Health care is broken. Insurance is hard to access, and expensive. What you pay often has little to do with the care quality you receive. Physicians are pressed for time, when you can see them. And the relationships between patient and doctor, and employer, and health insurer often seem to have broken down completely.
By 2000, 64% of Americans received health insurance through their employer. It wasn’t always this way. In 1943, the War Labor Board determined that health insurance benefits would be excluded from wage and price controls in key jobs like manufacturing. With much of the qualified labor off at war, and employers unable to raise wages, they resorted to offering non-wage perks (like health insurance) to attract and retain talent. The Kaiser Shipyards developed a system to care for their workforce. After the war, they opened their plan (today’s Kaiser Permanente) to other Northern California employers. By 1954, the tax exclusion was codified in law (PDF), solidifying the once-temporary link between employment status and health coverage.
Today, medical spending accounts for almost 18 cents of every dollar produced in our economy, the highest rate in the world. Americans pay 40% more than the country in second place on that list, and almost double what is spent in the U.K., but our outcomes are not substantially better. As more people confront the prospect of paying more for care out of pocket with reduced or non-existent benefit packages, it becomes increasingly important to understand, and to receive, what we pay for.
Even if you have coverage, and you can afford the care, it’s likely that your doctor visit will only be about 20 minutes long. And while the shipbuilders at Kaiser probably developed a rapport with their doctor, the average college grad, staying in his or her first job less than 24 months, is unlikely to build a long-lasting relationship with one. Traditional relationships are breaking down between patients and their doctors.
But not all is lost. This very environment—fragmented, cost-pressured—is producing the innovative products and consumer-facing services which provide hope for the future.
The shift away from employer-sponsored health coverage is already beginning. If and when the health reform bill is fully implemented, millions of people are expected to have access to health coverage for the first time. And, if you believe the rhetoric, 20 million Americans will lose their employer-sponsored care at that time. The employer-sponsored market is shrinking, and a growing percentage of people will be buying insurance directly. The major insurers have already anticipated this shift: They are gearing up for a world where they market their products directly to consumers, through health insurance exchanges. On a recent trip to PIttsburgh, where the headquarters of regional insurer UPMC dominates the corporate skyline, I was surprised to see billboards aimed not at benefits managers, but at soccer moms. The advertisements, directed at consumers, touted new individual health plans. And the CEO of Aetna gave a keynote at SXSW to tout his company’s commitment to people and products focused on consumers, in an area he calls "strategic diversification."
With the health plans preparing to sell their coverage directly to individuals, they’re starting to think like consumer marketers. Instead of focusing just on what happens when a member has an extraordinary diagnosis (and extraordinary cost), insurers are beginning to ask about what happens between billable moments, and between incidents of clinical care. When customer acquisition costs are high—as with a mobile carrier, or any subscription business—the key business success metric becomes customer retention rate. Unlike the mobile carriers, health insurers bear financial risk, so they’re even more motivated to keep around their healthy members, the ones who don’t anticipate using high-cost services and who are more likely to shop around based on features. The new plans clearly have incentive to optimize not just for cost, but for member experience.
With health reform bringing a new influx of people into the insurance system, pundits are projecting a shortage of as many as 150,000 physicians. Care seekers will be forced to rely more on alternative sources of care and guidance. Already, pharmacists can be reimbursed $2 a minute for counseling about diabetes. And any person can visit Sharecare and HealthTap to get a medical question answered by a qualified professional. You no longer need to make an appointment for the summer-camp physical or a flu shot; over 11 million people visited CVS-located MinuteClinic since it opened in 2000.
Consumers do not always choose the most expensive product in a cost-value tradeoff. Consider cars, electronics, or even vacations. But historically, this didn’t hold true for health care. People shopped almost blindly for surgeries, deliveries, and medical imaging, with no information on cost or quality. As more more people bear more of the cost, and want to make decisions around quality, health care management companies like Castlight and CakeHealth, are poised to succeed by helping provide the right information, to the right people, at the right time.
American habits have changed, and we’ve become more of a do-it-yourself culture. The average bank customer conducts less than 15% of his business with a live person in an actual branch, preferring instead to bank via ATM or computer. And in the hospitality industry, where the very name implies placing a premium on human interaction and the personalized touch, hotel chains now promote checking in at a kiosk without ever having to talk to a human.
We are seeing this transformation in the health care space. Over 80% of people have sought health information online (PDF), with over one-third of smartphone users tracking diet or exercise. Even Weight Watchers, built upon the strength of in-person meetings, is betting the future on DIY online and mobile experiences. In his critically acclaimed book, The Creative Destruction of Medicine, cardiologist Eric Topol details these transformations happening across the field. We are taking health into our own hands, supplementing fragmented physician interactions with data-driven personalized applications that really know us.
There will always be a need for deeply involved physician relationships. Especially with complex diagnoses and significant treatment plans. But the future seems bleak. Health care is broken. Coverage and care are harder to access, more expensive than ever, and lacking in quality and value.
But from where I sit, there’s hope. Market forces are pushing health insurers to develop products that consumers really want. And since retaining low-cost members is so important financially, the insurers are incentivized to look beyond traditional disease models and to design services for people to get healthy and stay healthy. New technologies and changing regulations allows consumers to access clinical resources where and when they want, outside of established channels. Shifting social norms mean that we’re often more accepting, even demanding of, a self-service model in health care. The companies poised to win in this space are the ones which build products not just for patients, but for people.