What do you think?
Rate this book
Health Care at Risk: A Critique of the Consumer-Driven Movement
In Health Care at Risk Timothy Stoltzfus Jost, a leading expert in health law, weighs in on consumer-driven health care (CDHC), which many policymakers and analysts are promoting as the answer to the severe access, cost, and quality problems afflicting the American health care system. The idea behind CDHC is consumers should be encouraged to save for medical care with health savings accounts, rely on these accounts to cover routine medical expenses, and turn to insurance only to cover catastrophic medical events. Advocates of consumer-driven health care believe that if consumers are spending their own money on medical care, they will purchase only services with real value to them. Jost contends that supporters of CDHC rely on oversimplified ideas about health care, health care systems, economics, and human nature. In this concise, straightforward analysis, Jost challenges the historical and theoretical assumptions on which the consumer-driven health care movement is based and reexamines the empirical evidence that it claims as support. He traces the histories of both private health insurance in the United States and the CDHC movement. The idea animating the drive for consumer-driven health care is that the fundamental problem with the American health care system is what economists call “moral hazard,” the risk that consumers overuse services for which they do not bear the cost. Jost reveals moral hazard as an inadequate explanation of the complex problems plaguing the American health care system, and he points to troubling legal and ethical issues raised by CDHC. He describes how other countries have achieved universal access to high-quality health care at lower cost, without relying extensively on cost sharing, and he concludes with a proposal for how the United States might do the same, incorporating aspects of CDHC while recognizing its limitations.
- GenresHealth Care
288 pages, Paperback
First published July 1, 2007
2 people are currently reading
22 people want to read
Ratings & Reviews
Friends & Following
Create a free account to discover what your friends think of this book!
Community Reviews
Displaying 1 of 1 review
November 24, 2018
Review 2 (2018):
Imagine you feel very passionately about something and have read a great deal about a subject matter, but are also somewhat lazy. If health care financing is your passion, you get something like Healthcare at Risk, which has some good facts scattered throughout but suffers from fitting those facts into a weak / possibly nonexistent framework. Editors asleep at the wheel!
Consumer-directed health plans (CDHPs) are a type of insurance product that feature high deductibles and other forms of cost sharing such as copays and coninsurance with consumers. There are numerous ways to implement CDHPs – with and without tax advantaged contributions, with contributions from the individual or the employer, and also varying degrees of catastrophic coverage and exemptions for primary care and preventative services.
Jozt starts by outlining reasons why CDHP advocates find it attractive, focusing on (A) choice and competition [31-2], and (B) avoidance of moral hazard [34-5]. (A) A system where patients are consumers that can direct their resources to one provider or another is once where providers must compete. (B) A system where patients have skin the game is a system where patients have incentive to slow down before eating that cheeseburger and think twice before visiting the ER over an urgent care clinic. The end goal of spreading CDHPs is to enable high quality, low cost care.
Jozt doesn’t buy CDHP as the solution to our woes. He has a number of arguments against promoting CDHPs in the US:
• 1. Moral hazard isn’t a real problem: “consumption of medical care is inherently time-consuming, painful, and in most respects unpleasant” [104]
• 2. Unsecured debt: if you don’t know everything you are going to do to a patient before you initiate treatment, you are essentially issuing unsecured debt. Good luck collecting that. [ed note: this is a real problem, currently hospitals collect 20-25 cents on every dollar billed to patients directly]. Much harder to be paid by patients than insurance companies if you’re a health system.
• 3. You can’t shop in emergencies: many hospitalizations are emergency situations and so can you really have time or do you have the ability to compare prices in that situation [147]? If you are in a car accident you are probably going to the closest place, period.
• 4. Scare information: you need good information to shop – on cost and on quality. Jozt is particularly worried about quality because he feels consumers won’t be well suited to assess this without special medical expertise.
• 5. Consumers don’t want choice in crisis: in many situations some patients simply don’t want to be burdened with choice, they just want to be treated with “competence and kindness” [100].
• 6. Sacred patient / provider relationship: I thought this was a weak point, but a point nonetheless – you’re making a special fiduciary relationship more transactional.
• 7. Other solutions have worked well in Europe: Various forms of public financing / public provision have worked well to reduce cost and promote quality in Europe, hard to argue that we are getting more bang for buck than NHS (although there are other downsides).
Of these, I disagree with (1) (see examples below, cost sharing reduces utilization), (5), and (6). I get excited by (4) because I think that using technology and bundling care into an ontology of consumable units (e.g. discrete episodes; subscriptions for primary care) we can solve this problem. We can hopefully also solve (2) by creating that ontology and asking for upfront payment before services are rendered. But (3) is indeed a vexing one that eludes a simple solution. (7) isn’t grounds to not try something sensible and well-designed here, only that we bear risk for trying something new.
Our best model for what may happen under CDHP comes from RAND in the late 70s. Families were randomized to plans with varying degrees of cost sharing for 3-5 years [120-8]. They found that the price elasticity of demand for healthcare was -0.68 – but also that families with higher coinsurance seemed to cut back on high value preventative services. This was not however accompanied by substantial variation in health outcomes.
RAND to the best of my knowledge doesn’t tell us about competition between providers. Did anyone feel pressure to offer lower prices to drive volume? My guess is no given that RAND high deductible participants represented at tiny % of these providers’ panels. But this competition is where our savings could come from; this is what could actually spur innovation. If you suddenly have 50, 60, 70% of people on the hook for their own healthcare spend, how do hospitals respond? This is something we need to figure out.
Review 1 (2017):
I got a few days in to this book when I realized that the question of who should pay for healthcare - individuals, employers, government - is not the important thing we should be thinking about right now. Nothing will meaningfully address ballooning healthcare costs that mysteriously and unfailingly grow faster than inflation (http://slatestarcodex.com/2017/02/09/...) if we cannot tackle the concern that Jost himself realizes on page 47: cartelization (restriction of supply). "Organized medicine gained control of the power of the state through the medical licensure boards, and then used this power to eliminate rival schools of healing, to limit entry to the profession by closing down medical schools, and to subjugate other health care professions such as nursing," writes Jost. While Jost argues that allopathic medicine deserves its monopoly -- "the claims of allopathic physicians to special knowledge and skills that made their services worth paying for" (47) -- I think there is a strong case to made that for an inflated cost we are actually receiving services of deteriorating quality as medical practice shuns evidence and disintegrates into shamanistic ritual and unthinking mimetics (see my review of Bad Pharma and read Ending Medical Reversal). This is a classical monopoly and we suffer the classical consequences.
This problem was the topic of Milton Friedman's doctoral thesis (78) and the main focus of Regina Herzlinger at HBS. Time to revisit it.
Imagine you feel very passionately about something and have read a great deal about a subject matter, but are also somewhat lazy. If health care financing is your passion, you get something like Healthcare at Risk, which has some good facts scattered throughout but suffers from fitting those facts into a weak / possibly nonexistent framework. Editors asleep at the wheel!
Consumer-directed health plans (CDHPs) are a type of insurance product that feature high deductibles and other forms of cost sharing such as copays and coninsurance with consumers. There are numerous ways to implement CDHPs – with and without tax advantaged contributions, with contributions from the individual or the employer, and also varying degrees of catastrophic coverage and exemptions for primary care and preventative services.
Jozt starts by outlining reasons why CDHP advocates find it attractive, focusing on (A) choice and competition [31-2], and (B) avoidance of moral hazard [34-5]. (A) A system where patients are consumers that can direct their resources to one provider or another is once where providers must compete. (B) A system where patients have skin the game is a system where patients have incentive to slow down before eating that cheeseburger and think twice before visiting the ER over an urgent care clinic. The end goal of spreading CDHPs is to enable high quality, low cost care.
Jozt doesn’t buy CDHP as the solution to our woes. He has a number of arguments against promoting CDHPs in the US:
• 1. Moral hazard isn’t a real problem: “consumption of medical care is inherently time-consuming, painful, and in most respects unpleasant” [104]
• 2. Unsecured debt: if you don’t know everything you are going to do to a patient before you initiate treatment, you are essentially issuing unsecured debt. Good luck collecting that. [ed note: this is a real problem, currently hospitals collect 20-25 cents on every dollar billed to patients directly]. Much harder to be paid by patients than insurance companies if you’re a health system.
• 3. You can’t shop in emergencies: many hospitalizations are emergency situations and so can you really have time or do you have the ability to compare prices in that situation [147]? If you are in a car accident you are probably going to the closest place, period.
• 4. Scare information: you need good information to shop – on cost and on quality. Jozt is particularly worried about quality because he feels consumers won’t be well suited to assess this without special medical expertise.
• 5. Consumers don’t want choice in crisis: in many situations some patients simply don’t want to be burdened with choice, they just want to be treated with “competence and kindness” [100].
• 6. Sacred patient / provider relationship: I thought this was a weak point, but a point nonetheless – you’re making a special fiduciary relationship more transactional.
• 7. Other solutions have worked well in Europe: Various forms of public financing / public provision have worked well to reduce cost and promote quality in Europe, hard to argue that we are getting more bang for buck than NHS (although there are other downsides).
Of these, I disagree with (1) (see examples below, cost sharing reduces utilization), (5), and (6). I get excited by (4) because I think that using technology and bundling care into an ontology of consumable units (e.g. discrete episodes; subscriptions for primary care) we can solve this problem. We can hopefully also solve (2) by creating that ontology and asking for upfront payment before services are rendered. But (3) is indeed a vexing one that eludes a simple solution. (7) isn’t grounds to not try something sensible and well-designed here, only that we bear risk for trying something new.
Our best model for what may happen under CDHP comes from RAND in the late 70s. Families were randomized to plans with varying degrees of cost sharing for 3-5 years [120-8]. They found that the price elasticity of demand for healthcare was -0.68 – but also that families with higher coinsurance seemed to cut back on high value preventative services. This was not however accompanied by substantial variation in health outcomes.
RAND to the best of my knowledge doesn’t tell us about competition between providers. Did anyone feel pressure to offer lower prices to drive volume? My guess is no given that RAND high deductible participants represented at tiny % of these providers’ panels. But this competition is where our savings could come from; this is what could actually spur innovation. If you suddenly have 50, 60, 70% of people on the hook for their own healthcare spend, how do hospitals respond? This is something we need to figure out.
Review 1 (2017):
I got a few days in to this book when I realized that the question of who should pay for healthcare - individuals, employers, government - is not the important thing we should be thinking about right now. Nothing will meaningfully address ballooning healthcare costs that mysteriously and unfailingly grow faster than inflation (http://slatestarcodex.com/2017/02/09/...) if we cannot tackle the concern that Jost himself realizes on page 47: cartelization (restriction of supply). "Organized medicine gained control of the power of the state through the medical licensure boards, and then used this power to eliminate rival schools of healing, to limit entry to the profession by closing down medical schools, and to subjugate other health care professions such as nursing," writes Jost. While Jost argues that allopathic medicine deserves its monopoly -- "the claims of allopathic physicians to special knowledge and skills that made their services worth paying for" (47) -- I think there is a strong case to made that for an inflated cost we are actually receiving services of deteriorating quality as medical practice shuns evidence and disintegrates into shamanistic ritual and unthinking mimetics (see my review of Bad Pharma and read Ending Medical Reversal). This is a classical monopoly and we suffer the classical consequences.
This problem was the topic of Milton Friedman's doctoral thesis (78) and the main focus of Regina Herzlinger at HBS. Time to revisit it.
Displaying 1 of 1 review