New projections are reinforcing expectations that the working family portion of health insurance premiums will rise by double digits, once again, in 2011. As these costs increase, families struggling, already, with wage stagnation and high ratesof unemployment will cling even more tenuously to their grasp on a middle class standard of living.
The consulting firm, Aon Hewitt, recently projected health insurance costs to rise by 8.8% in 2011. Aon Hewitt also projected family health costs to rise by 12.5%. This is because employers are seeking to stem the bleed of their health benefits expenditures by capping the dollar amounts of their contributions and shifting cost increases almost entirely onto employees.
Federal health reform will be expanding access to health care insurance for millions of Americans who need it – and that’s a good thing – but it won’t be reducing the growth in the costs of care. At least not this year.
And probably not next year.
On it’s own, the 2010 federal health reform is unlikely to stem the rising cost of health care, at all.
The federal health reform law has provided a menu of incentives and opportunities for launching cost-saving transformation in the way private sector health care is delivered and paid for that could save American workers and businesses tens of billions of dollars each year. But the bold decisions that are needed to transform private sector health care into a better coordinated, cost-efficient, high-performance care delivery system have yet to be made.
The time for action is now – but the pending set of decisions that need to be made won’t be made on Capitol Hill. They’ll be made in state capitols, in provider practices, and in private sector health plans (self-funded union and employer plans and commercial insurance plans). That’s where the struggle for cost-saving care delivery transformation will be enjoined between now and 2017.
Sure, the exchanges will only apply to the individual and small group markets, for now -- not to the large group employment-based insurance plans that cover most Americans. But well-designed exchanges can harness market competition to drive high-performance delivery system innovation and introduce a dynamic contrast within insurance plans between the efficient, modernized care delivery models and the inefficient, old “volume over value” fee-for-service delivery model. Why sustain both?
And in 2017, the federal health reform law gives states another critical decision to make: whether to allow large groups to purchase health insurance in the state exchanges.
Some health plans and providers are already undergoing a process of self-transformation to modernized, team-based care delivery networks. Innovative self-funded health plans, like those at IBM, Textron, and Johnson & Johnson , and successful integrated health plans like Kaiser Permanente, Cleveland Clinic, and Geisinger Health Plan have demonstrated that delivery system design that focuses on alignment of provider and patient incentives to adopt best treatment practices and care delivered by physician-led patient care teams yield substantial savings over the fragmented care American’s typically receive in fee-for-service health care.
In states like Pennsylvania and New Jersey, groups of independent primary care providers are bootstrapping themselves into becoming team-based care providers capable of offering patient-centered, coordinated care that has proven to dramatically cut growth in costs, while producing impressive improvements in care quality. Primary care providers are pioneering similar innovations from Washington State to North Carolina.
Will savings be passed on to health care purchasers – businesses and working families -- if transformation of care delivery accelerates along these lines? Or will prospective savings be reaped as windfalls by for-profit insurers and providers?
That depends on who steps up to lead the care delivery transformation between now and 2017. Businesses and unions that build, partner with, or contract directly with the most innovative, team-based health care provider networks will be in a position to share in the savings that result.
Will working families benefit? That will depend on how prepared employers are to pass along the savings to workers, when they occur, just as this year they are passing along the costs.