Can Insurers Force Better Care at Lower Cost?

InsuranceFierceHealthPayer.com recently published an article that looked at successful strategies to improve health care and lower costs. It mentioned

  • bundled payments,
  • global payments, and
  • accountable care organizations.

But that’s as far as it went, so I added the following response to show other ways that the ACA and changes to the healthcare Payment system can disrupt the Deliver system.

 

The ACA health exchanges are forcing new competition among insurers, causing them to become more innovative and to force new competition onto the health delivery system too.

New Model — The biggest cost savings can come from moving from Sick Care & Disease Management to Health Care & Wellness to prevent much of the need for medical care. Insurers started developing wellness programs for their self-insurers corporate clients to improve worker productivity, and with new ACA incentives they’re starting to promote wellness among individual consumers too. Changing the health delivery model is important, because new doctors from their first day in medical school learn how to recognize symptoms and diagnose and manage disease rather than how to prevent it.

High Deductibles — Insurance policies with higher deductibles  but much lower monthly premiums give consumers new reason to shop around for the best value for care, and I see that as a good think. They still won’t shop in emergencies, but for everything else they can.

Cost Transparency — Even when consumers do want to shop around, previously they couldn’t, because hospitals wouldn’t disclose their secret charges. But insurers are pressuring them to be more transparent and offer one bundled pricing for common procedures. And the ACA now requires hospitals to give patients satisfaction surveys before being discharged. So consumers will soon be able to shop for the best value that includes cost, outcomes, and satisfaction, and this will force hospitals to become more efficient and innovative too.

Medical Tourism — Some insurers are starting to pay for medical tourism, including travel costs and hotel stays during recovery, when the cost and care quality is better in another state or nation. They’re also starting to pay for remote visits by video call and for home modifications that allow people to recover or stay in their own home as opposed to much more expensive costs in a rehab or nursing home. The driving motivation is reducing costs while offering equal or better care.

Offload to Exchanges — As the ACA proves itself, and competition among insurers and providers results in improved costs and services, I expect more employers to eventually drop their group health plans in favor of providing Health Reimbursement Arrangements (HRAs) and encouraging workers to shop for their own insurance on exchanges instead. IBM already did this for Medicare-eligible retirees, but this could be a national trend similar to replacing defined-benefit pension plans with defined-contribution 401(k) plans. I see great economic benefit in removing the dependency on the employer. Workers will be more free to seek better jobs elsewhere, so employers will have to work harder to keep them with competitive pay and benefits. Workers will also be better positioned to start their own companies if they choose.