Like children gathered around a card table, America’s special interests are engaged in a high stakes game of Monopoly. But the winner of this game gets more than a day or two of bragging rights; this time the spoils are nothing less than control of our health care delivery system for the foreseeable future.
Let’s meet the players: on one side, Big Medicine; across the table, Big Insurance; and between them, Big Government. There’s room at the table for a 4th player…but we’ll get to that later.
Introducing Big Medicine
To compete in this high-stakes game, Big Medicine is reforming itself into large, multi-disciplinary organizations. Independent hospitals are merging into hospital systems. Hospitals and doctors are coming together as self-regulating Accountable Care Organizations (ACOs).
Big Medicine’s path to victory relies on persuasion: “Who knows more about health than the professionals? Then who better to manage healthcare delivery? Government regulation and insurance carrier interference are unnecessary and actually counter-productive, so their argument goes.
But this is the very same thinking that got us into this mess in the first place. Before managed care burst on the scene 40 years ago, 40 percent of American women were undergoing hysterectomies but less than one in ten of those procedures was medically necessary. Medical self-management gave us the spiraling healthcare costs and mediocre quality of care that we are trying to fix today.
Meet Big Insurance
Perhaps Big Insurance would be a more worthy winner. After all, back in the late 80s and early 90s, it was the insurance industry that put the brakes on Medicine’s reckless over-treatment (and over-billing) of patients.
Unlike Big Medicine, the insurance industry is not relying on persuasion to win this game: its weapon of choice is economic clout. The giant, double-digit rate increases of the past two years have put this player in a catbird’s seat.
Insurance carriers are already administering government money through the Medicare Advantage Program and they are likely to dominate the government-sponsored health care exchanges mandated by last year’s health care reform legislation.
But letting insurance carriers manage care is just another old idea in new clothing. As much as medicine failed to self-regulate, regulation by bean counters proved no better. The unconscionable rationing of care by 1990’s HMOs spurred a popular revolt that culminated in the Oscar winning film, As Good as it Gets.
Hello Big Government
Last, but by no means least, comes Big Government. This player may be gobbling up more properties these days than the other two players combined. Not only have we passed health care reform legislation on the federal level, but there are similar reform initiatives percolating in nearly every state. Hawaii already has a single-payer system and Vermont may not be far behind.
Under health care reform, government forces companies to offer benefits, requires individuals to buy benefits, defines how benefit plans are designed and stipulates what benefits they deliver. In the coming years, a steadily increasing percentage of pre-retirement Americans will be dependent on government subsidies for their health benefits; and by 2014, every state will have a government mandated insurance exchange. It’s a good time to be Big Government.
To win this game, Big Government is not content just to use its power to legislate, tax and enforce. Government is also working to choke off the other players’ oxygen supply. Doctors’ fees are to be cut. Insurers’ margins are to be capped. Once cash strapped, these two players may drop out of the game and forfeit their properties…to Big Government.
It is hard to love any of the players at this Monopoly board.
Presenting the Patient
But wait! One side of the table is still empty. There is room for another player. “How about the consumer? After all, it is the plan member who gets sick (or doesn’t) and who gets well again (or doesn’t). Consumers want access, they want quality and they want value. A win by the consumer would be a win for everyone. Surely, this player should have a seat at the table.
But alas, this is still one more idea that has been tried and found wanting. The Consumer Directed Health Care (CDHC) movement of the last decade showed promise, but in the end, consumers were not powerful enough to stand up to the machinations of the other players. Medicine refused to grant consumers the transparency needed for value-based decision making; Insurance turned CDHC into a massive cost-shifting scheme and Government is working feverishly to stifle consumer choice by forcing everyone into cookie-cutter plan designs.
The Player of the Hour
Despite its ultimate failure, Consumer Directed Health Care was a step in the right direction. Unfortunately, the individual plan member was not strong enough to stand up to the behemoths in the room. Consumerism could still work but the consumer needs a more powerful advocate!
Who could represent the plan member at the table? The private sector employer! The employer’s interests are perfectly aligned with the member’s. The employer wants its plan members to be healthy and wants to achieve that in the most efficient way. After all, employers still pick up most of the tab for working Americans’ healthcare and the employer suffers the greatest economic harm when an employee is absent from work or works unproductively due to poor health. Only the employer has incentive to make sure employees have access to the best possible care at the best possible price…and the economic clout to make it happen!
So where is the employer? Why isn’t the employer at the table already? Over the past decade, the employer community has endured a withering assault from Big Government and Big Insurance. And it’s taken its toll. So much so that today’s conventional wisdom holds that the era of employment-based health benefits is coming to an end. The truth is that the percentage of working Americans who enjoy employment-based health benefits has declined slightly in recent years.
But is it any wonder? The policies of Big Medicine, Big Insurance and Big Government have driven the price of conventional health insurance beyond the reach of many small employers. At the same time, these same players have systematically sabotaged the employer community’s efforts to control cost through creative benefit funding strategies.
For example: states continually impose additional expensive benefit mandates and last year the federal government joined the pig pile with Mental Health Parity. Those states with some version of health care reform have limited the range of plan designs available to employers and if federal health care reform takes effect in 2014 as planned, virtually all opportunity for plan design creativity will disappear.
Surprisingly though, Big Government is not the biggest culprit here; it’s Big Insurance. A few years back, many employers began to take control of their benefit budgets by buying high deductible, low premium insurance policies and making up the difference with Gap Plans, Wrap Plans, Health Reimbursement Arrangements (HRA’s) and Health Savings Accounts (HSA’s.) The result was richer benefits for plan members and lower costs for plan sponsors.
But this strategy also resulted in less premium income for the insurance carriers and Big Insurance struck back. Carriers began refusing to issue policies to companies unless they promised to rely exclusively (or at least primarily) on traditional insurance to fund their employees’ health benefits. The use of creative funding strategies has been severely curtailed.
As a result, employers now have just two choices: buy a high cost, cookie cutter plan from an insurance carrier or buy a lower cost plan and shift claims cost onto plan members. Economics has forced many employers to choose the latter option and the resulting redistribution of cost has further fueled cries that the employer-based system is broken.
And broken it is. But broken by design, not necessity.
Big Medicine, Big Insurance and Big Government offer three different paths to the same disastrous destination: uncontrolled inflation followed by severe rationing of care. Big Bang followed by Big Crunch. And in the end, we will be left with nothing that resembles the health care universe we know today.
A Way Forward
The only way to escape this increasingly inevitable fate is to empower the consumer through the agency of the employer. The employer, and only the employer, is in a position to deliver wellness information and services to plan members and to represent those members’ interests in the political and economic arena. Here are a few additional recommendations:
- Insurance carriers must cease their efforts to limit employer- sponsored benefit supplements. Government needs to eliminate all restrictions on employers’ plan design creativity.
- Anti-trust laws need to be relaxed to allow companies to share data and cooperate in joint wellness and quality-of-care programs.
- And hospitals and medical practices need to cooperate with employer-based quality-of-care initiatives and suspend any policies that discriminate against non-traditional claims payers in favor of large insurance carriers.
If we can achieve consensus on just these few policy changes, we will be well on our way to restoring the centrality of the employer in the health benefit process and we may then yet hope to see our game of Monopoly end happily…with no monopoly at all!
David Cowles is a founding Partner and the current Executive Vice-President of Benemax, an innovative benefit management firm in Mefield, MA. He is primarily responsible for new product development.
This post first appeared at Health Affairs Blog on 09/06/2011. Copyright ©2010Health Affairs by Project HOPE – The People-to-People Health Foundation, Inc.
Categories: The Business of Health Care