A few months ago, my 5-year-old nephew broke his arm while running through his house. It turned out he was fine and my sister’s concern over her son’s welfare eventually gave way to financial frustration. The total cost for X-rays and a tiny cast: more than $800, which, of course, fell shy of the family’s insurance plan deductible.
“Is it just me?” my sister asked in a family email, “or does this seem seriously out of whack?”
If Brad Weinberg, cofounder of both the social wellness platform Shapeup and the seed accelerator Blueprint Health, has his way, more and more people will be asking just that question over the coming decade.
The exit of large employers from the insurance market coupled with the widespread adoption of high-deductible plans by individuals will, he believes, put unprecedented pricing pressures on providers, forcing them to operate more efficiently and offer better value.
All of which, Weinberg says, constitutes an enormously positive development, and one that is a necessary foundation for what people refer to as the ultimate “consumerization” of healthcare. “If you actually want consumer change to be possible,” Weinberg says, “you need to get consumers involved in purchasing medical services.”
Here’s how he sees that shift playing out:
- Employers, who currently compose two-thirds of the health insurance market, can no longer afford to keep paying rising premiums for health insurance.
- Employers will shift toward a model in which they pay employees under defined contribution plans. Rather than acting as defined benefit providers, employers will pay their workers a certain amount of money each month and send them to private or public exchanges, like Bloom Health or Liazon, where individuals can shop for the benefits that best fits their needs.
- Individuals, confronted with choice, will tend to opt for high-deductible plans, choosing to take more responsibility for maintaining good health and betting on the chance they won’t need professional help.
- These individuals on high-deductible plans will look carefully at the cost, convenience, and peer reviews of medical services before agreeing to them.
If Weinberg is right, and insurance companies shift toward focusing on catastrophic coverage, individual consumers can look forward to a truly participatory role in medicine – evaluating the cost of medical visits and procedures in exactly the same way they evaluate the price of other consumer goods – school supplies or groceries, for example.
And startups, like those in the newest class of the Blueprint accelerator program, would do well to follow these trends and build companies that help providers, insurers and consumers adapt to this changing landscape.
Photo by swanksalot