Terry Connelly is dean of the Ageno School of Business at Golden Gate University and is frequently quoted on business, financial, and economic issues by Bay Area local, as well as national, news media.
At a recent meeting of Silicon Valley executives focusing on the issue of health care for the uninsured, one CEO lamented that Americans have “a right to a lawyer, but not to a doctor”. But a senior executives of a major health care provider/insurer observed in another meeting that we do, in law if not always in fact, provide the uninsured with access to medical treatment (at least if he or she happens to be near an emergency room), it’s just that we shift a large part of the cost of that treatment to those already insured in the form of higher premiums, or to the providers themselves. Between these two statements lies the potential for a business-like solution to our health care dilemma.
In the State of California today, 20% of the population does not have health insurance, yet two-thirds of those persons are full-time employees! The hidden “premium” the insured population pays to subsidize health care for the uninsured amounts to $445 per individual and $ 1186 per family according to the Governor’s office.California is not unique in these statistics. Small wonder, then, that annual premium increases are running at 11% per year, while the number of employers providing job-based coverage is declining nationally.
Preventive care measures, which would reduce overall system cost, unfortunately are not incentivized sufficiently either by publicly-funded programs like Medicare or Medicaid, or by private insurance packagers that concentrate on funding and insuring the healthiest customers while avoiding the riskiest.
The vapid debate about health care issues that concentrates on the end-points of the spectrum like “single-payer” or “socialized “medicine” – - or “Harry and Louise” vs. “Hillary and the Consultants” – - has passed its “use-by” date. More promising are the state-by-state efforts, from one end of the country to the other, to come to grips with the issues of both access and insurance, including the recent proposals of
California’s Governor Schwarzenegger.
These new initiatives seem to focus not on old political arguments but on very business-like strategic concepts like incentives, stakeholder engagement and strategic fit.
1) Start with the concept of mandatory insurance coverage for all. This approach turns on its head the issue of paying for ”covering the uninsured” by putting a new premise at the center: if everyone must obtain coverage and nobody can be denied coverage, a new, broad concept of “risk pool” is established to spread the risk and thereby reduce premium costs.
2) Add incentives to focus on prevention, early detection and wellness programs to further mitigate risk and cost.
3) Use the savings from (1) and (2) to fund more transparently the subsidies for those unable to afford the premiums.
4) Use the tax system not primarily to fund premiums but to expand pretax funding mechanisms for higher deductibles that also reduce premium cost.
5) Focus any additional government role on providing catastrophe coverage, as it has done in other risk situations like hurricanes and terrorism.
It took a massive private equity deal to lift the burden of legacy, American-style health care cost off the back ofGermany’s Daimler.US business in general cannot afford to wait until it is in Chrysler-shape to grasp the possibility of addresses the health care crisis in a business-like, de-politicized way. Merely abandoning the role of workforce coverage provider, or shifting more insurance costs to employees, does nothing to address the productivity loss associated with poor health maintenance, or the business-killing drag on consumers’ disposable income associated with accelerating health care costs. Those costs now account for about half of all personal bankruptcy filings in the US, according to a Senate Committee study.
Even the health insurance industry is coming to see that it has a greater stake in framing the solution than in servicing the problem. Harry and Louise, meet the Governors!
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