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"Founded in 2008, nHealth was built around a high deductible insurance plan model that utilized health savings accounts and kept costs down making consumers mor

• hga 16y ago
  Healthcare inflation is not something I strongly considered and you're right to emphasize it, but I submit to you that: A) This high deductible + HSA model can't affect the market unless it's widespread (probably very widespread), something we're not going to see in the USA (well, not any time soon), and: B) The experience of Singapore's first 5 or so years of the model cannot be considered very useful (I'm assuming that between the writing and publishing time and the lag in available statistics the referenced paper at best covers the period 1984 to '89 or 90): the period is way too short to see a change in behavior and their per-capita GDP increased by 43% (!!!) for '84-90 inclusive (from the IMF, as suggested by Wikipedia: http://www.imf.org/external/pubs/ft/weo/2006/01/data/dbcselm.cfm?G=2001 http://www.imf.org/external/pubs/ft/weo/2006/01/data/dbcselm...). But your points about inelastic demand and information asymmetry are well taken; I in particular don't tend to think of the latter, having an RN for a mother, my pediatrician as my father's hunting primary partner when I started hunting, having seriously studied biology and chemistry, always reading the prescribing info of any drug before taking it, etc. etc. etc. That said, how widespread is the information asymmetry problem in the US? I don't have any direct or family experience here, we've all stayed pretty much in the confines of GP type physicians with specialists consulted mostly to rule out things. These GP types have never encouraged "unnecessary" stuff ... but they wouldn't economically benefit from it. The specialists are where you'd expect problems, especially from surgeons who have a bias towards fixing problems by cutting anyway. EDITED: corrected fencepost error. ADDED: this high deductible + HSA model is intended to address one area of health care demand elasticity: avoiding your GP's office for minor ailments. There are simple sets of rules available for treatment of stuff like upper respiratory infections and gastro-intestinal illness including guidelines on when you should seek medical care. Canada is often described as a place where everyone goes to the doctor for a sniffle because it's free. US style 3rd party payment is often close to this. If you have to pay the entire amount out of pocket out of your HSA the theory is you'll apply the above, perhaps through a nurse hotline, and only go in (and get exposed to other bugs) when you really need to. Hmmm, that brings us to American exceptionalism: are we perhaps more likely than many other cultures to first take care of ourselves and family and only go to the doctor when it's really needed?
  • rianjs 16y ago
    Warning: meandering, incomplete response follows... Yeah, the HSA + high-deductible combination definitely has an effect on low-hanging fruit like primary care stuff. I don't know if it's been measured, but it intuitively makes sense. In terms of health care inflation, however, this is small potatoes. When a heart attack runs ~$80K for a course of treatment... well, primary care is pretty small. A normal course of cancer treatment (chemo + radiation) can run $200K and up. In this respect, controlling costs at the PCP's office has very little effect on overall health spending trends. Information asymmetry is significant, but it's most significant at the specialist level. How is a patient to know that long-run (5 yr) outcomes between surgery (we're doing something!) and physical therapy (hard, time-consuming, no sense of immediate satisfaction) are identical for something like herniated discs? And perhaps even better if you factor in potential surgical complications? So there's definitely that aspect to consider. Also, an orthopod is incentivized to do the surgery because we exist in a fee-for-service cottage industry. This doesn't mean they'll always recommend surgery, but there's always the financial incentives to consider. We reward more care in the US, not better care. But this isn't exactly news. To go back to the primary care type information problem... this is solvable to some extent. The Internet has certainly brought a huge volume of distilled knowledge to the masses. WebMD and the Mayo Clinic site are excellent examples of this. Unfortunately, they aren't very good at providing physiological context when explaining mechanisms of action (whether we're talking disease processes or their treatments), and this results in poor consumer understanding of what's going on in the big picture. When I was in pharmacy school, this was a common problem when counseling patients. It was quite common for an engineer to understand how this one drug worked on this one problem, but they didn't know how it fit into the big picture that is their body and how it might affect their body's homeostatic balance, especially if they did X or Y while taking the med. It didn't even occur to them to find out. This is where these information sources aren't enough, and where expert knowledge from someone who thinks about this stuff all the time comes into play. People have a frighteningly cavalier approach to taking pills... even smart, educated people. I suspect it's a cultural thing. Anyway, this lack of context problem is particularly exacerbated in psychiatry, neurology, and any other specialty where what is unknown is greater than what is known, especially when you start taking into account non-physiologic factors like cultural context. WRT guidelines: they're always changing as new information becomes available. The definition of obesity is broader today than it was 20 years ago. (And accounts for some of the increase in incidence.) Even guidelines for "simple" stuff like ear infections (otitis media) change with some regularity, if you follow organizations like the AAFP. The fundamental difference with health care in the US is that we ration based on ability to pay, rather than need. I know more about health care from both the ground-floor clinical side and big picture economic side than I know about probably anything else. If I were an investor, I wouldn't invest in health insurance startups or pharmaceutical startups. There's simply too much risk relative to the potential upside. I think this is to be expected in an industry where the low-hanging fruit has largely been plucked, though. What's left are niche diseases which aren't huge profit centers, as a rule. I'd actually love to know if there's any meaningful data on health care startups vs pure technology startups WRT return on investment, broken down by type of health industry.