Healthcare reform becomes official this week, as many of the provisions of the legislation kick in. One provision requires insurers to accept children with preexisting conditions while capping what they can charge, undoing a standard industry practice. Several insurers have indicated that they will stop selling child-only policies. Industry officials are having a field day criticizing insurance industry greed.
Maybe these officials haven’t noticed, but insurers are greedy and there is nothing anyone in the Obama administration can do about it. Maybe it needs repeating. Insurers are greedy, have always been greedy, and always will be greedy. So are all investor-owned companies. People don’t invest in health insurance companies (or any other investor-owned companies) for charity. They invest in them to make money. (Investors tend to be greedy too, and that includes the pension funds that most working Americans rely upon for their comfortable retirements.)Continue reading…
The Future Just Happened,
by Michael Lewis, 2001
As a consultant to the Physician Foundation, a not-for-profit 501 C-3 Organization representing physicians in state medical societies, as a sometime futurist, and as someone who has written extensively about innovation in Innovation-Driven Health Care (Jones and Bartlett, 2007) and in 1475 blogs in Medinnovation, I have been asked: What is the next big thing for doctors, and how should they react to it?
The next big thing for physicians will be Medicare fee cuts in the neighborhood of 50% by 2020 as mandated by the Affordable Care Act, and the next big clinical innovative response for doctors will be encouraging patients enter their own data, their own chief complaint, and their own medical histories before seeing the doctor to compensate for fee reductions.
Ceding a Traditional Physician Function to Survive Economically
Doctors will have to cede a traditional function – taking a history – to patients to become more efficient to survive. Payers – including Medicare, Medicaid, and private health plans- will demand standardization and restructuring of the medical history to achieve consistency in medical records. Patient-entered information may be disruptive. Doctors will have to change practice flow patterns to adjust to reality of lower pay. The need for greater productivity will drive this change.
Those of you with really long memories may remember that Kaiser had a little kerfuffle with a guy named Justen Deal. As part of that incident, I did a rather unorthodox interview with Andy Wiesenthal from The Permanente Group in 2006 which is still a hell of a read—mostly about the history of how KP got to the Epic decision and where it was in the middle of the installation process.
Fast forward the better part of 5 years. HealthConnect is done. And the pain and not inconsiderable expense is somewhat forgotten. But now it is done, what happens next? A long and somewhat philosophical interview. But a very interesting discussion.
Our nation’s Founders created a pretty good system of government by starting from what they wanted to achieve, exemplified by the Bill of Rights, so perhaps we would be wise to base health care reform on a similar footing. Instead, Congress is doing its usual muddled process to produce legislation that is likely to make no one very happy, but at least tries to minimize the number of people made very unhappy. As is too often the case, it is easier to create straw men to attack than to address the real problems. Insurance companies seem to be everyone’s favorite target to demonize, but the “evil” health insurance industry is like the various other players in the health care system: responding to the numerous and often perverse incentives in the current system. There are bad things done to people by insurance companies — as there are done by doctors, hospitals, government, and just about every other player in the health care system. There are both angels and demons working in health care, but mostly it is just normal people. Perhaps ninety-nine percent of the people working in the health care system try to do right by the people they serve, but “doing right” may not mean the same thing to different people.
I am always struck by the difference between the salesmanship of health plans offering consumer-driven health products and the reality of the data.
James Robinson and Paul Ginsburg have an article in the January 27th edition of Health Affairs with an objective review of the consumer-driven movement of recent years.
Here is the central point of the article:
The performance of consumer-driven health care has fallen short of both the aspirations of its proponents and the fears of its critics. Growth of the favored organizational forms, including HDHPs and individually purchased insurance, has been anemic. The forms of insurance and sponsorship originally embodied in the consumer-driven vision have mutated into forms far from those originally envisaged. This process is not unique to consumerism, but one well known to managed care, where the original group-/staff-model HMO was diluted into the loosely structured independent practice association (IPA)-model plan and the sponsorship framework of managed competition into the “total replacement” purchasing format of self-insured employers.
They also point out that:
- Enrollment in HDHP/HSA plans grew from 400,000 in September 2004 to 6.1 million in January 2008–“a large absolute increase but still small in relation to overall enrollment in private insurance.” By comparison, HMOs continue to hold 20 percent of the employer market and POS plans 12 percent.
- “The consumer-driven health care movement has been obliged to dilute its principles in light of the overuse of inappropriate services and underuse of appropriate services in the real world. HDHPs now incorporate elements of disease management for enrollees with chronic conditions; case management for enrollees with complex or comorbid conditions; and utilization management for patients using particularly costly drugs, devices, or procedures. Most of these medical management programs are obtained from the same diversified insurers that offer HMO and PPO products. Indeed, the potential for integration with claims databases is leading insurers to acquire many formerly independent medical management vendors.”
- “The blind spot in the consumer-driven analysis of market performance concerns the importance of coordination in insurance, delivery, and sponsorship. The obdurate insistence on á la carte choice and retail purchasing pushed the theorists of consumerism into positing organizational and market dynamics that have not been observed in the real world.”
Consumer-driven principles have clearly impacted the design of mainstream health insurance plans for the better.
But consumer-driven principles have not changed the fundamental dynamics of our health insurance system nor have they turned out to be a silver-bullet solution.
In my mind, the fundamental fault with the logic that they would be was the belief that consumers could do what insurance companies, employer benefit managers, and even providers could not.
Robert Laszweski has been a fixture in Washington health policy circles for the better part of three decades. He currently serves as the president of Health Policy and Strategy Associates of Alexandria, Virginia. Before forming HPSA in 1992, Robert served as the COO, Group Markets, for the Liberty Mutual Insurance Company. You can read more of his thoughtful analysis of healthcare industry trends at Health Policy and Marketplace Blog, where this post first appeared.