Op-Ed

Value Healthcare Could Change America

Four-fifths of companies with more than 200 employees now self-insure. Huge savings result.

By - Jul 19th, 2016 11:34 am
Sign-up for the Urban Milwaukee daily email
Access HealthNet homepage.

Access HealthNet homepage.

As ObamaCare sputters its way to an uncertain future, a new business model called Value Healthcare continues to emerge.

Self-insured private payers, entrepreneurs, lean hospital systems and the big dog payer, Medicare, are the main drivers toward a revamped delivery model for health care in America.

It is not completely understood that it is “game over” in the stampede by private companies who are going self-insured. The big health insurers have been removed from group coverage in the private sector. Four of five companies over 200 employees now self-insure. They “underwrite” their own risk of covering care.

That massive change in the payer firmament opens the doors for all manner of entrepreneurial innovation. Here are two examples among many:

  • One new Milwaukee company, Access HealthNet, now offers 850 “bundled prices” to self-insured employers. The all-in price of those standard episodes of care are always in the bottom quintile of a price range of 400% top to bottom. For instance, a joint replacement can be sourced for $26,000 to $28,000 in southeastern Wisconsin, compared to average prices in the market of about $47,000.The value price is below $20,000 in other markets.
  • A Waukesha startup, Intellivisit, (disclosure: my early stage fund is an investor) is offering virtual diagnoses to patients of providers for $40 or less. A powerful artificial intelligence engine assesses symptoms and feeds likely diagnoses to advanced nurses or doctors for a final determination of what to do for the patient. It’s telemedicine on steroids. Costs and prices per visit drop, and quality improves with better diagnosis.

Huge savings should flow as these companies gain market acceptance. That is Value Healthcare.

Best-practice private companies are already delivering coverage for less than $15,000 for a family, compared to the national average of more than $26,000.

Meanwhile, ObamaCare (ACA) gets a “C” grade at best. Here are some of the mixed results:

  • Premiums for individual policies are jumping at unsustainable double-digit rates on the ACA exchanges in many states. The federal subsidies are often not enough to offset the inflation in premium prices.
  • Families with those exchange policies are getting hammered when they need high-priced procedures that hit their high deductibles and co-insurance. How many families can shell out $6000 for a hip replacement?
  • Major health insurers are fleeing the exchanges, because they lose money when coverage mandates abound and issue is guaranteed to all comers.
  • Two-thirds of the cooperative insurers created under ACA have gone bust, costing taxpayers billions and proving that government supported businesses seldom work.
  • Access has indeed improved under ObamaCare, but nowhere near as sharply as its authors intended. There were some 46 million uninsured Americans ten years ago before ACA. Today’s estimate is still high at 33 million. It’s a partial victory at best.
  • Medicaid, the primary method for covering more poor people under ACA, is crowding out other strategic priorities at the state level, like spending on education, public safety and the environment. That is so even though Medicaid reimburses health care providers at rates that would put them out of business. They make it up by raising premiums to private payers. Medicaid managers have not adopted the major reforms that have helped companies and the nation reduce the rate of inflation in health costs.

Medicare, on the other hand, is making moves toward Value Healthcare. Ironically, local governments and school districts have led the way to the new business model for the delivery of care.

Medicare managers, for instance, are installing bundled prices for procedures, and they are starting to pay for performance by hospital corporations. That’s a big jump from paying for volumes of procedures. (Manufacturers dropped piece rates 40 years ago.)

Once the presidential campaigns are history (it can’t it come soon enough), there is room in the political debate for hope and change on amending ObamaCare, whichever party wins, along the lines of Value Healthcare.

John Torinus is the chairman of Serigraph Inc. and a former Milwaukee Sentinel business editor who blogs regularly at johntorinus.com.

Categories: Business, Health, Op-Ed, Politics

3 thoughts on “Op-Ed: Value Healthcare Could Change America”

  1. Tom says:

    As usual the right wing John Torinus’ bias negates any point he tries to make. I can predict his major points and conclusion before I read his opinion. Obamacare is trash blah, blah, blah… Many of us have been saved by the provisions mandated in the ACA.

  2. dudemeister says:

    Having the right-ish bias here (and, it should be pointed out, he at least tries to support the ACA bashing with facts) doesn’t really negate the point he is making about the impact of Value Care. The market here is in finding cost efficiencies, and that is incredibly useful in the overpriced healthcare/health insurance markets.

    It is akin to dismissing impressive increases in crop yields due to a more efficient growing scheme simply because the farmers talking about it are conservative.

  3. daniel golden says:

    Torinus is recycling Paul Ryan-he claims the answer lies in more of the same greed driven health care delivery system. The Commonwealth Fund.Org survey reveals a few details that Torinus omits. One:the ACA has been a modest success in almost all communities in this country. Two: the ACA requires all employers with more than 100 employees to offer health insurance-. the surge in self-funding employers is not due to some newfound compassion on the part of corporations, but because the law requires it.Three: the real problem is the US private, profit driven model administrative system, which The ACA limits to 20%, while single payer nations spend 4% for the same administration. Google Dr. Bill McQuire, who took a golden parachute of 1.2 billion form United Healthcare and you will realize why the US is the most expensive system in the world per capita, with some of the worst overall outcomes. Review the Commonwealth’s national health care scorecards and decide on actual surveys, not industry propaganda from Torinus.

Leave a Reply

Your email address will not be published. Required fields are marked *