Hixme Think

Revealing Harvard Study: Consumers Who Choose High-Priced Plans and Services Drive Cost Spiral

Denny WeinbergDenny Weinberg

Hixme Creates More Prudent Decision Making, Softens Cost Impact

This most recent, but not surprising study from Harvard published in the Journals of American Medicine Association (JAMA) confirms that models like Hixme’s leverage a key driver of health care cost control – the patient.

Research shows: When consumers are more aware of the actual costs of care, and know their real share of costs with their employers, they chose coverage more carefully, and use services more responsibly.

Says Nir Menachemi, one of the JAMA publication authors, “Traditional insurance plans shield patients from [some] of the financial decisions that are made. The fact that you are shielded financially from health care decisions makes you potentially more likely to over-consume services, which raises the average of care for everyone and increases premiums for everyone.”

Incenting consumers with “skin in the game” results in more prudent shopping and consumption of routine services and more careful consideration of more comprehensive services. This is one of the few effective ways to actually “bend the cost curve.”

The fact that you are shielded financially from health care decisions makes you potentially more likely to over-consume services, which raises the average of care for everyone and increases premiums for everyone.

Hixme’s unique safety net coverages create this kind of purchasing incentive. We also soften the impact of the costs for health care services for the patient, AND increase involvement, both key to change. Informed, involved patients make better choices.

Finally, our financing features that help spread a portion of patient balances over future payroll deductions make care decisions affordable for workers and their employers.

Excerpts from the study and resulting media coverage

From BenefitsPro | author Jack Craver | March 14, 2018

Price of care biggest factor in high health care spending in U.S.

A new study pins the blame not on overuse of the system, but simply on the high price of prescription drugs, medical devices and health care services here.

The study, led by Harvard Global Health Professor Ashish Jha was published in JAMA and compared data on health spending and health outcomes in the U.S to that of ten other wealthy nations.

Study conclusions and relevance

The United States spent approximately twice as much as other high-income countries on medical care, yet utilization rates in the United States were largely similar to those in other nations. Prices of labor and goods, including pharmaceuticals, and administrative costs appeared to be the major drivers of the difference in overall cost between the United States and other high-income countries. As patients, physicians, policy makers, and legislators actively debate the future of the US health system, data such as these are needed to inform policy decisions.

Jha tells the New York Times that he expected the study to confirm the wide assumption that overspending in the US is largely driven by over-utilization of services … but … the big difference in spending comes from the price of care itself.

According to the New York Times:

“There were two areas where the United States really was quite different: We pay substantially higher prices for medical services, including hospitalization, doctors’ visits and prescription drugs. And our complex payment system causes us to spend far more on administrative costs. The United States also has a higher rate of poverty and more obesity than any of the other countries, possible contributors to lower life expectancy that may not be explained by differences in health care delivery systems.”

“It’s not that we’re buying more pizzas, we’re just paying more for each pie,” Jha tells the New York Times. “But that doesn’t mean that you can’t still buy fewer pizzas.” 

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ABOUT THE HIXME THINK BLOG: Authored by one of the gurus of health insurance, Denny Weinberg, postings reflect market trends and the powerful emerging movements toward true portability and personal ownership by workers and their families. Postings follow these emerging trends, driven by consumer ownership of retirement benefits, consolidations by health care institutions, and the stated pro-consumerism goals and actions of the administration, federal agencies and Congress.

Denny Weinberg is a 35 year veteran executive in healthcare financing and operations. Prior to his 4 years as investor and CEO with Hixme, his broad background includes a 20 year tenure CEO of a number of Anthem's largest operating companies. Denny has managed a portfolio of early stage companies in the Health/Medical arena as well as other industries. He has also served as board member, advisor and consultant to both private equity-backed, and publicly traded Blue Chip companies.

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