Wednesday, January 8, 2014

What to Hope For in 2014…and Why I’m Not Holding My Breath

I live in the Midwest, so right now I’m looking for things to distract me from thinking (complaining) about the nasty weather.  I might as well try to use my crystal ball and try to look ahead to 2014.  The following are things I hope will happen…and why they might not.

1.  ACA enrollment finishes out smoothly:  OK, enrollment for the Affordable Care Act – or Obamacare – got off to a rocky start, and I won’t rehash any of that. seems to be working better now, and some 2 million have enrolled for private coverage, with another 4 million picking up Medicaid.  Those numbers are below projections, but consumers have until March 31 to sign up, so we may yet see the desired surge of enrollments.  The furor over botched websites and cancelled policies could be forgotten if we end up with the desired millions of new insureds.   

In any event, it remains to be seen whether the insurers will be able to accurately and quickly process the eligibility files; signing up doesn’t mean actually having new coverage.  At least those people will have tried; the 23 states that didn’t expand Medicaid are leaving almost 5 million people without coverage, and that is a tragedy.  

The real concern is whether enough younger, healthier people sign up.  We could end up with no significant increase in the privately insured population, yet with a generally more expensive risk pool, which would mean higher premiums and higher federal subsidies in future years.  That, more than anything, could be the death of ACA.

2.  Health care cost increases continue to moderate: According to CMS officials, national health spending had its fourth consecutive year of moderate increases in 2012.  They don’t credit ACA for this (although the White House was quick to).  The slowdown has been attributed to the recession, ACA impacts, the rise of consumer out-of-pocket exposure, and structural reform on the provider side.  Take your pick; preferences seem to be largely ideological at this point.  It’s still good news – or, at least, not bad news.

It would be nice to believe that we’ve whipped health care inflation, but I’m dubious that much structural reform has truly happened yet.  Moreover, consumers are still very insulated from the actual cost impacts of their behaviors, and are often treated as whiny after-thoughts in the government-provider-payor industrial complex that health care has become.   We have what one expert called a “humongous monopoly problem” in health care, and that bodes poorly for costs. 

There is lots of talk about value-based purchasing, but we’re still only taking baby steps towards it.  Until that is the norm, in significant ways, health care spending is still a danger. 

3.  ACOs start to prove their effectiveness: ACA spearheaded the ACO movement, with over 360 ACOs now established, which are expected to serve 5.3 million Medicare members.  The private sector has followed suit with their own ACO models, and the consensus seems to be that ACOs will continue to spread.  ACOs promise to reshape how we finance and deliver care, focusing more on costs and quality than ever before.

However, initial results of ACO effectiveness are at best inconclusive, and still only impact a small percentage of patients.  In a recent survey by Purdue Healthcare Advisors, 46% of hospital executives have no plans to implement an ACO, as they are nervous about the risk and uncertainty.  That is not to say that hospitals aren’t buying up physician practices at record levels (although the magnitude of this is not entirely clear) as it is to say that such ownership does not necessarily mean the kind of integration and oversight that successful ACOs are thought to need. 

Frankly, I fear many “ACO” efforts are more about locking in market share and/or revenue levels that than are about improving quality/controlling costs.

4.  Virtual “point of care” options continue to advance as viable alternatives: Once upon a time, getting care was clear-cut: you saw your doctor, you went to the hospital (or pharmacy).  As technology has advanced, though, more virtual options have emerged, including email consultations and telehealth (which comes in many forms, such as consultations and remote monitoring).  These options are starting to take off.  Rock Health reported a record $1.97B in digital health funding, while the Consumer Electronics Association sees an $8 billion market in connected health and wellness devices in the next five years. 

But these options remain outside the mainstream.  The hang-ups are not technological but historical – primarily around reimbursement and licensure.  Getting reimbursement for email or video consultation has been slow, both due to providers’ inertia and to payor uncertainty about whether those costs are additive or cost-saving.  They also force the question of whether the provider with whom you might be dealing using them needs to be licensed in the state you happen to live in (as the regulators want). 

Progress is being made – particularly on the state side, although Medicare and the VA have also been pioneers – but we have a long way to go.  The difficulty our health care system has had in rapidly taking advantage of these new kinds of technological capabilities highlight that we don’t really have an effective market for health services, particularly not a consumer-driven one.  Unlike in other industries, technology in health care is often more about increasing revenue for providers, rather than reducing costs or improving convenience for consumers.

5.  The concept of “health insurance” starts to experience “punctured equilibrium.”   For those of you not familiar with Stephen Jay Gould, the noted paleontologist, “punctured equilibrium” is the theory that evolution proceeds in long periods when little happens, interspersed with rapid, dramatic changes.  

On the face of it, ACA would seem to be causing health plans to evolve quickly.  There are new underwriting and rating restrictions for individual coverage, new requirements on “essential benefits” and benefit limits for all plans that should improve consumer protection and the ability to compare plans, and new types of insurers, such as the federally-funded CO-OPs.  We even have at least one health plan – OSCAR in New York – that is trying to be a slick, high-tech, next generation type of health plan. 

Some would argue that the revolution in health insurance is the rise of so-called consumer-directed plans, with higher cost-sharing paired with tax-preferred accounts, and that these are finally paying off with some well-needed consumerism in buying health services. 

All that is well and good, but probably don’t foster the kind of radical evolution that I think we badly need.  In fact, I worry that ACA will have the impact of freezing innovation in health insurance.  Look at Medicare.  Its benefit design is still largely based on 1960’s Blue Cross plus Blue Shield designs, that even BCBS plans today don’t use.  It’s hard to change benefit structures designed by the government.  For example, Medicare only has preventive visits or drug coverage because of commercial insurers were providing those to under-65 insured, and those took decades to deliver.  What we now have may be what we’re forced to live with for some time.

I once had a very smart boss who talked about delivering solutions with a rifle instead of a shotgun.  I.e., targeted to the right people, not hitting everyone around them as well.  Health insurance is pretty poor at that.  We all know that a small percentage of consumers account for the vast majority of health care expenses, yet health insurance is designed largely for to be the same for everyone. 

I think we need to break the concept into constituent pieces, such as financing health care, protecting against financial loss, assuring access to appropriate care, and promoting healthy behaviors, and think about new ways to address them.  Face it: our system of provider charges is madness, our approach of using health plan networks is going the wrong way, and the current tax preference for employer health coverage is a huge subsidy that mostly goes to the wrong people and distorts costs.  That’s just a few of the big problems.  Surely there are better ways, but we’re going to have to think differently about the problem(s) in order to solve them.

That’s my (fairly murky) crystal ball…your thoughts?

No comments:

Post a Comment