Reform Health Care by Re-empowering Consumers

By making simple decisions to buy or not buy, consumers have changed entire industries — banking, travel, cell phones. A little pressure from consumers typically produces a lot of innovation that shifts products, competition, prices, quality, choices, and ultimately value. The problem with healthcare is that it has been built around providers, insurers, the government, employers — and not around consumers. We’ve ended up with spiraling costs and few consumer choices, primarily because many of the regulations and mindsets governing health care have inhibited the kind of broad-scale consumer innovation that’s happened in other industries.

Now, while the U.S. government is undertaking one of the biggest reform efforts in our history, the debate seems to be overlooking the essential element of consumers.

Consumers are important for two reasons:

1. They are ultimately responsible for their health. The majority of health decisions are made at home, and the daily choices individuals make can affect what everyone in the system pays for healthcare.
2. By arming them with the right information, consumers can make more informed decisions about how they want to spend their healthcare dollars, ultimately driving market innovation.

We see the result of the individual choices consumers make every day. Two-thirds of Americans are now considered overweight or obese, and obesity is one of the biggest risk factors for developing the six chronic diseases that account for 75% percent of America’s current healthcare costs — including diabetes (costs to the system = $218 billion), cardiovascular disease and stroke (costs = $437.5 billion).

What’s disconcerting is that this doesn’t have to be our reality. Consumers can control and largely prevent obesity and chronic diseases through lifestyle changes and personal choices, such as exercising regularly, eating right, and not smoking. Research has shown that even a small change, such as losing 5-10 percent of body weight, can reduce the risk of suffering from a chronic illness. Walking half an hour a day, five days a week cuts the incidence of diabetes by 40 percent. According to the CDC, the average American adult (age 20 to 74) is 5’6 ¾”, weighs 177.65 pounds and has a BMI of 28 (25-29.9 is considered overweight; 30 or higher is obese). To achieve a BMI of 24, America needs to lose 29 pounds per person. With more than 205 million people in the United States that means almost 6 billion pounds.

Not to sound trite, but collectively losing weight could be a “quick fix” for our health problems and rising costs of care — without legislation. Obese individuals incur 42% more in medical expenditures, which amounts to about $4,800 per person per year, compared with normal weight individuals, who incur an average of about $3,400 in such expenses.

Despite these facts, consumers continue to make harmful health choices that affect society as a whole. We need to help consumers engage with their health differently, be wiser purchasers, and better understand the trade-offs. As long as people believe the price of care is their co-pay and continue to engage as they have, there won’t be sustainable reform.

A big part of the problem is that millions of Americans are insulated from the true cost of healthcare. Yet they’re paying for it whether they realize it or not. They receive lower take-home wages so that employers can pay the premium on health insurance, lower take-home pay via the Medicare tax on wages, or higher prices on goods and services so that businesses can pay their insurance premiums and taxes. Because the majority of health benefits are provided through employer-sponsored programs, many consumers do not know (or care) how much their healthcare really costs. And because healthcare providers negotiate rates directly with health insurance companies, consumers don’t know that one hospital might charge twice as much for the same procedure as another — only to achieve the same results. Even consumers who pay for healthcare out of their own pockets often don’t know how much a procedure will cost until they have already undergone it and are on their way to recovery.

We could shift these trends by engaging consumers with increased transparency and more information with simple public education. So much can be done by healthcare professionals and the government to provide information on diseases and potential treatments, the cost of those treatments, the providers with the best track records for those procedures, and the trade-off between lifestyle choices and the cost of care. We need to encourage and reward general wellness by helping people to focus on health “management” throughout the course of their lives.

When you combine the disconnect between lifestyle choices and the burden it places on the system as well as the hidden costs of providing healthcare, it’s clear that we have created a situation in which our most powerful drivers of change — American consumers — have been incapacitated. Only by providing consumers with the right information at the right time can we re-empower them.

Healthcare is not going to be reformed by simply revising the current system, which is centered on providers. Instead, we need to concentrate on re-engineering healthcare around the consumer, building innovative approaches that can help consumers take more control of their ongoing care. After all, the ultimate success of healthcare reform will depend on consumers changing their behaviors and interactions with the healthcare system as much as it will on the legislation under consideration in Washington, DC.

Peter Neupert is the Corporate Vice President in charge of the Health Solutions Group at Microsoft, a group providing software innovations that empower users and enable transformation to improve health.