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Jeff Sutherland

Twice the Energy with Half the Stress

Will the Banks Take Over Healthcare?

Banks: The New HMOs
By Scott Gottlieb, M.D.,, April 1, 2005

A transformation is under way in health care that will displace the entrenched giants among the ranks of America’s HMOs and pharmacy benefit managers. In their place will be millions of consumers linked by their financial services companies to accounts. These new accounts will allow them to manage their full range of medical benefits in the same fashion that they direct their 401(k)s.

The impetus for this change is a Trojan horse buried inside the new Medicare law. Explicit language in the new law enables a health plan and drug plan to be offered by any well-capitalized outfit adept at marketing and able to bare some financial risk.

If you think this describes a financial services company, not a health maintenance organization, then you are ready to glimpse the future of health care.

There are very few barriers to the type of businesses that can offer one of Medicare’s new drug benefits plans. Despite conventional wisdom, there is also only a small financial risk from doing drug business with Medicare–owing to the risk-sharing scheme the legislation allows with would-be drug plans. In fact, there is nothing to stop any financial services firm with an e-mail marketing list and a handful of health care lawyers from offering one of Medicare’s new prescription drug plans…

Another feature buried in thenew Medicare law is health savings accounts, which–similar to IRAs–allow investors to build tax-sheltered nest eggs to cover out-of-pocket medical costs.