Is it Healthcare Reform or Healthcare Payer Reform?

Most people believe that “Healthcare Reform” means reform of the providers, but if you look at the system in total, is the problem with the providers or payers?   Some employers are seeing 20-50% increases in their annual rates; these increases are being passed along to employees in higher rates, decreased coverage, and higher co-pays and deductibles.  The providers claim they are being squeezed with increasing costs and decreasing reimbursements, so this begs the question, “what is happening to the dollars from the increased rates?”  The healthcare payers are realizing increased profits while covering fewer lives, a great business model in these economic times.

In a recent article by John D. Atlas on, he indicates that the five (5) largest health insurance companies scored record profits of $12.2 billion an increase of 56% over 2008.  The article further explains that while profits have increased, payers are covering 2.7 million less lives.  According the Center for Responsive Politics, the insurance industry has spent $77M lobbying to defeat the healthcare reform bill.  Ms. Kathleen Sebelius, the secretary of health and human services, recently took a shot at Anthem Blue Cross for the 39% increase in health care costs when the company made $2.7 billion in the 4th quarter of 2009.   The payers are concerned about keeping their companies in business; guaranteed issue (GI) would put some of the national companies out of business.

What about the new technology and new treatments that are constantly being introduced which can extend lives?  Hospital stays are shorter, outpatient surgery is becoming more common for procedures that once required overnight stays.  New technology and procedures that are minimally invasive are replacing more complicated surgeries.  The immediate thought is that new technology and shorter stays should decrease the cost of healthcare; but what about the increased costs in research and development, technology, and training costs?    

How does this impact the average citizen?  Many studies have shown that people have been forced to reduce the amount of money they spend on healthcare by techniques such as using OTC drugs; home remedies instead of going to the doctor; skipping health checkups and cutting doses of medications; postponing needed healthcare; and not filling prescriptions.   Average citizens are feeling the pinch of the increased healthcare costs through decreased available care, and through less disposable income.

If the government isn’t successful in reforming healthcare through legislation, consumers will force the reform.  Currently consumers are in a silent rebellion, but savvy consumers are starting to shop around.  As the government continues to struggle to make progress, consumers are becoming more educated and “shopping” around for services.  I recently found that by signing up through a national chain’s prescription program that I was able to reduce my medication costs for three months from $105 to $10.  Everyone should review their healthcare options and become informed consumers by looking at their medication plans; asking more questions of physicians related to tests and procedures to understand why they are being done; and generally being a more informed consumer.  

Source: Edison/Mitofsky, National Exit Poll, sponsored by the National Election Pool. Conducted November 4, 2008.

According to The Henry J. Kaiser Family Foundation report in March of 2009, 16% of the U.S. economy is devoted to healthcare and the U.S. spends $7,400 per person each year.  In the exit polls after the 2008 Presidential election, 65% of respondents were concerned about healthcare.  I am confident that of the 33% not concerned, a percentage has moved to the “worried” category.

So what is the next step in Healthcare Reform?  The White House has sent out invites for the health-care summit on February 25 to select Democrats and Republicans in the House and Senate.  The President believes that through bipartisanship they can come to a resolution between the parties to move forward.   There is no doubt that the healthcare system is broken; the question is where, how bad, and how to fix it.  The tactical focus needs to be on reducing the rising costs for healthcare, and then strategically how to provide quality healthcare for citizens at a reasonable cost.  However, do we really want the federal government to be the one to take control of our healthcare? 

What can payers do to remain competitive and viable?  They can look for ways to cut or reduce IT systems costs through modernization, consolidation, or replacement.  Business process improvements can streamline the processes and reduce costs.  Provider, agent, and member portals can be implemented to provide a competitive advantage with better access to needed information.  Through an enterprise data strategy, Payers can leverage the data collected and develop reports and dashboards around key performance indicators (KPI’s), driving improvements throughout the enterprise’s operations.  These changes can put an organization on a path toward measurable improvement; not a bad first step toward badly needed reform.

One thought on “Is it Healthcare Reform or Healthcare Payer Reform?

  1. Pingback: Picis Exchange Global Customer Conference – “It’s All About the Data” « Edgewater Technology Weblog

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