Monday, March 2, 2015
Obamacare is working better than anyone dared to hope. Following the astounding news that some 30 million people have Obamacare, we are now told that the way we buy Obamacare insurance on the public exchanges is good news for the canapé people. Why? Because we are finally exhibiting typical shopping behavior in health care, which is what consumers ought to do, and which has been shown to reduce prices of things in every other consumer market. Typical shopping behavior means that consumers have no brand loyalty, and no long term commitments to anything. Instead, “price sensitive” consumers (“poor” is not a term used in polite company) are in a constant frenzy to find the cheapest product available, regardless of quality, utility, or benefit to themselves or society.
It turns out that about one third of Obamacare exchange shoppers switched to new insurance plans this season. Nobody knows what they switched to or why they switched, but that’s not important right now. The good news is that they switched. Switching between the typical narrow network health insurance plans sold on the Obamacare exchanges, means that consumers switched their doctors and sometimes hospitals. It means that medical care is viewed as a commodity, like Cheesy Poofs. One brand is as good as the other, and the dollar store brand is the best. That’s how the free market works, except under the candelabra.
The entire notion of having your own doctor is pitifully presumptuous. How many of us have our own lawyer or accountant? Warren Buffet certainly does, but the rest of us do just fine with episodic roadside legal and financial services, and Internet do-it-yourself tools and advice. For the very poor who become afflicted with severe legal problems, an attorney usually paid minimum wage or nothing at all, will be provided by the state. No separate safety net exists for financial trouble, but debtor prisons are flourishing. Expecting medicine to remain different is a sign of old age, failure to innovate, and deteriorating mental capacities.
Personal services are not scalable, and scalability is the number one prerequisite for productization and marketability, and scalability is predicated on repeatability. A transaction defined by having two people in a room interacting behind closed doors is neither scalable nor repeatable. Once we capture the events in that previously private room, and digitize them into structured data routines, we can abstract a repeatable process definition. To make it scalable, we need to discard the parts that don’t have universal applicability. The result is a good enough product that can be used by most people most of the time, like TurboTax or making your last will and testament online. Oh, and one more thing. To encourage shopping for the cheapest venue, unencumbered by misguided brand loyalties, we need to eliminate any and all switching costs. In health care, we call it interoperability.
Continuity of care is redefined as the existence of a digital dossier called health record, not medical record, and this is a crucial difference, because health is a continuous thing from birth to death, while medical may be episodic and vulnerable to branding attempts. The existence of a public lifetime health record obviates the need for fuzzy interpersonal logic. Any interchangeable resource, human or electronic, can pick up where the previous resource left off. This brings us one step closer to Cheesy Poofs or electronics, where the actual product manufacturer is not the same as the brand name on the box, although once in a while a recognizable brand may be used for advertising (Intel inside) of an otherwise generic product (your laptop) to bestow an aura of quality for those who prefer to think of themselves as connoisseurs.
Health care, as we all love to point out at regular intervals, is different. Before we can plunge health care delivery into retail mode, we must transition health insurance to a retail paradigm. The vast majority of Americans became accustomed to health insurance as a job benefit, like paid vacation days. Often the only decision one had to make was between the crappy HMO plan and the slightly more expensive PPO plan offered by their employer. Nobody read the prospectus because the choice was exquisitely simple: can I go to any doctor I want, or do I have restrictions? Since at most businesses, the CEO (and the CEO family) had to use the same plans offered to employees, everybody was confident that their interests were well represented. We should have known that this was too good to last.
Obamacare is creating a retail market for health insurance. Essentially, the inefficient, unaffordable individual health insurance market model is to be propped up by government subsidies, while its unsustainable and inequitable methodology is copied over to the orders of magnitude larger employer sector. When the transition is complete, health insurance will no longer be a job benefit. Instead, a fixed value voucher will be given out by employers to be applied by employees towards health insurance purchases. Since salaries will not be affected by this change and since the voucher value will be trending to zero over time, most Americans will be forced to shop not just for insurance, but for everything insurance used to buy.
Retail medicine makes perfect sense to the canapé nibblers under the candelabra, because Isabella, the undocumented au pair, is very happy shopping at Walmart for all her health care needs, and she comes from a good upper class home in Venezuela. One can only imagine the entertaining spectacle offered by millions of little consumers scurrying ever each way, like so many rodents on a burning ship, holding on tight to their worthless little vouchers, desperately trying to find a way to pay for medicine. Help is on the way though. Transparency, you see, is the missing ingredient in this newly liberated market. Every Cheesy Poofs bag has a clear list of ingredients, starting with cornmeal, oil and salt, and ending with yellow coloring, and a big huge table of “nutrition facts”. This has been shown to work well for Cheesy Poofs and it is now being applied to health extortion bags, as well as boxes of health providers.
In a moving show of solidarity, the glitterati themselves are participating in this disruptive “sharing economy” because they all use Uber. Uber is replacement for taxis, and if the closest you ever came to paying for a private ride was on your high school prom night, that’s okay, because taxis are disproportionately used by rich people. Cheesy Poofs guzzlers take the bus or drive themselves. Uber for health care has been the wet dream of many entrepreneurs and their two bit consultants. In this “sharing economy”, lots of jobless hungry people provide on-demand unskilled services to more fortunate patrons, and then “share” their fare with a $41 billion global corporation. This business model is several thousand years old and it used to be called pimping in the prostitution field.
The Uberization of health care will require turning the same tricks used in the taxi industry, or the hotel industry, to neutralize licensure requirements for offering a service, any service. The eradication of credentialed expertise, goes by the name of democratization, because discrimination based on one’s education, training and expertise should be abolished in an enlightened society where only pigs can be more equal. Health care is a harder nut to crack though, because of the unfairly large differential between a licensed doctor and all other potential providers of this service, and because licensed physicians are selfishly unwilling to “share”. The good news is that some doctors are starting to come around, and the indisputable success of Obamacare is showing that health care consumer products need not contain real doctors, just like your satisfying bag of Cheesy Poofs contains no real cheese. It’s a miracle of sorts….. Bud Light is still beer. Cheers.
Posted at 10:43 AM