Is there anybody who still doesn’t know that cigarettes are bad for them? You’d have to have lived under a rock—or received a public school education—to think otherwise. How about obesity, alcohol abuse, high cholesterol, elevated blood sugar, and hypertension? All have received a huge amount of publicity for decades. So why do we still have an epidemic of preventable diseases from these avoidable risks?

Lack of information? Nope. We’ve been deluged by that for years (“This is your brain on drugs…”), and while it has indeed helped, we still have a huge number of huge people eating, drinking, smoking, and sofa-spudding themselves slowly to death.

Lack of medical care? No, not that either. Awesomely cheap preventive medical services have been a hallmark of private health insurance since they were mandated by the HMO Act of 1973. If anything, there is a perverse parallel between the growth in prevention coverage and surge in diabetes since then.

Stupidity? Sorry, but as self-satisfying as it may be to quote H. L. Mencken’s apothegm about going short on American intelligence, it isn’t that either. The average IQ in the U.S. is 100; and while that may be lower than Sweden’s, Italy’s, and Poland’s (so that’s why we don’t hear those jokes anymore), it’s still sufficient to allow the vast majority of Americans to apply rational thought often enough to produce the most prosperous economy in the history of the known galaxy.

So why, despite all the public health efforts and improved insurance benefits, do we continue to see so much lemming-like behavior? I think it’s because it doesn’t physically hurt. If a drag on a cigarette, a third shot of Wild Turkey, or a BMI over 25 were always accompanied by a sharp pain in the affected area, my guess is that most people would seek their transient pleasures elsewhere. But since these avoidable behaviors that cause debilitating diseases are largely symptomless, way too many people find it way too easy to ignore their cautious forebrains (“This is going to kill me someday.”) in favor of the more immediate gratifications favored by their reptilian hindbrains (“Damn, these 3000-calorie cheese fries sure taste good. Go Broncos!”).

Not that I’m arguing for a weight-loss version of Antabuse, which some alcoholics intentionally swallow to transform a subsequent drink into “flushing of the face, headache, nausea, vomiting, chest pain, weakness, blurred vision, mental confusion, sweating, choking, breathing difficulty, and anxiety.” Call me a libertarian softy, but I prefer tasty carrots to painful sticks. As a student of microeconomics, I particularly like the idea of letting people profit financially from doing the right thing. And study after study has shown that money can be a great motivator to lose weight, stop smoking, exercise, and to engage in other healthful behaviors.

I’ve previously written about using monetary incentives to take a big chunk out of the three-quarters of all health care spending that now pays for self-inflicted maladies. Also that I actually like the Affordable Care Act (ACA) provision allowing employers to increase financial incentives for employees to engage in health-enhancing behaviors. But I don’t like the mandate for insurers to provide zero-copay coverage for a lot of preventive medical services that history has shown to increase rather than reduce the cost of health care. (Those interested in “Who Benefits From Cost Benefit” might be interested in a brief essay on the subject from my book Cured!)

So to get where we need to be on prevention, I propose three changes to Obamacare’s currently deficient provisions:

  1. Allow monetary prevention incentives for everybody. ACA forbids premium-based prevention incentives (except for tobacco use) in the insurance exchanges, although they’re allowed for employer-based insurance. If it’s a good thing for workers, it ought to be good for folks who have to buy their own insurance. Stop discriminating and allow the incentives for everybody.
  2. Remove incentive limits. Rather than limiting incentives to 30% of premiums and allowing HHS discretion on raising them to 50%, let insurers compete for customers by offering the most generous, most creative, most effective, most marketable incentives they can afford, without regard to arbitrary limitations. Remember, the exchanges—if restructured properly—will create strong inducements for new high-value health plans to compete aggressively for members who will be looking for the best coverage at the lowest cost. Don’t over-regulate them and short-change consumers.
  3. Eliminate the free-preventive-benefits mandate. The current ACA provision perpetuates one of those feel-good, conventional-wisdom myths that won’t work and increases premiums forever. Get rid of it and replace it with the same minimum-benefit requirements now used for HSA-enabling High-Deductible Health Plans (HDHPs). HDHPs are allowed to provide first-dollar prevention coverage (i.e., not subject to the deductible), but are not required to.  This action will immediately lower insurance premiums and incentivize health plan members to earn their prevention awards by spending the least amount of money to earn the biggest rewards.

Together, these three simple changes to Obamacare have the potential to unleash a flood of entrepreneurial innovation to help consumer earn their prevention rewards, improve their health, and help make medical care affordable for everyone.

Next in Part 5, Providing a Sustainable Safety-Net.

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  1. Daniel says:

    Here’s a corollary to that: incentivize doctors to manage their patient populations better as far as weight, blood pressure, diabetes control, smoking cessation, etc.

    I realize these unhealthy behaviors are personal decisions, but high-quality care means getting more involved in your patients’ lifestyle decisions.

    They do this in the UK and it works very well.


    P.S. So what about the $2000 colonoscopy that people on HDHPs don’t get because it applies to their $10,000 deductible? You think that’s perfectly fine? How would you structure incentives to make sure patients undergo early detection procedures that the current system charges them out the nose for? Do we really want people to undergo these screenings or not?

    Steve Responds: Smart health plans, especially the innovative local ones that emerge around high-value medical providers, will provide strong financial incentives for doctors and hospitals to provide high-quality, lower cost care, which can include prevention incentives.

    As for the $2,000 colonoscopy, no, it should not be required as a first-dollar coverage item (i.e., outside the deductible). First, by allowing employers, government, and individuals to deposit the premium savings in a person’s HSA, the necessary funding mechanism is created (except for the hard-of-thinking who most likely won’t be getting the procedure under any circumstance). Here in Colorado Springs, the prices of colonoscopies range from roughly $800 to $3,000. If everyone had to pay for their own from their well-funded HSAs, I would expect doctors, hospitals, and ASFs to compete publicly and aggressively with prices well below this range (as we’ve seen with LASIK). Savvy patients would also demand information on relative quality, allowing them to make their own value calculation in choosing providers.

  2. Randy Dipner says:

    So, once someone takes the steps necessary to earn the incentive – say taking cholesterol-lowering or blood pressure controlling medication, do these condition go away as preexisting conditions? Perhaps the discussion of preexisting conditions is not the subject of this article; however, it is true that the medications don’t remove the condition but control it. Should I be able to move my coverage from an existing employer-funded plan to an individual plan because I decide to retire early without concern for that “preexisting” but controlled condition? This is certainly a problem right now. I think it goes away with some of the rules for preexisting conditions in ACA and perhaps is aided a bit by the insurance exchanges.

    The problem as I see it is that even if I control the condition, the cost of that control becomes, actuarially, a 100% probability cost and thus might be labeled welfare rather than insurance.

    Steve Replies: It’s important to differentiate between individually controllable health risks (e.g., obesity) and pre-existing medical conditions that may be caused by them (e.g., diabetes). Under both ACA and the system I advocate, neither health insurance access nor premiums would vary according to an individual’s pre-existing medical conditions. If someone has diabetes, he would have access to the same health insurance on the same terms as everyone else. However, anyone with the health risk factor of obesity would ideally be able to earn premium rebates or receive other rewards for reducing his BMI to a healthy level. It would be up to each individual to decide whether and how to do this–and how much of his own money to spend to achieve control. Non-obese people would be in the fortunate situation of being able to claim their rewards without any effort other than submitting their (third-party administered) measurements.

  3. Daniel says:

    Steve –
    I think you raise an interesting idea: “well-funded HSAs.” I actually like consumer-directed plans AS LONG AS there is some requirement to fund the health account.

    As I have said before, I used to be a call center rep…specifically dedicated to my company’s consumer-directed plans (both for individual and group health insurance).

    There were good and bad sides to it. On the one hand, they really were good for helping people to control costs by giving them skin in the game. But the scariest part to me was that people would buy these plans because they were cheaper premium-wise and then most of them would not fund their health accounts. So they were putting themselves at risks they could not realistically incur. I know I’m advocating regulation again, but there should be some requirement for patients to fund these accounts at least at a minimal level if they are going to purchase a HDHP just to make sure their providers aren’t forced to extend credit to them and then try to chase down payment. Personal responsibility.

    You’ve also said that primary and preventive care should not just be subject to the insurance deductible but total exclusions from insurance policies. I don’t object to that per se, but then you add on high deductibles on top of that and you find yourself in a very risky situation. Plus the more you put on the patient to pay out of pocket (or out of an HSA), the more risk the provider incurs and the more the provider must invest in collection efforts.


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