Unlikely Allies Fight Rising Insurance Costs

Just the mention of health insurance these days can provoke strong emotions and create stress. Rising healthcare costs and the unknown full-force of the Affordable Care Act have put businesses and individuals on edge. Congress may have avoided one “fiscal cliff” for now, but people wonder if there isn’t another cliff of healthcare reform with a bigger chasm looming just around the next curve in the road.

There are a number of players in the changing healthcare reform lineup. The President, Congress, healthcare providers, facilities like hospitals and care centers, and the insurance companies are involved in the game. They can at the same time appear to be playing together or on opposing sides. There is plenty of finger-pointing in the blame game.  

According to an article, “The Health Insurance Company is Your Friend,” by Todd Hixon, the teams are shaping up this way—The Providers and the Payers. Simply put, providers are those who provide healthcare, and the payers are the ones that, well, pay for it. The article suggests that insurance companies will be allies with the payers in the efforts to reform the healthcare system and reduce costs. Hixon reports over-use of advanced (and expensive) healthcare services and high provider earnings as the two main targets for bringing down costs.

Initiatives like Managed Care in the 1990’s were an attempt to hold the line on costs. Providers fought back by merging hospitals and hiring primary care physicians so that now, 40 to 50 percent of primary care physicians work for hospitals. These factors, according to Hixon, are responsible for driving up payer costs. 

The next form of consolidation, giving more control to providers, is the creation of Affordable Care Organizations (ACO) which is part of the Affordable Care Act (ACA). Healthcare providers take on the role of insurers, since they are responsible for healthcare and for paying the providers within their organization. This arrangement takes health insurance companies out of the picture and leave payers without an ally at the negotiation table when determining costs and covered expenses.

Another warning sign, Hixon said, was the reaction of the stock market once the ACA was passed by Congress. Hospital stocks went up; insurance companies went down. Did the stock market declare the winner and loser in this game? If so, he suggests, payers will need to align themselves with the health insurance companies and bring their “A” game to hold the line on healthcare costs.

New medical procedures and high-tech equipment, along with advances in care and treatment have a higher price tag. Left on their own, payers could be at the mercy of medical care conglomerates that control health care services, their costs and how they are distributed between providers and payers. Hixon suggests that payers will find their champion in health insurers and plan sponsors. An unlikely team, perhaps, but one that will have a fighting chance against the heavy hitters of healthcare reform. 

Photo Source:  Freedigitalphotos.net