Monday, June 29, 2009

Consequences of a single health care transactor

In my first post I talked about creating a selective pressure that could direct progress by narrowing economic opportunities to be mostly in the direction we want our economy to evolve. This is the sort of thing I was talking about. Finding ways that don't so much change things as they are now, but undermine their ability to grow in any direction besides improving. Here's how I think the single transactor system I describe in my previous post would affect our nation:

Fewer Health Care Lawyers.

The impact on of a single transactor system on everyone in the health care industry that doesn't actually provide health care is not good. The lawyers will most likely have less work because patients wont be suing insurers for coverage that can no longer be denied or delayed. (Obviously proving fraud on the part of the insured is important if it took place and the system must be designed to allow that to happen without simultaneously giving insurers access to enough information to cherry pick who they cover.) Less malpractice suits are likely too, because the transactor will have a lot more data and better tools to discover subpar providers quickly. Less contracts will be needed since the transactor will have standardized ones.

Less marketing and administrating. No sales force.

Marketing departments and advertisers will have less work since health insurance will be as generic as we can make it. A lot less clerks, accountants, and secretaries are likely to be needed since the transactor is handling all health care payments electronically. The sales forces aren't needed at all since health insurance could only be purchased via the transactor.

(This process of creative destruction is a rough but necessary part of capitalism. These jobs are artifacts of the system we have now and would no longer add value to a single transactor system. I do believe there is some injustice in destroying these jobs because they only exist as a consequence of our governments willingness to ignore the payroll tax fraud implicit in employer provided jobs perks.)

Wiser more competitive HMOs and Insurers.

Not having a brand-able product to market will leave insurers with only three ways to compete; lowering overhead, earning a higher yield with premiums, or improving their ability to deploy preventative medicine effectively (so that it genuinely does save money by reducing a patients need for more expensive treatment later.) Of those, it is the last one that promises the most profit. This tightly aligns the fortunes of both insurer and insured--they profit most by helping us stay as healthy as possible and via no other way.

Perhaps our government should encourage this practice even more by offering some fraction of the savings generated by a breakthrough in preventative medicine as a reward to the discoverers. I would prefer this to the patent mechanism we use now, for health care technologies, because it promises the most rapid deployment, avoids a great many costs, and can generate the same or even better financial rewards for the discoverer genuinely commensurate with the utility of their invention.

A national health care database.

A universal health care transactor will create more jobs than it will destroy. Jobs for people to build and maintain the databases needed, design the most efficient and error-proof input and output equipment for providers, and create tools for allowing users to find the information they're looking for in the database.

It offers more opportunities for entrepreneurs to create insurance, medical products, drugs, and information processing technologies for the heath care marketplace formed by a common transactor. This is because a very accurate idea of how much of a market exists can be purchased enabling a more competent and believable business plan to be developed.

It might fund itself. The transactor would have a lot of information of great value to insurers, researchers, and entrepreneurs and can be carefully regulated to protect the public and the intellectual property of its clients. If we are clever enough, we might make health care solutions as easy to discover, deploy, and profit from, as iPhone applications are today. But every one of these jobs will share the property that they are directly involved in improving the quality, access, or affordability of health care. Contrast that with the system we have now, where most of the profit comes from passing on costs to the insured if at all possible, or by marketing coverage more effectively.

Trading your lifestyle data for health care coverage.

Suppose you were able to collect a great deal of data about what you consume, when and how long you sleep, where you go, and what sort of exercise you get. A transactor is in the unique position of making that safe to do (best protecting the information from government and industry) while allowing you to profit from anonymized access to it. This kind of data will enable the most comprehensive understanding of any relationships that exist between lifestyle choices, health care needs, and effective preventative measures. It will help patients by giving their health care providers a better window into a patients health than even the patient themselves could deliver. And regardless of whether they are conscious at the time.

I think the best way to protect our privacy is to create a single regulated mechanism for collecting information about us and make it illegal for anyone else to maintain certain kinds of information about people. (They must use the regulated mechanism to both store and retrieve that sort of information when they have a legitimate use for it. This would apply to all government agencies as well.) This may seem backwards to many people--actually creating a formal way to store everything about us in order to protect us from exploitation by entities with exactly that information. I think this belief is naive. The information exists and is collectible today by pretty much anyone with the desire to do so. We're constantly reading about this or that database of credit card customers, patients, or credit union members being stolen and exposing those people to identity theft or other fraud. By requiring those companies to use a common, heavily regulated and protected store for that kind of information we can better protect it and improve the accuracy too. This is a threat I think we had better face head on and very seriously.

Right now companies that collect data about us are free to sell it. That's the source of a lot of the unsolicited invitations you get. That can't happen if we switch to a common store. Instead you'll browse a web site that shows you the list of outstanding offers to buy anonymized access to your data and can pick which, if any, you'd like to indulge. There will even be studies you can be paid to participate in that ask you to change something about your lifestyle for a test period because researchers have the ability to verify that you did. This should dramatically reduce the cost and improve the accuracy of a great many kinds of clinical trials.

All of these things work together to lower health care costs and protect our privacy. I believe they would improve our health care system a lot all by themselves. But there is one more minor change I'll propose in the next post that should do a lot more. And it consists of how we might better connect what we pay for the choices we make in life to the true cost those choices have on us and others.

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