What Will New Care Models, Health Benefits Look Like in 5 Years?

ScopeAt the VHA 2013 Navigating to Excellence Forum in Las Vegas on May 1, 2013, David Cutler, PhD, the Otto Eckstein professor of applied economics at the Kennedy School of Government at Harvard University; Meredith Rosenthal, PhD, associate professor of health economics and policy at the Harvard School of Public Health; Marianne Udow-Phillips, MHSA, director of the Center for Healthcare Research and Transformation and a lecturer at the University of Michigan School of Public Health; and Dan Wolterman, president and CEO of Memorial Hermann Healthcare System in Houston, discussed “Navigating the Regulatory, Economic and Consumer Landscape” of healthcare in a panel moderated by Steve Miff, PhD, senior vice president at VHA.

New care models
The panel kicked off by discussing the future of new care models, in particular, accountable care organizations, and the role of various providers – hospitals, physicians, etc. – in these models.

“I think it’s pretty clear, at the moment, the hospital is in the driver seat,” said Dr. Cutler, adding that he’ll be interested to see if it continues in the future, or if others will “take over the steering wheel.”

In response, Mr. Wolterman quipped, “We may be driving the car, but there’s a lot of back seat drivers.” He added that his health system’s size, a result of consolidation, has led to its role driving new care models. He expects, however, that physicians will eventually take over this role.

Ms. Udow-Phillips added that payors will continue to play an important role in the success of these models, as they play an important administrative role.

Insurance coverage post-PPACA implementation
The conversation then turned to changes in insurance coverage anticipated as the Patient Protection and Affordable Care Act is fully implemented.

“I’m actually quite optimistic about what will happen on the private insurance side of ACA implementation,” said Dr. Rosenthal. “I see us in the early years getting to a place in most of the country where we really see those individual and small group markets doing better in term of premiums.”

Dr. Cutler commented that he believes the decisions of large employers will have a greater impact on the healthcare landscape. “[Employers’] strategy had been to raise cost sharing, which they’ve done quite a lot; I think the next phase will be to really strongly incentivize wellness.” He said that he doesn’t believe large employers are ready to drop health coverage “just yet,” but will penalize unhealthy behaviors, such as smoking. 

Ms. Udow-Phillips was quick to voice her doubt on the benefits of wellness programs. “I happen to think wellness programs are wonderful, but I don’t really think they’ve shown in research they can save money.”

Mr. Wolterman said his biggest concern regarding post-PPACA implementation is that large employers will drop coverage. “The $2k opt-out tax versus premium cost is a concern for me,” he said. As one of the largest employers in Houston, he said his system spends $112 million annually on health coverage for its employees and families. Dropping coverage would save the system $80 million, even with the penalties. “My belief is hopefully Congress will come around and get the tax closer to what the actual cost is so we don’t see an incentive for employers to exit,” he said.

If employers do stop providing coverage, those employees would head to exchanges to obtain coverage, where rates would likely be lower than those under employer-based coverage.

Although the future of new care models and coverage is unclear, the panelists are confident healthcare providers will adapt. “We will survive,” said Ms. Udow-Phillips.

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