The Rise of U.S. Health Care Consumers: Lessons from Abroad
Can you imagine buying gas from a station with no signs to let you know the prices? Or having the clerk at a clothing store pick the “right” jeans for you, with no opportunity to figure out for yourself which ones fit best? In a sense, this is how Americans buy something far more important: health care.
Economists and policy makers have long emphasized the challenges in treating health care as a consumer good. Supply generally drives demand; there is little correlation between cost and quality; and end users have neither visibility into costs, nor much incentive to find out. Lack of price transparency makes it nearly impossible to find health care cost information even for someone motivated to look for it. Consumers also have little basis for evaluating quality; often the data that is available is dense and hard to interpret. In other words, most Americans do not have the practice or capacity, let alone the information they would need, to make informed health care decisions.
But it does not need to stay this way – and, indeed, it cannot if health care reform is to succeed. Under the Affordable Care Act, 12 million consumers are expected to purchase their own health insurance via a health insurance exchange by 2014, growing to 28 million in 2019. Americans, including lower-income individuals qualifying for subsidized health insurance, will have new health plan choices, and new means of comparison shopping. Even without reform, health insurers are designing and employers are increasingly offering products that shift costs and choices to the consumer.
Remarkably, as a nation and a health care industry, we have not prepared our population for the increased responsibility and decision-making power they will soon assume. Yet there are places around the world that have a lot to teach us in this arena, and they’re not necessarily the ones you might guess – or the ones health economists tend to focus on.
As a 2013 Eisenhower Fellow, I will have the opportunity to explore global lessons on consumer empowerment in health care. Eisenhower Fellowships (www.efworld.org), a nonprofit, nonpartisan organization founded in 1953 as a tribute to Dwight D. Eisenhower, identifies, empowers, and links leaders from around the world, helping them to achieve consequential outcomes across sectors and borders.
My first stop will be Singapore, a young, small nation which spends less than 4% of its GDP on health care, yet measures well on common quality indicators. Singapore mandates all employees have health savings accounts, with a portion of wages going directly into those accounts (like our social security contributions). Consumers then use their health savings to pay for treatments. Unlike in the U.S. where our national psyche remains grounded in a mentality of “it’s not my money, so it doesn’t matter what I do,” Singaporeans largely control their own health care spending and know it. In the U.S., health care spending is increasingly coming out of consumers’ pockets. Twenty two percent of insured Americans had out-of-pocket maximums of $3,000/year or greater in 2007, and experts estimate that more than half the insured population will be in a high-deductible plan by 2020.With the rise of high-deductible health insurance products, Americans must learn to harness the power it gives them.
My second stop will be Australia, a sprawling nation focused on “capacity building to enable individuals to exercise control in their environment and make appropriate health choices.” Australian health policy focuses on social determinants of well-being as well as physical and mental health, framing individual decision-making in the broadest possible context of health. Australia’s indigenous population, just 2% of the overall population, illustrates a challenge we face in the U.S.: dramatic health care disparities between minorities and the general population. Empowering consumers will only work here if we recognize and adapt to cultural differences and norms.
By looking to some of the world’s highest performing health systems, I hope to identify strategies for educating and empowering consumers as a means to encourage traditional consumer market forces, and hopefully associated transformation, in the U.S. health care system. Consumer empowerment, leading to individual accountability, has the potential to be a key part of the solution.
Deborah Gordon, MBA
Chief Marketing Officer,Vice President of Marketing and Business Development at Network Health