How Health Care Changed While You Were Watching the Election

After a seemingly endless presidential campaign, we’re just days away from the Nov. 6 election. And to be sure, health care issues remain at the forefront.

Both Barack Obama and Mitt Romney have tried to claim the high ground as Medicare’s number one defender. In his latest column, the New York Times’ Paul Krugman argues that next week’s vote “is, to an important degree, really about Medicaid.” And writing on Bloomberg View, columnist Ezra Klein takes an even broader stance, concluding that “this election is all about health care.”

But health care isn’t all about the election, despite politics’ seeming ability to draw every sector into its gravitational pull.

In fact, many of the most significant stories in health care from the past two months haven’t come from the campaign trail — where candidates have mostly rehashed their existing policies — but from the private sector, as employers and providers have made aggressive, and sometimes unexpected, deals and changes. Reforms that will continue regardless of who’s sitting in the Oval Office next year.

Here are some of those stories.

Top Employers Move to Defined Contribution

As previously discussed in “Road to Reform,” Sears Holdings and Darden Restaurants have made plans to shift away from their current “defined benefits” — where they choose a set of health insurance benefits on behalf of their workers — and roll out “defined contribution” instead.

Under that model, firms pay a fixed amount for employees’ health benefits and allow workers to choose their coverage from an online marketplace, such as the Affordable Care Act’s health insurance exchanges or the emerging number of privately run exchanges.

In theory, the model would slow employers’ health costs while allowing employees to have more control over their own health care spending. And Sears and Darden’s announcements aren’t wholly unexpected, given that many employers have signaled their interest in making a similar shift.

But given the long-entrenched employer-sponsored health coverage model, some employers needed to be the first movers before the rest would be ready to follow.

Will they? That will be a major industry issue to watch across the next months.

Wal-Mart, More Providers Ramp Up Direct Contracting

As also noted in “Road to Reform,” Wal-Mart has continued to pioneer health care changes that could trickle down to the rest of the nation’s employers.

The company — the largest private employer in the United States — earlier this month announced new bundled payment agreements with six prominent providers. Given Wal-Mart’s size, the deals have major ramifications; the agreements could cover the company’s 1.1 million U.S. employees and dependents.

But Wal-Mart’s hardly alone. More employers are looking to limit their health spending by directly contracting with a selection of hospitals and physician groups that they think deliver the most efficient care — regardless if they’re located miles away from their workers — even as top providers are aggressively seeking such deals.

For example, Seattle-based Boeing on Oct. 1 started covering specialized cardiovascular care for nearly 83,000 employees, retirees and dependents through a new bundled-payment agreement with the Cleveland Clinic. Under the agreement, Boeing will cover the cost of travel and lodging for both the patient and a companion.

It was the seventh such agreement that the Cleveland Clinic has struck with a self-insured employer, with most of the affected employees located outside of Ohio. And if more companies are willing to send their workers across the nation to be treated, what does that bode for the traditional belief that all health care is local?

Mass. Hospitals Make Shift Toward Global Payment

Massachusetts continues to be the testing ground for national reform, given how its state reforms served as a forerunner to the Affordable Care Act. Some experts have argued that what’s happening in the Bay State is a preview of what will unfold across the nation’s health care system in the coming years.

That’s why it was so telling when Partners HealthCare, one of the state’s most prominent hospital systems, this fall chose to rip up its existing contracts with several major insurers and instead accept new deals that limit rate increases and put its providers on a budget.
In many ways, Partners’ deal-making reflects the broader climate in the state. Having already expanded health coverage — through a mix of mandates and a state health exchange that resemble ACA reforms going online in 2014 — Massachusetts is now pushing its providers and insurers to rein in health spending.

Partners also is following the path laid by the Alternative Quality Contract, a payment pilot by Blue Cross Blue Shield of Massachusetts that appeared to slow health spending and possibly reduce inappropriate utilization.

More Changes Ahead

But the emerging push for defined contribution, direct contracts, and global payments is only part of the story in the private sector. More changes — ranging from new market entrants to more adoption of risk-based payments– are sure to come.

“I would characterize employers as increasingly impatient and sophisticated,” said Chas Roades, chief research officer at the Advisory Board Company. (The Advisory Board Company publishes California Healthline for the California HealthCare Foundation.)

Employers “are not just shifting more cost onto employees,” adds Roades, “but getting more aggressive about putting dollars at risk for wellness, health maintenance, and disease management.”

Looking Forward

The changes in the private sector don’t diminish the importance of next week’s vote to the health care industry. An Obama victory would likely preserve the ACA for years to come; a Romney win could lead to partial or full repeal of the law and scaling back of the nation’s Medicaid program, among other possible reforms.

And according to a Kaiser Family Foundation poll released on Wednesday, about one-third of likely voters do rank health care issues as “extremely important” to their vote.

But as recent events bear out, many top employers, providers and payers aren’t waiting on Washington to make big changes. With rhetoric sure to mount until Tuesday, keep in mind that while the election’s the thing — it’s not the only thing.

Dan Diamond (@ddiamond) is Managing Editor of the Daily Briefing, a CaliforniaHealthline columnist, and a Forbes contributor. This post originally appeared at CaliforniaHealthline.org.

3 replies »

  1. Why shouldn’t individuals carry more responsibility for their healthcare costs? In a world of exploding health spending, that seems like a good reform to me.

  2. So basically, health care expenditures are increasingly being shifted to individuals, while decision making is increasingly shifted to corporations (health systems and employers), and prices for services are increasing through consolidation of providers’ market power.
    And we refer to this as the road to reform. Road to perdition seems more apt.