Your health data could be worth over $3,000 / year

October 21, 2012 in health care costs, Health Insurance

In a recent post about the new MA Health Information Exchange, I suggested that a patient-accessible connection to the HIE could save a patient thousands of dollars per year. And now there’s a real-world, peer-reviewed example of what we/’re talking about. Research of medicare Part D beneficiaries published in October 2012 issue of Health Affairs (sorry, it’s paywalled) shows:

“Nationwide, beneficiaries on average spent $368 more annually than they would have spent had they purchased the cheapest plan available in their region, given their medication needs. More than a fifth of beneficiaries spent at least $500 a year more than they needed to.”

and

“Our findings suggest that beneficiaries need more targeted assistance from the government to help them choose plans, such as customized communications about the most cost-effective plans that would cover their medication needs.”

Prescription drugs, as covered by Part D, represent about 10% of the nation’s overall healthcare cost. If, as a gross estimate, we took $368 from this study to be 10% of what a person would save if their overall health insurance was appropriate to their specific needs, then the annual per/beneficiary saving would be over $3,000.

To save this kind of money, patients will need to be able to pay an accountant or similar trusted advocate to match their specific health care costs as collected in their claims with their particular health insurance choices. Just like we hire an accountant every April to look at our data and fill out a tax form, we might hire an accountant every December to advise us and fill out the appropriate enrollment form at The Connector.

Accountants (or a committed do-it-yourselfer) can only save this kind of money if the patient can access their private information in a convenient and cost-effective way. The information is being collected in the state All Payer Claims Database, the payment reform law gives us patients the right to access our own data. What’s still missing is the patient-access connection to the state HIE.  All of this is probably spelled out in the payment reform law. Can we get a legal opinion of when this data will be accessible to you and me?

4 responses to Your health data could be worth over $3,000 / year

  1. Hey Adrian – let me see what I can figure out. In the meantime, I’m pretty sure you’ve just a defined a major new job description – the health care accountant – the equivalent of a broker for those of us who are do-it-yourselfers. If the market is in fact moving to health insurance as a defined contribution, not a defined benefit – this job will be in high demand, yes?

  2. Doctor

    Sorry but don’t spend all that money yet :) There are problems with both the UPitt research you cite and your logic flowing from the research.

    Number one, I wrote about this Parf-D-specific UPitt research and its problems and its implications on this blog on October 11. Seniors only spend $900 a year on drugs on average so it’s hard to believe they’re over-spending by almost 80% on average. In addition, the UPitt research (see its methodology) did not count the savings that low income seniors get all across the U.S. because of Extra Help/LIS and that middle income seniors get in the 22 states like Massachusetts that have an SPAP. And it also does not take into account that only a little more than half of us seniors even have a Part D plan.

    That being said (and as I wrote on October 11), there are clearly some of us seniors that overspend (and the research picks this up) because we would rather do business with Rite Aid then CVS (or vice versa), or with AARP rather than Caremark (or vice versa), or use Lipitor rather than a generic equivalent. I am a SHINE volunteer at my senior center and I see those choices being made every day. This is America.

    And then there are seniors like me that are so frugal that we buy our scripts at Target (or others that shop in Canada) without even using our Part D card even though we have a plan for true insurance purposes. I get my drugs without the Part D card at Target for $100 a year less than if I used the card at Target. Seniors like us are spending almost a negative Part D amount not counting the premium (those sorts of senior savings are not captured by the UPitt research).

    Second, your arithmetic involving 10% does not seem to take account for the fact that we seniors are the ones buying most drugs. So our normal spending, our purposeful overspending, and our uninformed overspending cannot be applied to everyone.

    And I cannot begin to figure out how you got from $368 (not repeating its problems noted above) to $3000.
    .
    So to paraphrase Ronald Reagan, be wary of conclusions that begin “Our findings suggest that (you) need… assistance from the government…”

    • Hi Lee,

      My point is not specific to seniors. All of us could use the advice of an expert working for us when we make decisions involving thousands of dollars. Realtors, accountants and lawyers are all examples of advocates that have no direct stake in the product or service being sold and work only for the buyer. Doctors and hospitals and insurers have your data but they they are not impartial when it comes to your money because it’s their money too. My main point is that patients need their information in order for us to be able to engage an un-conflicted advocate.

      Prescription drugs are 10% of health expenses. This means that 90% of the money goes for other goods and services. If $368 can be saved by choosing the right prescription drug plan, one could argue that $3,680 could be saved by choosing the right private insurance plan in The Connector. I rounded down to $3,000.

      I’m not sure what your point is in paraphrasing Reagan. Unions and anti-discrimination laws are put in place by government to protect individuals when market mechanisms fail. Access to data about me protects me when the credit bureau is manipulated by their customers or they make a mistake. The credit bureau’s customer is the bank or car dealer. Absent government, the credit bureau would have no reason to answer to me.

  3. Doctor, Assuming you mean me and not someone named Lee, the answer to your questions (but not in order) are

    1. The reference to Reagan was in response to your quote from UPitt: “Our findings suggest that beneficiaries need more targeted assistance from the government to help them choose plans…” Reagan said something like “Be careful when you hear “Hi, I’m from the government and I’m here to help…”"

    2. I assumed you were talking about Medicare because you referenced the Part D study; bad assumption on my part; I agree everyone needs to know the information (that’s where Martha is trying to take this blog, I think)

    3. Relative to assuming there are so much savings out there in health care — even if spending were totally transparent — Part D proves that people choose a higher priced product or service for many reasons but the UPitt survey does not take that into account. In addition, my point was that there is just plain something fundamentally wrong withs the UPitt numbers not to mention that the UPitt guys left out 20% of the people on Part D (low income seniors) and 40%-50% of the entire demographic (seniors not on Part D)

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