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Charge it to my health care card

Marketplace Staff Jan 26, 2007

KAI RYSSDAL:
The president’s tax plan Lisa was just telling us about isn’t the only new development in health care. According to a recent study by the Access Project, that’s a medical consumer advocacy group, more people are using credit cards to pay their health care bills. And in some states, financial services companies are teaming up with hospitals and doctors to offer cards specially made for medical expenses. Regina Herzlinger is a professor at the Harvard Business School. And professor isn’t this the last thing really that most of us need, another kind of credit card?

REGINA HERZLINGER: Very good point. So I’m sure that the traditional credit card companies would love to get in on the action, but you may not want to have them as your credit card provider. And the reason is, when you go and buy health care, unlike anything else that you buy, you have no idea what the price is and the price differs depending on who you are. So if you happen to be signed up with Aetna, you’re likely going to get charged much less than if you’re uninsured. These credit card companies really can’t help you with the pricing and they really can’t negotiate a good price on your behalf. But there are some new kind of credit card providers who can help you get a better rate.

RYSSDAL:
But isn’t there something ethically questionable about depending for your credit on somebody who conceivably, to stretch a point, has just saved your life?

HERZLINGER:
If you’re uninsured right now, you’re between a rock and a hard place. You’re going in, you need to get this health care. You don’t know what the price is. The price, if you’re sick, is going to be a very big number. So right now, many of those people become bankrupted. This is a much better choice.

RYSSDAL:
I read a great line in preparing for our talk. It said, what’s happening now is that the health care safety net, in essence, is made of plastic. It’s made of these credit cards.

HERZLINGER:
I think it’s not made of plastic. It think it’s got a lot of holes in it and all kinds of people, not only poor people, but middle class people can be bankrupted by uninsured health care costs. So while the credit cards are not a great solution, it’s better than going bankrupt.

RYSSDAL:
It does do something for the hospitals and for the caregivers who are organizing these cards and sending them out. It lets them get away from bill collection for one.

HERZLINGER:
It’s a certainly a boon for them, but I don’t think that they are going to be the ultimate winners in this credit card business. It’s going to be the kinds of financial institutions like banks or insurance companies. And they’re more squarely aligned with the consumer’s interests than the hospitals and the doctors are when it comes to collecting the money.

RYSSDAL:
How can you as a consumer search out those companies who act more in the consumer interest?

HERZLINGER:
I think they are going to come to you. I think we’re going to see a big swell of searching for those consumers by these companies. The underinsured market, which is the people who have insurance, but it doesn’t cover you from soup to nuts, that’s probably going to amount to 40 million people in about three years. Lots of companies are going to go out looking for those customers.

RYSSDAL:
Regina Hertzlinger is a professor of business administration at the Harvard Business School. Professor Hertzlinger, thank you so much for your time.

HERZLINGER:
Thank you.

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