4 areas where advisers can make a difference for clients
Employers are simply worn out from all the debate and proposals, counterproposals and partisan politics that have surrounded the issue of healthcare reform since the election. Once the American Health Care Act was pulled from Congress last month, they turned off their alarms and said, “Wake me up when you’ve got something for me to really pay attention to.”
Meanwhile, the only major provision of the Affordable Care Act left to comply with is the excise tax, which has been kicked down the road to 2020. Many still think it won’t see the light of day. So, with ACA compliance no longer a major focus and further health reform still up in the air, what should advisers focus on with clients?
Here are four areas that remain critically important for benefit plans:
1) Prescription drugs. Drugs have been fueling the increasing cost of healthcare more than any other single factor for the last two years, and that trend is only expected to continue. Specialty drugs are the big driver here. Expect that we could see 40-50 new specialty drugs hitting the market annually by 2020. Some of these drugs can truly be considered miracle drugs, offering treatments or, in some cases, cures that never existed before. But, with costs that can often be measured in thousands of dollars a month, an expanding market will require extra diligence to ensure these dollars are being spent wisely.
2) Price transparency. Only about 30% of all healthcare is truly “shoppable,” but within that 30% there are huge disparities in cost — without a commensurate improvement in quality — for many frequently performed procedures. The expansion of CDHPs has improved our consumerism when it comes to purchasing healthcare services, but there is still a lot of room for improvement. The availability of pricing data will help that process along.
3) Cost shifting. Employer plans aren’t generally concerned with factors affecting the individual market, but employers need to be alert to the fact that a strong individual market (including a strong Medicaid program) will prevent some people from jumping on your plan who might have choices elsewhere and also keep the amount of uncompensated care as low as possible. This, in turn, will hold down the need to make up for that uncompensated care by cost-shifting to employer plans.
4) Behavior change. They say the true measure of insanity is doing what you’ve always done and expecting a different result. Well, leave it to healthcare to defy conventional wisdom. Employers have learned that the same strategies of cost shifting that have been used for years are not producing the same results as before, so we have to look elsewhere. The best cost reduction strategy is avoiding cost entirely. Improved population health is a sure-fire way to keep costs down. This is the hard one, though. It involves behavior change and doesn’t provide immediate cost reduction gratification. But it is the true sustainable solution and one on which we all need to be laser-focused.
So, fellow advisers, no rolling over and pulling the covers up over your heads. We’ve got work to do.