Value in healthcare and healthcare financing is a hot topic.For
many, health insurance through an employer is financing
mechanism for their healthcare needs (Shi, 2019).Medicare and
Medicaid are government sponsored programs for vulnerable
and elderly populations.Because of the government’s role in
administering, licensure, reimbursement negotiations, and other
regulatory responsibilities; it is apparent the government has a
large and important role to play in setting industry regulations
and standards of practice (Shi, 2019). Maintaining best
treatment practices for providers is a crucial function of various
government agencies (Shi, 2019).This post will focus on how
the government can play a role in advocating for health
insurance subscriber’s best interests, while negotiating cost
efficiency between employers and insurers to increase overall
healthcare value for patients.
Most often, private insurance is offered through an employer as
part of a compensation package (NIH, 2017).Now, in theory, the
employer should be shopping around insurance carriers looking
for the best options of provider networks and cost for the total
employee group.It is always in the best interest of the
employer to either lower the over healthcare cost and their
portion of the cost share (NIH, 2017).In theory, employers are
supposed to find a balance between cost and quality options for
their employees (NIH, 2017).
I work as a large group underwriter at Blue Cross Blue
Shield.Drawing from my professional experience, here is the
perspective of the health insurance company.Health Insurance
companies want to increase their fee and premium income while
lowering their overall claims payments (NIH, 2017).From a
business stance, this makes sense – increase income decrease
output, more profit.If employers will negotiate down their fees
and income, health insurance companies often respond by
adjusting plan richness and cost share ratios between employer
and employees (IBM Watson Health, 2018).Employers are at
the table discussing these changes with the insurance
company.Employer interests are represented.Health
Insurance company’s interests are represented.Unless the
employees are in a union, they (while paying the lion share of
the negotiated premium) do not get to partake in the
negotiations about coverage levels and premium and fees.
For most employees in the US, health insurance equates to
access to health care services (IBM Watson Health, 2018).An
employee contract holder’s interest is not only lowered overall
cost, but also in plan richness.From the employee’s
perspective, the more coverage for lower cost is the
goal.Employees want nuance in the cost containment – always
keeping access and coverage as top of mind.Employers
generally want lower overall cost, regardless of access or
coverage.Insurers want higher premiums and fees and lower
coverage and claim payments.
Because employees cannot be in the negotiating discussion, the
government need to set basic coverage standards that employer
s and insurers cannot go below.An example of this in action is
CDHPs.IBM Watson Health published research, utilized by the
NIH in 2017 (IBM Watson Health, 2018).They performed a
longitudinal study on the effects of CDHPs on patient behavior
and service utilization.What was found was that even with
mandated coverage of many health maintenance services,
patients with chronic diseases were less likely to seek care for
their conditions (IBM Watson Health, 2018).The reasoning
boiled down to the cost sharing arrangement.
CDHPs ask for the employees to pay out a certain amount
upfront for healthcare services out of pocket before the plan
kicks in (IBM Watson Health, 2018).The cap on out-of-pocket
costs for these plans is often in the double digits (IBM Watson
Health, 2018).However, for the insurance plan and the
employer, these plans are a great way to cut their costs.
The government can affect the negotiations by raising the floor
for what must be covered and what these plan structure can be
through regulation and reimbursement negotiations.The
government can do so from a perspective of advocating for the
interest of the employee or subscriber.
Value in healthcare is a combination of access to necessary
care, cost transparency, and cost containment.Without the
employee/subscriber in the negotiations, their interests get lost
to the overall cost equation.
IBM Watson Health. (2018, April 4).The impact of consumer-
directed health plans on costs, utilization and care.
Https://Www.Ibm.Com/Downloads/Cas/M52VGBWX. Retrieved
May 24, 2022, from
https://www.ibm.com/downloads/cas/M52VGBWX
NIH. (2017, June 27).NCBI - The Long Term Effects of
“Consumer-Directed” Health Plans on Preventive Care Use.
Https://Www.Ncbi.Nlm.Nih.Gov/Pmc/Articles/PMC5583027/.
Retrieved May 24, 2022, from
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5583027/
Shi, L. & Singh, D. A. (2019). Essentials of the U.S. Health Care
System (5th ed.). Jones & Bartlett Learning.Burlington, MA.
