Insurance Companies See Salvation In Becoming Consumer Friendly
Insurance executives and health policy researchers described a post–managed care world in which employees have become consumers who are expected to make responsible choices—and to pay for them.
The occasion was a standing-room-only Capitol Hill briefing on “The Changing Face of Health Insurance,” sponsored by the Alliance for Health Reform last month.
James Robinson, a professor of health economics at the University of California, Berkeley, articulated one of the major themes of the meeting when he said, “[W]e have to see the incredible disenchantment in the insurance industry with managed care. Companies do not want to be the employers’ tool to beat down on doctors and hospitals and health care costs. They tried that and got it from both sides.”
Instead, companies want to be the “consumer’s helper,” as he or she makes “responsible, informed choices.”
And, “responsible,” according to Robinson, is code for “You’re going to pay for a lot of your choices” (see box).
Robinson predicted that the insurance industry will move from comprehensive coverage for a limited range of services to limited coverage for a broad range of services. The impetus for the shift is the lack of will on the part of employers and of employees to “pay for every service for everyone” (Psychiatric News, December 21, 2001, January 18, and March 1).
David Lawrence, CEO and board chair of Kaiser Foundation Health Plan Inc., described a series of challenges to the insurance industry and society posed by changing demographics and other social trends.
When the baby boomers begin to experience chronic illnesses, they will bring heightened expectations about their rights to information and quality care. “The medical care system won’t know what hit it,” he said.
Currently, according to Lawrence, 14 percent of the population is over age 65; nearly half the U.S. population has at least one chronic illness, and a third of those over the age of 65 have three or more chronic illnesses.
Lawrence extrapolated from those data to conclude that by 2025, 20 percent of the population will be over 65, and between 60 percent and 70 percent of the U.S. population will have at least one chronic illness.
The next 10 years of scientific discovery and technological innovation will dwarf anything seen in the last 50 years, he said. Translating that knowledge into effective medical care delivery will be challenging. The availability of new treatments will raise “very, very critical” issues for insurance companies about what gets covered.
On April 18, the New York Times reported that the California Public Employees’ Retirement System (CalPERS) premiums for the health maintenance organizations it uses would increase an average of 25 percent.
According to the Times, “Officials at CalPERS, which was particularly successful in using its influence to hold down health care costs for much of the last decade, see fewer opportunities now to keep costs down as the population ages and makes greater use of technology.”
Jay M. Gellert, president and CEO of Health Net Inc. (formerly Foundation Health Systems Inc.), noted “an awesome opportunity for increased efficiency and effectiveness in this system.”
It will become increasingly important to move toward an evidence-based system of medicine and to develop a regulatory framework that is based on evidence and outcome, he said.
Provide Incentives
Incentives must be given that encourage people to effectively address problems such as smoking, obesity, and substance abuse, which tax the resources of the health care system.
Change will come about, he believes, when Americans begin to internalize the results of studies that demonstrate the number of avoidable medical errors that occur. They will say, “Hey, having the freedom to pick the worst doctor in America is not my God-given right.”
Lawrence noted the existence of evidence that “patients can make very, very informed choices on rather complex statistical information, if it is relevant to their conditions.”
Both Gellert and Lawrence expressed concern about finding ways of protecting those most in need, either because of the severity of illness or because of poverty.
Gellert said, “Eighty percent of the [health care] money is spent on 20 percent of the people.” Those most in need of health care usually have fewer financial resources. Lawrence spoke about the need to protect people from the bad results of random, unpredictable events, such as chronic illness and trauma.
How Should Psychiatrists Respond?
Kevin Smith, M.D., a member of APA’s Managed Care Committee, told Psychiatric News, “At our last meeting, we decided to take a proactive approach to these new trends and find positive ways of addressing the move to consumer-driven health care benefits and the underlying problems that move addresses.”
Committee Chair Lawrence Lurie, M.D., said, “I asked Kevin to chair a subcommittee on alternatives to managed care that will function as a think tank as we begin to examine the issues emerging for patients and psychiatrists.”
Lurie highlighted three unresolved questions in the current debate about future directions for mental health benefits and the health care system.
Will the health benefit system be cafeteria-style, in which consumers pick from a broad range of options, using the same or similar amounts of insurance dollars? If so, Lurie said, mental health benefits might appear less attractive to consumers than options such as dental care. This benefit method mostly directly resembles the defined contribution model (Psychiatric News, December 21, 2001).
Or will the system allow consumers to select options with a variety of price tags? The Cadillac versus the Chevrolet model of benefit design might encourage consumers who do not have mental health benefits to add them to existing benefits.
Finally, how will risk be handled? Insurance companies and consumers both try to determine the odds of illness occurring, Lurie said. But the kind of illness that will strike and the time when a person will become ill are unpredictable.
Lurie told Psychiatric News, “When I read the comments of the insurance executives at the briefing, I was struck by their seeming lack of concern about physicians. The excesses of managed care demoralized many psychiatrists and other physicians. Some have voted with their feet and are no longer treating patients under managed care auspices. Their exodus means less available care. It will take effort for companies to regain physician confidence.”
Still, he is optimistic about the future, speaking of a “new and more hopeful reality that will encourage better service delivery and increased access.”
Smith said, “These changes can be regarded as an enormous opportunity for us to take a new look at the delivery of psychiatric services from the standpoints of all three parties—the patient, psychiatrist, and employer—and bring about something better.” ▪
Information & Authors
Information
Published In
History
Published online: 17 May 2002
Published in print: May 17, 2002
Notes
Faced with the failures of managed care, insurance companies claim they want to become “consumers’ helpers.” What role will psychiatrists play in the latest transformation of the health insurance industry?
Authors
Metrics & Citations
Metrics
Citations
Export Citations
If you have the appropriate software installed, you can download article citation data to the citation manager of your choice. Simply select your manager software from the list below and click Download.
For more information or tips please see 'Downloading to a citation manager' in the Help menu.
There are no citations for this item
View Options
View options
PDF/ePub
View PDF/ePubGet Access
Login options
Already a subscriber? Access your subscription through your login credentials or your institution for full access to this article.
Personal login Institutional Login Open Athens loginNot a subscriber?
PsychiatryOnline subscription options offer access to the DSM-5-TR® library, books, journals, CME, and patient resources. This all-in-one virtual library provides psychiatrists and mental health professionals with key resources for diagnosis, treatment, research, and professional development.
Need more help? PsychiatryOnline Customer Service may be reached by emailing [email protected] or by calling 800-368-5777 (in the U.S.) or 703-907-7322 (outside the U.S.).