Erik Goldman looks at the changing future of healthcare that will include a shifting focus toward preventive care and insurance plans losing rather than gaining money with increased healthcare costs.
by Erik Goldman
As if the last few years in health care haven’t been turbulent enough, the field is about to go through some major gyrations. The end result could create a landscape that is much more favorable for preventive, integrative medicine. But the process of getting there ain’t gonna be easy!
In short, we’re starting to see a reversal of fiscal incentives, kind of like a change of magnetic poles. Yesterday’s assets fairly suddenly become tomorrow’s liabilities; yesterday’s carrots become tomorrow’s sticks; the old “mainstream” suddenly finds itself on the margin, and yesterday’s margin suddenly finds itself in the middle of the road.
Are you ready?
To see what I mean, let’s look quickly at the basic fiscal dynamics that drive the way insurance-based health care is financed. Simply put, up until very recently the insurance plans actually made more money when health care costs went up. Sure, they complained about rising costs, talked up their commitment to cost containment, and ratcheted down on physician reimbursement.
But the truth is, their profits are a percentage of the total amount of money churning through their systems; the more money flowing through, the higher their net returns.
How else have the big plans continued to boast record profits despite the economic downturn, mass unemployment, and soaring medical costs? Why else would they be so reluctant to support true preventive health care, nutrition, holistic medicine? In truth, the insurers have had very little incentive to actually rein in costs.
Why? Because they could always pass along the cost increases. And that’s what’s about to change.
For the past 50 years, insurers have been able to raise premiums to employers and individual plan members at will. Since most folks believe that insurance is essential and since owing to a lack of anti-trust laws, there’s relatively little price variability between comparable plans, the employers and self-employed individuals have simply sucked it up and paid double-digit annual premium increases for years.
Not any more.
Employers, unable to keep up with the costs and rapidly losing their global competitive edge, are dropping health insurance as a benefit, hoping that the Obama reform plan won’t actually kick in and oblige them to either insure or pay extra taxes for the Fed to do it for them. Individuals who can’t afford insurance, or who lose their jobs, simply go without, hoping that the Obama plan starts soon, so they can get coverage via federal plans.
If it is implemented (and it probably will be) healthcare reform will put another 40-50 million Americans into insurance plans. The government will restrict the insurers’ ability to freely raise premium rates (a big reason insurers tried to derail Obamacare).
That means no more 15% annual rate increases. Simply put, there’s no one to whom the insurers can pass on costs anymore. And that means incentives are about to change, big-time.
I recently had the pleasure of interviewing Dr. Garrison Bliss, Medical Director of Qliance. His company provides attentive, prevention-oriented insurance-free primary care for a monthly membership of $45-$125 (depending on age and level of health).
Dr. Bliss is a pioneer of innovative practice models and a keen observer of healthcare trends. He believes the impending incentive-reversal will be very good for preventive medicine. Suddenly there will be serious incentives to prevent expensive chronic diseases and to identify less expensive, less invasive, more effective modes of treating them (read my interview with Dr. Bliss).
He contends that the “old order” of insurance-based health care is very similar to the real estate bubble: runaway costs not tethered to fundamentals, fueling big Wall Street payoffs at the expense of ordinary doctors, physicians and small businesses.
“Like everyone else living in a bubble, the insurers—and everyone who was benefiting from insurance-based medicine, wanted to believe it would go on forever. But it will not go on forever,” said Dr. Bliss. “The bubble is about to pop, and they know it.”
In this new healthcare landscape, preventive care will move from the wings to the center stage. The health plans and the practitioners working in them, will have to be more open to approaches that actually prevent costly episodes of care down the road.
According to Dr. Bliss, the next few years will bring about, “a pole reversal, where those higher prices that used to translate into more revenue for insurers, become higher costs that the hospitals and insurers will have to bear. When that happens, the incentives will change. They’re going to have big incentives to save money and cut costs. Good, comprehensive primary care can do that; keep people healthy, save money, and cut costs.”
To be sure, the insurers will look for all sorts of ways to cut their “medical spend” by restricting procedures they deem “unnecessary,” by getting rid of people they deem “bad risks,” by squeezing practitioner payment even further than they already have. That’s the “ain’t gonna be easy” part I was talking about.
But rest assured, the incentives are finally aligning to reward—rather than marginalize—practitioners who are good at keeping people healthy. That means we’re going to need a lot more practitioners able to implement lifestyle-based preventive care in real-world settings.
Nutrition, lifestyle interventions, herbal medicine, exercise and other aspects of natural preventive health care are no longer “fringe” or “luxury” topics. They’re going to be a necessity in the near future. To that end, my company, Holistic Primary Care, is redoubling its effort to educate practitioners through our print & online publications and our Heal Thy Practice: Transforming Primary Care conferences (next one’s in Long Beach, CA, Nov. 4-6).
For those of us who feel that the old modes of health care shut us out, vilified, or simply humored us, this new world of reversed incentives might feel like a welcome change. We just gotta get there!
Erik Goldman is the editor of Holistic Primary Care-News for Health & Healing, a quarterly medical news publication covering the field of holistic health care for an audience of roughly 65,000 primary care physicians. He is also co-founder of “Heal Thy Practice: Transforming Primary Care,” an annual conference focused on business models that enable doctors to build thriving integrative health care practices. The next Heal Thy Practice will be in Long Beach, CA, Nov. 4-6, 2011. Contact Erik for more information: 212 406-8957 or Erik@holisticprimarycare.net.