Healthcare decision-making is an intricate dance that involves patients, and often clinicians and insurers. While patients face clinical consequences exclusively, financial ramifications can also accrue to insurers, a feature that often strains the dance.
Startup Ezra offers full-body MRI scans for cancer screening at $2,500. Although no evidence suggested positive effects of such scans, Ezra has attracted customers interested in identifying potential conditions while paying out of their own pockets. Insurers, unaffected by these scans initially, will become involved once follow-up visits and further diagnoses take place. Other beneficiaries in the same insurance plan, even if they aren’t interested in such scans, may end up paying for resultant downstream spending through higher premiums.
Using 2017 Medicare Part D dispensing data for brand-name drugs with cheaper generics available, we found that among dispenses with a documented reason, 41% were requested by clinicians, costing Medicare almost $1 billion and patients $89 million in extra spending; and 32% were requested by patients, resulting in $673 million in extra spending for Medicare and $109 million for patients. In these cases, clinicians or patients opted for more expensive branded drugs over generics, decisions that affected the financial interests of taxpayers.
Same as everything else in life, financially involved parties seek to influence the decision-making process. The preferences of these parties sometimes clash—what patients desire, what clinicians advise and what insurance plans want can vary widely. Even among patients with the same medical condition and clinicians treating the same patient, opinions and judgements can diverge.
However, utilization control policy from an insurer is standardized, unable to accommodate diversified preferences from patients and clinicians. The debate surrounding prior authorization illustrates the mismatched preferences—medical decisions made by patients and clinicians differ from the policies of insurers, who demand to influence the decision-making because their financial interests are involved.
For routine medical services and generic drugs, allowing patients to control their own healthcare dollars would address this mismatch. For example, a catastrophic plan bundled with large contributions to health savings accounts, made possible by the savings from lower insurance premiums, would shift the locus of control to patients. Subsidies to financially disadvantaged and seriously ill patients should flow directly to their individual savings accounts.
In such a system, after consulting with their clinicians, patients who want to use MRI scans for cancer screening, take branded-name drugs whose cheaper generics are available and use services not allowed by insurance plans can do so and take full financial responsibilities (with tax benefits). Consequently, diversified preferences of patients and clinicians are satisfied, spillover effects to other beneficiaries are largely contained and individual financial risk exposure to major medical spending is protected.
By controlling their own healthcare dollars, patients ascend to the role of king in decision-making. The king yields power in choosing clinicians, providers, and even insurance plans, igniting truly patient-centered innovation and competition. Delegating power to others for whom healthcare is merely a job is worse than giving power to patients for whom healthcare is life. Let the king reign!
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