The right's healthcare "revolution" is a scam

Conservatives like to trumpet “consumer-driven” healthcare plans. Here’s what they’re not telling you about them

Published September 6, 2013 2:48PM (EDT)

         (<a href=''>Brian A Jackson</a> via <a href=''>Shutterstock</a>)
(Brian A Jackson via Shutterstock)

“The consumer-driven healthcare revolution,” trumpeted one conservative think tank a few years back, “has only just begun.”

Now, for anyone who has ever been inconvenienced by an encounter with the healthcare system – or even worse, been on the receiving end of poor quality care, a medical error or a misdiagnosis – a greater focus on “consumer” satisfaction might sound like just the right medicine for American healthcare.

So should we celebrate the recent rise of “consumer-driven” or “consumer-directed” healthcare plans?  The premise of CDHPs – essentially high-deductible plans, with an option for a health savings account – is straightforward enough: If you shop for services with your “own money,” you’ll use less healthcare and hunt for better bargains, in the process forcing providers to improve quality.

CDHPs have grown rapidly in recent years.  From a trivial 4 percent in 2006, CDHPs now account for a full 20 percent of all employer-based insurance plans.  The trend seems set to continue in 2014: A survey from the National Business Group on Health last month found that CDHPs were considered “the most effective tactic to control rising costs” by large employers, with 72 percent already offering a CDHP, and 22 percent planning to offer only CDHPs in 2014.

I’d wait to break out the bubbly, for, despite the utopian claims of its enthusiasts, CDHPs are more about cash than quality, more about cost shifting than consumer empowerment.

The “consumer-driven healthcare revolution,” it turns out, is likely to be neither revolutionary nor consumer-driven, but instead will only manage – somehow – to make the misfortune of getting sick an even worse experience.

One irony of the current craze with “consumer-driven” care is that its adherents seem surprisingly unaware that we already had an experiment with true market medicine in this country – in the 19th century.

“From the beginning,” argues the legal professor T. S. Jost in his critique of the consumer-driven movement, "Health Care at Risk," "there was only consumer-directed health care in the United States.”  Patients paid out of pocket, there was no health insurance, and there were an impressive variety of equally ineffective practitioners, frequently engaged in brutal competition.

The system (if it can be called that) was basically a disaster, with the presence of a healthcare marketplace doing little to encourage “quality” in that golden age of quackery.  What ultimately did improve quality – at least to some extent – was good old-fashioned regulation: medical licensure laws, the closure of low-quality medical schools, the Pure Food and Drugs Act, and so on.

Meanwhile, the poor of that era were generally left at the mercy of scattered and frequently inadequate charitable facilities – if they were lucky.  In later years, hospitals would not infrequently reject or otherwise “dump” sick patients deemed poor financial investments, a notorious practice that wasn’t really addressed -- again, with regulation – until the Emergency Medical Treatment and Active Labor Act of 1986.

The second irony of the current consumer-driven movement is the degree to which it diverges from the last major healthcare “consumerism” movement of the 1960s and 1970s, when progressive activists and consumer advocates like Ralph Nader sought to advance the rights of patients in an age when medical paternalism was the rule of the land.

“The major element in all of this activity,” commented an editorial in one medical journal in 1971,  “has been the unyielding insistence that the people who are to use the product or who are to be recipients of a service are entitled to an important voice in how that …  service is dispensed.”  Reforms to defend the mentally ill and disabled, to protect the privacy of health information, to open free clinics for the poor, and to increase the use of “informed consent” prior to medical interventions were achieved, in part, in the name of “consumer” rights.

If the current consumer movement sought similar goals – to give patients more of a voice in the healthcare system – who would be opposed?

Enter “Consumer-Driven Health Care.” Unfortunately, the current consumer-driven movement represents something altogether different from these earlier efforts to advance the rights of patients.

Consumer-driven healthcare arose from the ashes of yet another allegedly “consumer”-based model: “managed competition” among health maintenance organizations was at the heart of Bill Clinton’s healthcare plan.  The essence of such a type of plan – dubbed a “Consumer-Choice Health Plan” by the health economist Alain Enthoven in 1978 – was that competition among insurance companies for healthcare consumers would drive down costs and increase quality.  Clinton’s plan famously failed, but the HMO-model was rapidly ascendant – to the dismay of both patients and physicians, neither of whom appreciated profit-taking insurance companies dictating or denying care.

As the HMO paradigm began to disintegrate, a variety of academic, business and political thinkers began promoting a “consumer-driven” alternative.  Their ideas, it should be noted, were not particularly original.  At the center of the new ideology was the long-standing idea of healthcare “moral hazard,” which as I recently discussed, is the idea that because insurance makes our medical expenses “free,” we will use healthcare haphazardly and indiscriminately, without regard for cost (and apparently without regard for the fact that we are subjecting our bodies to unnecessary incisions and intrusions).

But it was only in the late 1990s that the term “consumer-driven healthcare” arrived on the scene, a coinage courtesy of Harvard Business School professor Regina Herzlinger, dubbed the “unofficial godmother” of the movement by Money magazine.  “In this system people would newly consider the costs of the health care products and services they use,” she wrote in her 1997 book, "Market-Driven Health Care."  “A consumer-controlled system would allow Americans to decide how to spend their money … they would shop carefully for the health services for which they themselves paid.”  Herzlinger coupled this notion of a free healthcare marketplace, however, with a legal requirement that everybody buy catastrophic health insurance – i.e., an individual mandate, the initially conservative idea that today’s conservatives are oddly outraged by.

Herzlinger’s influence should not be underestimated.  The former CEO of Aetna called her ideas “the most important trend to hit health care – and Regi [as she is known] is a beacon for us practitioners.”  This was not idle talk, with Aetna being described in one policy journal as a “first mover” in the move toward consumer-driven health insurance.

The more-or-less same idea keeps popping up everywhere.  Rand Paul made the argument for market-medicine a few weeks back on "The Daily Show." In the book "Catastrophic Care – How American Health Care Killed My Father," published earlier this year, the business executive David Goldhill similarly argues that the only solution to quality problems in American healthcare is consumer-driven care, with universal catastrophic insurance for all, but with all other expenses paid for out-of-pocket.  “We are less likely to be skeptical of benefits when we are paying little or nothing for them,” Goldhill argues.  “So the plague of unnecessary cesarean deliveries, spinal fusion surgeries, and cardiac bypasses …”

Exactly. It would be simply foolish not to have your abdomen, spine and/or thoracic cavity surgically opened and unnecessarily manipulated, assuming – and this is crucial – that it was free.

The failure of such individuals to imagine that some things in life are not mere commodities underscores the inherent failure of the consumer-driven ideology.  But the ideology remains appealing to many because it promises things we all value – choice, quality, knowledge, respect, individualized-attention – with something that no one wants: skimpy, low-quality health insurance that pushes us to avoid needed care when we need it (sometimes even in emergencies), while leaving us at the end of the day with a big bill.

None of this is to deny that American healthcare has serious quality problems, that as physicians we need to be much more cognizant of the costs and utility of the interventions we prescribe, and that all healthcare providers need to work toward making the experience of healthcare more convenient and humane.

But let’s work to improve American healthcare in ways that actually have a basis in solid evidence, before selling it off to the highest bidder in the name of a market ideology better suited to the interests of industry than to the needs of the sick.

By Adam Gaffney

AG is a physician and writer in Massachusetts.  He blogs at and is on twitter at @awgaffney.

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Conservatives Consumerism Health Care Ralph Nader The Poor The Right