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). a 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). a
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. a Health Insurance companies want to increase their fee and premium
income while lowering their overall claims payments (NIH, 2017). a 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). a Employers are
at the table discussing these changes with the insurance company. Employer
interests are represented. a 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. a 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). a They
performed a longitudinal study on the effects of CDHPs on patient behavior and
service utilization. a 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). a 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.
