We anticipate dramatic government-driven change (once again) in our industry in 2017. The new Administration and the 115th Congress have clear intent and many opportunities to fulfill their commitment to repeal and replace the Affordable Care Act (ACA). From any angle—political, legislative, budgetary, actuarial, administrative—ACA repeal and replacement options are fraught with complexity and challenges. But we expect major legislative and executive branch developments which can lead to market uncertainty and disruption.
For many health plans, potential post-ACA market scenarios look attractive. It’s too early in the legislative process to get giddy, but many in the industry see the long-term potential for amplification of the role of private insurers; reduced regulation; decreased commoditization; line of sight to profitability in the individual market; and upside in Medicare Advantage and Medicaid lines of business, among other favorable developments.
While many of the longer-term scenarios seem enticing, the question remains, how do we get there from here? Uncertainty and confusion—seldom favorable developments for markets—seem likely to persist for some time. We anticipate that our clients and our professionals will invest substantial time and energy in 2017 on the fate of the ACA, on what might follow, and the resultant implications for markets and companies.
Meanwhile, as health plans navigate in this uncertainty, they must still contend with the structural challenges of the current market. Health plans should continue to:
- Drive affordability. A growing share of the cost of US health care is shifting to consumers, who are responsible for an increasing portion of insurance premiums, and more importantly, for skyrocketing deductibles. In a recent conversation with a health plan CEO, he noted that consumers having skin in the game is a positive development– until consumers don’t have any skin left.
- Solve the consumer engagement riddle. Earlier this year, we published a study that found personalized interactions with their providers and plans were most important to health care consumers. They want the ease of access and contact with their health plans and providers that they routinely encounter in their retail interactions. Health plan should find ways to help consumers interact more readily and efficiently with the hospitals, clinicians, and pharmacies they use. Improving customer service, providing greater transparency on pricing, and developing easier access to medical information and options are steps in the right direction. But health care may be the hardest of all industries for consumers to understand and act as rational decision-makers.
- Leverage technology. Incorporating big data, building better analytics capabilities, and integrating transformative digital systems remains a challenge for the industry. Block chain, the distributed ledger technology, is catching on in the financial services and technology industries, and it could gain a foothold this year in health care. Blockchain simplifies and streamlines the management of contracts, record-keeping systems, and billing, among other potential benefits. On a more mundane but even more important level, health plans must continue to modernize legacy systems that are often built on 1990-era technology platforms.
- Promote value. The shift from paying for volume of services to paying for value is accelerating. Health plans are taking leadership roles, working through new arrangements with hospitals and physician groups to elevate quality, create a more efficient system, and meet the needs of consumers. This will continue as an important trend in 2017, particularly as the new Medicare physician payment program known as MACRA begins its phase-in. MACRA has the potential to truly transform the ways that doctors are rewarded—and therefore how they behave. This is a game-changer that so far seems to have flown under the radar.
Simply put, those in the health plan business will need to walk and chew gum (and maybe juggle bowling balls) at the same time. They will likely need to participate in health reform in Washington, DC, and make a host of strategic adjustments based on ACA repeal and replacement developments. At the same time, health plans are looking to win in the market of 2017: selling products, partnering with care providers, supporting challenged consumers, improving technology platforms, and doing their part to manage health care costs that are once again on a rapid rise.
Our most confident prediction: no one in the health insurance industry will be bored in 2017.
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