If Costly Care Is the Elephant in the Room, What's the Insurance Industry?

December 23, 2010
Jeff Kaplan, MD

Although new regulations governing the insurance industry will soon take effect, we still face rising costs and uneven quality of care.

Isn't this disgusting? I challenge you: find the posse ad esse (possibility to reality) of health care as a right and health care reform anywhere in the following summary from the TriZetto white paper “Transforming Your Business in an Era of Healthcare Reform: Four Imperatives to Payer Success in an Evolving and Competitive Environment,” which sees the impact of healthcare insurance as affecting payers in three waves:

  1. In 2010, new legislative rules came in to effect, contributing to an increase in payers' cost of doing business -- they had to expand dependent coverage and restrict appeals, rescissions, and annual and lifetime limits.
  2. In 2011-2013, they will be made more accountable -- medical loss ratio (MLR) regulations, market-place exchange models, measuring and monitoring, ICD-10 coding, price transparency, and studies of what they do (or don't do) and outcomes.
  3. 2014 will see $8 billion in new taxes that had been promised to offset the financial burden of millions of new insured. By that time insurance exchanges will be fully in effect and "payers will need to have evolved into strong consumer marketing organizations, with the ability to compete on many additional differentiating purchase drivers, in addition to price."

Thus, the insurers will be taking less off the top and paying more for health care coverage. At the same time the natural cost of care will rise inexorably because of the technological imperative, insatiable patient demand and impatience, the insidiousness of the threat of malpractice, and physician-induced demand generated by the inefficient oversupply of physicians, especially in the specialties. All the while, health care quality is uneven, attended by the disconcerting, palpable, unexplained variation in the practice of medicine. So, we are spending more to the point where health care is unaffordable, and we are getting less. Where does that leave the patient? Certainly floundering and unsure of where to turn. Indeed, from the cost to the quality or outcomes of care, we can no longer afford it; that is the elephant in the room.

From my perspective (a 30-year veteran physician executive), the syllogistic logic of these issues ought to be inescapable -- to help the patient, health care quality must be maintained if not improved (outcome measurement and monitoring is critical) and cost must be decreased at the same time through efficiency, discretion, and giving patients what they need (ie, better value for health care). For more on this, see "What is Value in Health Care," where you will hear, once again, that the incentives in health care must be aligned and there must be accountability for substandard care.

For more on health care as a right in the context of reform, see "The Right to Health as the Unheralded Narrative of Health Care Reform" by Eric A. Friedman and Eli Y. Adashi, which claims that “The commitment of the United States to the right to health remains ambiguous."

The point of this and previous posts is that health care is a right and doing it right is the role of management. Managed care should be about providing the right care at the right time and place, and the real bottom line is the patient.

I'm getting tired of the political rhetoric; aren't you? I think, “It's the Patient, Stupid!” will be my new motto.