Editor's note: H&HN Staff Writer Marty Stempniak is blogging this week from America's Health Insurance Plans' Fall Forum 2012.
CHICAGO — There are a lot of moving parts right now in the health insurance industry. But is what's taking place really sustainable innovation, or just smoke and mirrors?
During a who's who panel of speakers Tuesday at AHIP's Fall Forum, one expert made the case that real innovation isn't taking place. Rather, insurers are just "churning," and waiting for the "other shoe to drop in health care, said David Brailer, M.D., chairman of Health Evolution Partners, who's known as the "first health information czar" for his role as head of the Office of the National Coordinator during the Bush Administration.
"I'm worried. We have a problem where we need innovation more than ever, and I think it will ultimately come down to, will innovation solve the problems in the industry before we hit bankruptcy?" Brailer said. "At the same time, we're in an environment where the willingness to innovate is quite small."
Brailer is concerned that many of the "innovations" in insurance are being dictated from the top down, and not from many of the "radical freethinkers that are buried in organizations." Mergers and acquisitions are driving far too much change — he said such activity is happening at a record clip in the industry — and not experimentation.
"When you innovate through acquisitions as opposed to organically, from the bottom up, I don't think the industry really figures out new things," he said, later adding, "We have the makings for some future leaders of health plans saying, 'What a mess they created in 2012 and 2013, and now I've got to clean it up by selling things and setting things down and going back to, quote, the core business.'"
Joining him in the discussion were Gail Wilensky, a senior fellow for Project Hope and former White House senior advisor, along with Avik Roy, senior fellow for the Manhattan Institute and former advisor to Mitt Romney's presidential campaign.
Brailer said he sees three major types of activity happening in the insurance market now — horizontal integration, with plans acquiring plans; vertical integration, with plans forming partnerships or buying up providers; and health plans becoming information companies, which he calls the most promising trend of the three. He's intrigued by the idea of payers putting to use all the data they have stored up on patients, and becoming enablers of care coordination. He finds little innovation in horizontal integration, but sees promise in the hospital-insurer collaborations (such as payers buying up physician groups), especially if they're about allowing doctors to be more collaborative and integrated, rather than just trying to make a "market play."
Roy thinks one of the fixes for the insurance industry is putting more choice into consumers' hands. He's skeptical about the Affordable Care Act, but thinks, with a little tweaking, that insurance exchanges might allow patients to have more freedom of choice, and take more accountability in their health care decisions.
"The vast majority of Americans don't buy insurance for themselves; it's bought on their behalf by their employers or by the government," Roy said. "So you have third-party spending on health services and then third-party purchasing of health insurance. So it's really a ninth-party health care system that we have, and it can't be any surprise that … nobody is really accountable for how much we consume, and how rationally we consume health care."
Ballooning spending on Medicare means CMS has to cut payments to providers, which just leads to hospitals raising rates on private insurance companies, and consolidation to gain more market leverage, Roy said. He thinks provider consolidation is one of the biggest drivers of health costs "that nobody talks about" and should be addressed.
Wilensky thinks if the government wants to address Medicare and Medicaid's shortfalls, it needs to look to private payers for solutions. They're less constrained by politicians and freer to try experimentation.
"This is really an important time now where private payers can help with innovation because you can do things so quickly without having mother-may-I kinds of discussions with the federal government," she said.
Check back tomorrow for my final report from AHIP's Fall Forum 2012.