Yesterday’s Wall Street Journal an article written by Janet Adamy deals with the rise in health insurance premiums. As insurers start to assess the costs associated with the additional benefits mandated under PPACA we are seeing the beginning of what many people predicted: higher premiums. We all know that premiums were rising before the passage of PPACA and again I believe health reform is needed but what we are now seeing is how insurers are starting to assess the additional costs for the mandates provided under PPACA and this is where we get “unintended consequences.” The article highlights the premium increases for individual plans. Over the next few weeks we will have a clearer picture of what the landscape looks like for group plans. Between 65-75% of group plans renew January 1 so the renewal rates are now being shared with employers. It is again anticipated we will have double digit increases for group plans and when you include the likely repeal of the Bush tax cuts for 2011, employers will have to make some very serious decisions on how they will remain competitive in the marketplace.
I encourage you to watch and listen to the video above. Ron Williams, CEO of Aetna, is interviewed by Alan Murray of the Wall Street Journal, and Mr. Williams makes some excellent points regarding cost and quality in today’s healthcare environment. If we are to have true reform, we must have a rational payment system that us fully transparent to all parties. The time is now.
I have written the past about the slow adoption rate for innovative technology and solutions in the healthcare payer space. Not much has changed in the way healthcare payers interact with healthcare providers. This will change and it must change. We are starting to see some signs of the “paralysis by analysis” walls are starting to crumble in healthcare. It is an evolutionary process and yet outside the healthcare payer space we see a technology revolution occurring.
For example, today I read in the Wall Street Journal that Amazon announced E-book sales outpaced hardcover sales. A few years ago no one thought it possible and yet it just happened. The ease and convenience of reading a book just got easier. Oh I forgot to mention that Amazon reduced their rate of the Kindle device and of course e-books are cheaper. We don’t see a reduction in healthcare charges whenever new technology is applied. In fact, prices traditionally go up.
If healthcare payers and providers are going to remain an integral part of the future landscape of healthcare delivery they must adopt technology that will continually improve outcomes while reducing the charges for services. Today the providers are still asking for things to be faxed, forms filled out on paper and photocopied, doctors who still handwrite prescriptions that nobody can read.
iphone, ipad, Kindle, Fax…(oops). So long fax. The “paralysis from analysis” wall is about to tumble.
In the July issue of Managed Healthcare Executive there was an interview with Karen Davis, President of the Commonwealth Fund, a private foundation based in New York that supports research on improvements in healthcare. In this interview I was struck by her comments relating to payment innovations. She is quoted in this article “But the bigger issue is whether the public and private sector can work together on payment…Some states may be willing to use their convening skills to bring different parties together to identify a payment model that is more rational instead of having so many different ways of paying. It’s consuming so much in administrative costs.”
I wholeheartedly agree with her assessment. With the recent passage of PPACA all eyes are focused on providing access to 32 million uninsured/underinsured people. However, there has been no attention to developing a rational payment approach to support this added burden on states and individual employers. For years, we have operated on a payment methodology created by Medicare which today is broken, or a system based on contracts based on discounts in return for volume that is no longer advantageous to employers. What do we do? Our current system is not sustainable. Anyone in the business realizes this and we need to change this quickly.
A rational payment process is needed and will be central to the success of a sustainable healthcare system. Since 2001 we have worked on ways to bring rationality to an irrational payment world. The spotlight of the sustainability of healthcare will be squarely on this word “rational reimbursement.”