Health IT Options Hold Promise, But Face Major Hurdles

By Devon Herrick
Chair, Health Care Economics Roundtable
Senior Fellow
National Center for Policy Analysis

The pros and cons of health information technology (IT) were discussed at a session of the Health Economics Roundtable at the annual meeting.  The starting point was the failure of the United States to adopt health IT.  A recent study in Health Affairs found that only about one-quarter of doctors and hospitals are equipped to store health information electronically.  Yet, the U.S. health care system could save billions by storing medical information in electronic form.  Panelist John Bertko, a consultant and former vice president and chief actuary for Humana, Inc., cited research by Wennberg and Fisher that found up to 30 percent of Medicare health expenditures is wasteful or serves no purpose.  If health information were stored electronically, analysis of aggregate health data could identify treatment patterns and specific providers that are wasting resources. 

New Ways to Bill Insurers, Store Patient Records

The second panelist, Stephen Parente, the University of Minnesota, illustrated how personal health records could work on the same infrastructure as electronic banking.  For instance, the VISA card platform, where most medical bills could be paid instantaneously using debit/credit cards, already exists and is used in virtually every other area of our economy.  Parente emphasized that a simple USB credit card reader, costing only $20, and plugged into a physician’s computer system, could bill insurers electronically.  The data stream from the debit card would contain the diagnostic or procedural billing codes.  Whenever used at a pharmacy, the card would notify insurers of drugs prescribed to a patient.  This claims data contains significant amounts of information that is currently the property of the insurer.  Yet, this information would be useful for researchers and to consumers for a personal health record.
 
This type of system would have its shortcomings, however.  Absent from these data are the full medical records, including information on long-term outcomes from treatments rendered, as well as physician notes.  Patients technically own their own medical records, but obtaining a complete copy is difficult because records are scattered across different practices over numerous years. 

Costs Borne by Providers, Benefits Accrue to Consumers, Insurers

There is good news on the horizon.  Both Google and Microsoft are expanding into health information technology.  And Quicken already has a software package that does for health information what the company’s personal financial software does for household finance.  But Bertko said there still is no “killer app” that will cause consumers to embrace personal health records.  Moreover, much of the costs of health IT are borne by physicians and hospitals while the benefits tend to accrue to consumers and health insurers.

Providers may benefit from lower administrative savings, but this would be more than offset by lost revenue when aggregate data from high quality information systems reduce unnecessary care and redundant medical diagnostic tests.  This is one hurdle that must be surmounted before health IT becomes widespread.  The federal government, the largest payer for health care through the Medicare program, could compel providers to adopt health information technology by merely refusing to pay any provider that doesn’t bill Medicare electronically.  However, this is unlikely to happen due to intense political pressure from providers.