We ve seen the future: insights into the dynamics of the reformed health care market

Transcription

1 We ve seen the future: insights into the dynamics of the reformed health care market Ellen Zane, Vice Chair of the Board and CEO Emeritus, Tufts Medical Center, Boston July 13, 2012

2 What we know Two main cost drivers: price and utilization Utilization is down Major price differentials exist among providers(among hospitals and physician groups) Healthcare is not your standard market Leverage drives the market Wealthier patients get more expensive care 2

3 Price differentials still exist BCBS health status adjusted 2010 TME by Physician Group Source: MADCHFP 2012 Premium and Expenditures report 3

4 More patients go to the high-cost providers Distribution of member volume by physician group TME Source: MADCHFP 2012 Premium and Expenditures report 4

5 Healthcare is not your standard market Leverage not quality or price - drives everything The middle man (insurer) is often the one with the most leverage The lowest price does not drive volume Very little transparency for end users (employers and patients) 5

6 What s really behind a market that is working Premiums are leveling off Yes, but Utilization is down Benefit buy down is occurring High deductible plans shifting costs to consumers 6

7 What s really behind a market that is working We see growth in alternative payment methods Yes, but Does not always lower costs Insurers still hold the reserves, even as they transfer risk Physicians shielded from risk aren t incented to change behavior Adoption of new models does little to change underlying price differentials Some level of FFS will always be necessary 7

8 What s really behind a market that is working New plan designs offer choice and cost savings Yes, but Employers reluctant to make changes No incentive for low cost providers if volume doesn t follow Managed care may cost more (e.g. AQC) Providers can t always get the info they need to manage populations 8

9 Leverage remains the name of the game Market power is the biggest factor in driving health care prices Insurers: sometimes only one major player in state De facto regulators Providers: physicians groups have immense power They will be integral to ACOs and integrated care Decision making on referrals is very much driven by financial considerations and relationships Key groups can be shielded from risk by powerful systems eager to get access to their patients 9

10 Market power drives volume and price Global payments and risk-based contracts aren t leveling the playing field Leverage is still the driver on commercial rates Providers with high Medicaid have no leverage Their patients are lower-income and have greater health challenges Yet they are paid the least, with low government payments AND low commercial payments 10

11 Follow the money Total Medical Expense (TME) is a critical indicator a measure of the total spending of medical care for a covered population Measured by provider: tied to leverage, not quality or value Measured by community: low income communities are subsidizing the high end communities, low income communities not receiving the same health investment of high income communities This equation must change to achieve improvements in health and long-term sustainable healthcare savings 11

12 The wealthier you are the more your health care costs the system Highest income Lowest income Source: MA AGO 2011 healthcare cost trends and cost drivers 12

13 Conclusion Much of the health care market is hidden from public view More sunshine and scrutiny of insurers as well as providers very much needed for real reform In policy-making, beware the law of unintended consequences 13