the sick, he's produced an essay so bad that to call it "wildly unconvincing" would be an insult to wildly unconvincing things.
I've puzzled a bit over why Humana is taking this tack, since high-deductible plans are far less profitable for insurers than "full-service" offerings such as HMOs and PPOs. My best guess is that McCallister and his fellow executives see the writing on the wall and figure that rising costs will make full-service plans unaffordable to all but a few before long. And if national healthcare reform ends up mandating insurance coverage for all, Humana had better have something affordable to sell -- and that means cheaper high-deductible plans. Even if each plan is less profitable, a mandate would go a long way toward helping Humana make up the difference in volume.
Postscript: ChangeNow4Health also seems to be waging a charm offensive with some healthcare bloggers -- in some cases, by wielding its checkbook. For instance, last month Jen McCabe Gorman interviewed Elizabeth Bierbower, Humana's VP for product innovation, over at The Health Care Blog, a site known for its often stinging criticism of insurers. In an odd coincidence, however, ChangeNow4Health decided to sponsor the blog shortly after the interview, a fact that Gorman disclosed in her item with the following disclaimer:
Full Disclosure: Shortly after this interview was conducted, ChangeNow4Health became a sponsor of The Health care Blog. However, if you think that in any way influenced the content of this article, you don't know the Health 2.0 folks very well--Another unusual coincidence: Dmitriy Kruglyak of Trusted.MD called ChangeNow4Health "very impressive" in an interview with McCallister last November. According to Bierbower, Kruglyak is now "moderating" one of the ChangeNow4Health "community blogs." (No word yet on whether that's a compensated position, although I've asked Dmitriy by email.)
Update: Dmitriy tells me by email -- and again in comments -- that he is getting compensated for his work with ChangeNow4Health "in line with typical freelance writer and part-time community moderator gigs."