Insurance & Coverage

The Centers for Medicare & Medicaid Services estimates that Medicare and Medicaid enrollments will grow by 57 and 71 percent, respectively, from 2006 to 2022, whereas enrollment in private insurance will grow by only 6 percent. 5

PricewaterhouseCoopers estimates that 50 percent of health systems have applied or intend to apply for an insurance license. 6

When we asked privately insured adults with deductibles if they could afford them, more than two of five (43 percent) said their deductible was somewhat, very difficult, or impossible to afford. One rationale for adding deductibles to health plans is that they will create disincentives for consumers to use health care that might be of limited value, thereby lowering costs and limiting premium growth over time. But the survey finds evidence that deductibles also create disincentives for people to get needed care. 7

While relatively few covered workers at large employers currently receive benefits through a private or corporate health insurance exchange (3 percent), many firms are looking at this option. Private exchanges allow employees to choose from several health benefit options offered on the exchange. Thirteen percent of large firms are considering offering benefits through a private exchange and 23 percent are considering using a defined contribution method. 8

Over the past few years, forces have been aligning to make offering a health plan look increasingly attractive to health systems. Today, 13 percent of all U.S. health systems offer health plans in one or more markets. However, history has shown that it is quite difficult to reach the level of payer-provider integration needed to succeed. A key challenge is ensuring that the provider-led plan offers a differentiated value proposition and strong branding, especially if it includes a narrow network. 9

PPO plans remain the most common plan type, but enrollment in high-deductible plans with a savings option has increased significantly. 8



The transformation of health care toward more integrated and accountable delivery systems has brought physician practices and other physician enterprises into health systems, as partners and collaborators, in unprecedented numbers. With this shift has come a need to rethink and engage the leaders of these medical enterprises in new roles, including their participation in physician organization governance. 10

High-performing organizations are increasingly reporting to physicians how their personal performance compares with that of their colleagues and providing those data in ways that intensify peer pressure. Some organizations now post individual physicians’ quality-performance data publicly on their websites. Whether consumers are using these data to make decisions is unclear, but doctors, knowing that their performance is on public display, are strongly motivated to improve. 11

U.S. physicians typically are not trained to meet patient needs related to problems that are not fixable ­— for example, frailty, aging, gradually worsening chronic illness or terminal illness. Two critical skills for clinicians to gain are how to ask the patient questions and how to listen to what the patient says, preferably with the physician talking less than 50 percent of the time during the patient’s visit. 12

In the United States, we have more specialists than generalists. While increasing the number of primary care physicians has been linked to lower mortality rates, increasing the supply of specialists has not. The reimbursement system, professional lifestyle and our beliefs about expertise reward specialty care physicians over primary care, creating a perverse incentive to create more specialists. 13

Physicians anticipate that value-based payment models will equal about 50 percent of their total compensation in the next 10 years. But they are reluctant to participate, preferring the status quo, and are concerned about the consequences of financial risk (e.g., being held accountable for things out of their control). 14


Political Issues

The Obama administration pledges to tie 50 percent of payments to quality by 2016. This announcement commits Medicare to fast-track the much more sensible approach of tying payments directly to the quality of care delivered to the patient. On the other hand, the plan heavily relies on the success of accountable care organizations — success that has yet to be fully realized. 15

Health & Human Services Secretary Sylvia Mathews Burwell announced a bold initiative aimed at moving half of all Medicare payments away from traditional fee-for-service reimbursement by 2018 and replacing it with incentive-based payments encouraging higher quality and lower costs. Of broader significance than this initiative, potentially, is a shift in Medicare’s role from a bill payer to a more proactive force, with the program using its purchasing power and leverage to drive positive change not only through Medicare, but also in the private sector. 16

The American Hospital Association argues that recovery audit contractors have chosen to focus on inpatient claims because of the financial incentives created by these contingency fees. Inpatient claims are generally high-dollar compared with outpatient claims and, therefore, make the most lucrative targets for a contractor that receives a percentage of the claims it denies as improperly paid. 17

MedPAC recommends limiting payments to hospital outpatient departments. MedPAC states as its general position that Medicare should base payment rates on the setting in which beneficiaries have adequate access to care at the lowest cost to the program and beneficiaries. Hospitals submit yearly data reports to Medicare that allow CMS and others to compare actual costs incurred by the hospital with the amount paid for the services provided. There are no similar centralized sources of data on the cost of performing services in other settings to help determine which payment system most accurately reflects the cost of providing services. In addition, differences between payment systems, and which items are covered by a single payment complicate the application of rates from one system to another. 18