Much like tectonic shifts in geology, new healthcare landscapes are being shaped by forces that are under the surface, according to Andrew Croshaw, a partner at Levitt Partners Consulting. He told a packed hall of several hundred that societal tectonics are creating new potential healthcare landscapes.
Among those forces are:
Social Compassion: The Affordable Care Act (ACA) a continuation of the desire of industrialized countries to extend to their populations in the form of health and wellness. Social Security, Medicaid and Medicare are driving the deficit spending that has been going on in this country.
Economic Dispassion: The antithesis of human compassion, a pushing back by bond traders who fund the debt. Deficit spending is being driven by these entitlements, he said. The Congressional Budget Office has projected deficit spending will increase, driven in part by an anticipation that health spending as a percentage of gross domestic product will increase.
The social compassion to extend healthcare is being countered by those who say, this can’t continue, he said. The recognition is that something has to change. The question is, how fast will it change, and the main driver of that will, be the health of the U.S. economy over the next five years, he said.
Government and the ACA: The ACA is increasing the access to healthcare through Medicaid and subsidies, and establishing minimum benefits, regulated through insurance exchanges. The regulations that have been put on the insurance industry has knocked them out of their orbit, forced them to reassess their identity. Many of them are moving to create a new identity as a consequence of that, Croshaw said. He added that the ACA has changed in the past and will continue to change. Factors driving those changes are potential delays in the employer mandate; election outcomes; what can Congress do post-2014 election before the 2016 presidential election to influence the law; and the influence of the courts, such as the Medicaid decision to allow states the flexibility to opt in when and if they choose.
Croshaw noted that there is a legal challenge making its way through the courts saying that the government does not have the authority to distribute subsidies to people through federal exchanges. The law specifically states that those subsidies must go through state exchanges. If the Supreme Court rules that the statute should be interpreted literally, it would essentially neuter the ACA in terms of its ability to extend coverage to the populations, he said.
Croshaw also said that the Senate is up for grabs in the 2014 elections. If it should go to Republican control, this would be a big question of leadership for Republican leadership in Congress: If that they control the legislative branch of the government, should they continue to criticize the bill, or do they shoulder some responsibility to repair some of the aspects of it that our constituents find most important.
Of the potential landscapes, Croshaw pointed to the providers that are entering into risk bearing arrangements with payers. Accountable care activity is robust, but uneven, he said. Until a substantial portion of the covered lives is in some type of risk bearing relationship, it’s difficult for providers to commit into this exercise, he said. It’s important to watch the density of risk-bearing arrangements in the market. The total number of lives that are covered in ACO relationships at about 20 million, but most of the arrangements are upside only at this point, he said.
Croshaw portrayed three potential scenarios for the 630 ACOs that have been formed over the last few years, in an attempt to see if the movement has legs. In the high scenario, some participants figured out the model and demonstrate significant cost savings. This scenario projects 150 million lives in the next four years that are involved in an ACO arrangement. In the low case scenario, CMS doesn’t change policy to be consistent to what the participants feel they need to be successful. As a result, some of the commercial experiments fail, and providers feel they need to be much more cautious. That scenario peaks in the number of participants and lives and will flatten out with a total market penetration of about 23 million lives. The middle scenario takes into account some successes and failures, projecting that 100 million lives.
He identified insurance exchanges as another emerging landscape. March enrollment showed that there was significant catch-up that occurred during the last period of enrollment. Insurance companies say most people are paying their premiums, he said. The young-person demographic is one to watch during the second enrollment cycle, whether young people pull out or pull back in. For the next enrollment period he expects to see more focus on the functionality of the enrollment process.
Croshaw said consumer sovereignty will increase as consumers choose their healthcare coverage and their network, as well as patient engagement from the provider to the patient. This is an emerging area, great promise to shape how healthcare is delivered. Patient engagement is advancing on a variety of fronts, he said. He identified significant trends, including: profiling patients and understanding where the risk is; building the clinical infrastructure to be able to communicate between physicians and inform their thinking at the point of decision-making; providing services in the most cost effective venue, such as retail, the home or clinic; and how to do care management for populations, especially at-risk populations.