The Grassroots Health Care Revolution
Unlike the current system that revolves around specialist doctors, hospitals, and insurers, the new model centers on the employee, the consumer. The new delivery model listens first to the voice of the customer. It is patient-centric.
Chapter 1: Go or No-Go Under ObamaCare?
Best-practice employers in the private sector deliver health care for a total cost between $8,000 and $10,000 per employee. … Employers who haven’t applied management disciplines to health care often pay more than $20,000 per year.
Soft Costs: Legal Fees, Turnover and Recruiting
Hard Costs: Suppose an employer currently delivers health care at a total cost of about $8,500 per employee, which is tax deductible to the employer and tax exempt to the employee. If it drops the benefit, it would have to give an employee a taxable raise of more than $14,000 to buy an equivalent policy.
Suppose, instead, that a company wanted to drop coverage but be cost-neutral with its current expense of $8,500 per employee. In that scenario, it would limit the raise it gives to an employee to buy a policy to only $5,700. … Unfortunately, in most cases, that added compensation of $5,700 would not be enough to buy an equivalent policy on the exchange.
ObamaCare is insurance reform, not health care reform.
Chapter 2: Private Payers Forge Disruptive New Business Model
- Elevating their employees from passive, entitled recipients to engaged consumers
- Insisting on transparent prices and quality
- Creating incentives and disincentives and a culture of smart consumerism
- Moving business to the highest-value providers
- Treating health care vendors with respect, but demanding performance
- Creating a culture of fitness and health at their companies
- Making workforce health and health costs a strategic priority
Employers and employees are the only health care players with a deep mutual interest in a long-termgame plan. They are in a health care compact for many years.
The Steps Companies Are Taking
Companies with work forces as small as ten people are racing toward self-insurance as a first step, thereby assuming the risks, responsibilities, and rewards of keeping costs in check.
Their second step has been to roll out consumer-driven plans that engage employees in becoming responsible users and buyers of medical services.
That, in turn, requires data sleuths, known as transparency and analytics vendors, who collect and slice and dice the medical charges and outcomes from many health care transactions to shine a light on prices and quality. They offer clear comparisons of costs and quality. It is a new lens that allows consumers to make sound decisions on where to get care.
The payers’ fourth step is to contract for rigorous on-site providers to manage health. Their health teams tackle chronic diseases, believed to cause 80 percent of health costs.
Chapter 3: Three-Year Game Plan Can Flatline Company Health Costs
First, it does little good for a company to adopt innovative practices that save money if it is fully insured. The savings go to the pool of insured companies, of which it is only one member. The pool structure does spread the risks of expensive cases, but the insured company gets only a sliver of its own savings. You’re married to stuck-in-the-mud companies.
Ergo, as Play One, private companies need to wean themselves off indemnity plans and move to self-insurance. … They offset the risk of getting hit with an expensive episode of care by buying stop-loss insurance to protect against catastrophic claims.
Play Two injects incentives and disincentives into the behaviors of employees. … When the deductible is set higher – the median appears to be about $2,500 – employee behaviors change on a dime. A Health Savings Account (HSA) or a Health Reimbursement Arrangement (HRA) usually offsets the high deductible, so the out-of-pocket expenses by an employee can stay about the same. But it’s the employee’s money in the accounts, and that makes all the difference.
Example: Why would an employee spend $3000 of his own money for an MRI when the same procedure can be purchased for $525? Or go to an emergency room for $600 when he could go to a clinic for $160?
Self-insurance takes some planning time because the company has to pick the best network of providers for its employees. The network can be acquired through a health plan, through a TPA – Third-party administrator – or can be put together through a collaboration of employers. Claims processing can also be bought from multiple sources. … The big deal is choosing a high-value network with lots of choice and the right geographic alignment.
Play Three needs to follow shortly behind the engagement of the employees as smart buyers of health care. It’s the transparency piece. … You can’t ask people to be intelligent consumers without giving them good information.
The next step, Play Four, is to promote Centers of Value. Play Five is to Price in Bundles, and Play Six is to offer On-Site Health Clinics. Even though it hasn’t happened broadly yet, some smaller companies team up in joint clinics.
Play Sevenfollows from Play Six. With an on-site health team offering intimate, holistic care to members, rigorous face-to-face management of chronic diseases can be launched and attained. Ie Manage Employee Health
Finally, … Play Eight is to treat health as an asset – a personal asset, a corporate asset, and a financial asset.