Health for life

The health care commentariat are all wee-weed up over the just-released Kaiser Family Foundation survey on employer health benefits.  The report, based on telephone interviews of a representative sample of more than 2000 employers, shows that the cost of employer-provided insurance has increased by a whopping 8-9% this year. 

Supporters of Mr. Obama and Affordable Care Act argue the increases have preceded the chief provisions of the ACA and are the best evidence to date that federally-led health orm is necessary.  In the meantime, foes of Obamacare are glomming onto the increases as proof that current and anticipated federal mandates are doing nothing about the underlying causes of cost inflation and are ruining any hope of slowing it down. 

And so the debate goes on and on.

Unlike the political class, the DMCB has never found that there is any "single" culprit or simple explantion when it comes to health care cost trends.  In this instance, the 8-9% increase is likely due to variations in the underwriting cycle and a combination of insurance and provider market forces. They include new (and expensive) technology, an aging workforce, continued reliance on fee-for-service mechanisms, grabbing some additional  rate before federal oversight increases, the cost of covering all those college students and other various mandates.

But the perceptive DMCB will offer up one more cause: the provider equivalent of the insurer "death spiral."   If insurers are having a bad year thanks to increased claims, they can be forced to increase their prices.  In response, persons who dont need insurance exit, leaving only the persons who must keep the insurance because they know they are a bad risk. That leads to another bad year, another price increase and more exits until the insurer is left with a small book of business that is unaffordable.

Thanks to 1) 9% unemployment leaving persons without health insurance, 2) high "under" employment also leaving persons without insurance and 3)  high out of pocket expenses for those who do have insurance, the DMCB suspects many more persons with a choice are electing to not go to the hospital or the doctor.  That leaves fewer persons, but theyre sicker, higher cost and unable to pay. Less margin, bad debt and fixed costs are forcing providers to increase their rates. 

While this a arguably a form of cost shifting, the DCMB doesnt believe that term adequately captures what is going on.  If its right, the lower frequency of claims with a much higher severity could point to a true spiral and next years increases will also be unexpectedly high.  In addition, once the economy improves and all that pent-up demand can be addressed, itll get worse.

Combined with everything else going on, this doesnt bode well.

When accountability fails

"Accountability."  Everyone wants it, right?

While its one thing for health care providers to be "accountable" for costs, its another for them to actually make money at it.  The Disease Management Care Blog is continuously amazed at how many physicians and administrators believe that dollops of "primary care," "prevention" and "wellness" will empty hospital beds and cause insurance money to appear like the morning dew on a windshield of a physician specialists BMW. 

Believe that and the DMCB has an ORD-SFO United Airlines upgrade "departure management card" it would like to sell you.

If the DMCB could do only one thing to reduce costs within one fiscal year for a health care system , it wouldnt be PCPs, wellness or prevention. Instead, it would place one vastly overpaid case manager in every emergency room in the network.  His or her job would be to find alternative levels of care for persons that dont really need to be in the hospital and begin discharge planning for those who do.

The second thing the DMCB would do is implement predictive modeling.  Thats why its immodestly tooting its horn and suggesting research like this is so important.  In this web first publication, Chris Hollenbeak, Mark Chirumbole, Benjamin Novinger, Frank Din and your humble DMCB examined the baseline demographic data and medical conditions that can predict the likelihood of a future high cost hospitalization within a Medicaid population.  Armed with knowing which of its patients are at risk ahead of time is a critical level of intelligence for any newly "accountable" hospital, clinic, IPA, PHO or IDN.  By reaching out to high risk individuals prior to any crisis, physicians and administrators can engage these patients in outpatient settings and keep them away from the emergency room.

The good news is that the art and science of predictive modeling is within reach of most data bases, desk-top computers, statistical software packages and trained analysts.  The bad news is that interpreting and executing on that information remains a daunting challenge. 

Health systems like HealthCare Partners is a good example of how it can work well.  As this "accountability" movement in health care evolves, the DMCB will undoubtedly learn about other good examples. 

The systems that rely on vague notions about primary care, fail to understand the role of case management and ignore the business case for predictive modeling will form the bad examples.