Sticker Shock will lead to Occupy Healthcare

The headline in today’s Wall Street Journal, “Deductibles Fuel New Worries of Health Law Sticker Shock” understates the inevitability of a massive, predictable consumer pushback directed at the U.S. health system. It’s a bigger story. Consider these prominent postings in major media last week:

 Healthcare sticker shock is not the result of the flawed rollout nor the cancellation of 5,000,000 individual policies in the last month. It’s because the U.S. healthcare industry—every sector—is uncomfortable with consumerism, lacks a consistent value proposition and is inclined to protect the interests of its sectors at the expense of improving overall system performance. As a result, the system must brace itself for an Occupy Healthcare movement that’s building. There are four reasons for its inevitability:

1-The vast majority of Americans do not understood the U.S. health system The U.S. health system is 18% of the U.S. GDP, 21% of state’s spending, and 9% of the average household’s discretionary spending. Each is increasing faster than parts of their budgets. But most consumers are ignorant about the structure, funding and regulatory framework of the U.S. health system. Rather, public opinion about the “health system” is circumstantial—how individuals and families use doctors, hospitals, insurance, public health agencies, government programs and online tools. “Understanding how the U.S. Health System Works” is not requisite coursework at any level of public education nor an imperative to enrollees in employer sponsored insurance, Medicare or Medicaid.  So, for the 10% with complex medical problems, or the 16% who lack insurance of any kind, understanding of the health system is quite unique from the rest. For the 170 million with private insurance coverage and the 102 million covered by Medicaid, Medicare, and other government programs, the health system is no better understood.  The complexity of the system and widespread lack of understanding lend to misinformation about its performance and policies that pander to fear.

 2-The health system prefers dependency to consumerism. To doctors, hospitals, drug and device manufacturers, we are “patients”. To insurance companies and government programs, we are “enrollees.” And to most incumbents in the U.S. eco-system, we are dependents—incapable of navigating between treatments and diagnoses on our own. The presumption of dependency is central to how our system operates. It makes little effort to connect costs and quality, health and human services programs, mental health and physical medicine, acute and long-term care. It effectively resists transparency, perpetuates confusion, and carefully protects its turf. Examples: 8 of 10 consumers want ownership of their medical record but only 3 in 10 physicians are so inclined (Accenture) and there are more than 1400 hospitals among the Top 100!  Each sector jealously guards its data while espousing transparency for others. It’s understandable, then, that dependency is easier to manage than consumerism.

3-Profit in health care is increasingly a sensitive subject. Is it OK to be “profitable” in health care? It’s a delicate subject especially in the acute and insurance sectors wherein investor ownership is a hot issue. What’s clear is that many high profile health care companies—both investor owned and private not for profit-- have produced impressive profits during the downturn and since passage of the Affordable Care Act. And regulatory efforts to curb physician self-referrals and high profile actions against fraud have heightened attention to the greed-factor in health care.  The health care industry is capital intense, labor intense (employing 16 million) and highly regulated at the state and federal levels. Per the CBO’s forecast, national health expenditures will increase 6% annually in coming years—well above the 2-3% long term GDP growth and 2% wage increases expected for workers next year. Cuts in spending on health care, and declining insurance coverage by employers will result in shrinking operating margins and heightened attention to profits. And consumers will be alerted to profits from by-gone years that too many is ill-gotten gain.

4-The success or demise of the Affordable Care Act is a lightening rod for activism.  Kaiser tracking polls dating back to September 2009 found the public feels strongly about “Obamacare” but awareness of what’s actually in the law remains low.  Deloitte surveys revealed growing levels of dissatisfaction with the health system, including growing fear of financial ruin resulting from health costs, even among those with private coverage. For the 56% of employers that provide insurance coverage, health costs increases have been passed through to employees through higher premiums, limitations on coverage and use of defined contribution benefits that require employees to cough up $5000 or more before their policy pays. For the 44% who don’t provide coverage, and even for those that do, the ACA’s employer mandate and penalty in 2015 looms as a tipping point. And for young healthy individuals buying individual policies ineligible for subsidies, sticker shock will prompt pushback. They’ll pay more to subsidize older and sicker, just as employers that provide coverage subsidize employers who don’t.  The ACA has ignited passions across the political spectrum, with peaceful resolution no time soon. Health reform and the ACA will be prominent in Campaign 2014, and attention to transparency in the health system will continue to get page one coverage. Thus, the ACA will ignite an already building skepticism about the health system.

Occupy Wall Street coalesced the activism of several groups around a shared belief that the financial system was operating in its own self-interests versus the public good. The ranks of the health care disaffected are growing—those without coverage or inadequate coverage, those who can no longer afford higher co-payments for prescriptions, tests and hospital care, those who just lost coverage, and young healthy adults above the poverty line who now face higher premiums for insurance they suspect they don’t need.

Sticker shock in health care is a real issue to the industry. It might ignite the Occupy Health Care movement that  will fundamentally alter its future, and the ultimate result of health reform.