This is Healthcare Marketplace Specialization, Healthcare Marketplace Overview. I'm Steve Parente, and this is module 3.2.4, Health Insurance Today. So when we look at the market of health insurance, there are four different elements to keep in consideration. One is the insurance models that we've talked about that still persists today. There are what we call demand side control programs, supply side control programs, mostly on fee schedules, and then we're going to talk about some of the market success and failures that this space has had. So in 2007 these were the major types of health insurance innovations. And the reason why I focus on 2007 was that, really nothing new has happened since 2007. There's been new legislation, but this is the last time we've had major innovations. And most of the major innovation has come from the introduction of consumer driven health plans that arrive in the market-space at that era. And so if you look at where things were in 2007 about what's the old school fee for service, only about 9% of that market is that way. HMO's such as Kaiser Permanente and others, about 24% of the market. And then preferred provider organizations, which are really like fee for service but they've pre-negotiated all the rates with providers, is really dominates the space with about 65% of the market. Consumer Driven Health Plans, release in 2007 is 2% of the market. Now that, that world is changed considerably, so if we look here and this is looking at the world by 2013, it's a little more recent data, but this is at least we'll emphasize, what I want to focus on here, which is this huge growth of consumer driven Kaiser counts this differently. This is showing the share of different types of plans that are available and how they've grown in terms of what's offered by employers over a period of time. So what we see is that 1988 really this fee for service or conventional world Just dominated space, that's about when I started working in Health Insurance for has a PhD and then just grow, really eroded very quickly. Manage care sort of taking off and part by that cheerleading for manage care by the Clinton Administration. We see the point of HMO plans are actually big, in the sense of 60% and 20 more percent, but they never really got huge. PPO is what got huge, and point of service plans, which are like PPOs but open out of network. But the really amazing thing is that consumer driven health plans have had this remarkable growth period. 4% to 20%. Similar to what happened with the PPO designs. Whether or not it eclipses that growth is a different issue. It seems that where most of that has come out of is with the point of service. Which I'm not that concerned about because that's a lot like PPO. But a lot of that has also been declines in the In the HMO market as well. Now, there is a funny phrase that a professor of mine at Hopkins always use to coin the Insurance Tower of Babel. Jonathan Barner at Johns Hopkins University. And there's just so many acronyms in this space. And so if you're new to this, and you're just like my God, this is out of control. You just have to say, yes, it is. They all do have names, we talked about these Preferred Provider Organizations as PPO, HDHP, High Deductible Health Plan, Gatekeepers, meaning that the physicians don't let you see the specialists you want unless they're checked in first by a primary-care physician. But this just shows the range of what's there, you can Google any of these and get pretty good details about where they are. And they've all come on the line in that 40 year spectrum of time. So one thing I want to highlight is these consumer driven health plans, CDHPs. What was exciting about these plans when they came online is that they were really kind of novel in that when they first showed up was about 2000 or so to 2004. That's when they were really startups, almost dot-coms. And what they realized was that they could get claim systems, that they could just lease the people to pay their claims for them. They could actually lease networks of physicians, believe it or not, nationally. And they could also lease basically Rx benefits as well, and put it all together and build a health plan, and name it after themselves or come up with any name they want. The other thing that was interesting was that the Internet played a major role as well. You can actually have some of the claims systems and otherwise disease management. It's a little early for M health for mobile health. But there clearly were some elements about that from the consumer engagement that was all part of this design. And the last part, we mentioned the risks are earlier. What basically happened was the self insured employers, meaning that they are running their own cache and they were the innovators in this space because they were feeling the pinch of year over year inflation and health care costs as high as 12, 13% in the late 1990s. And said there has to be a better way and they thought if they give the consumer some skin in the game by these consumer driven health plans, that maybe things would be different. And so because they were exempt from state law in terms of oversight for different health insurance pieces they were able to be quite innovative and quick to market so they were relatively quick span of time these innovators had about 2,000,000 covered lives in a new market. This just goes into a lot of detail about what consumer driven health plans have on offer. There's usually an account that's there, a health reimbursement account, an HRA, and then the novelty here is that account will pay for your healthcare services up to a certain point. Then once you've exhausted that, you're then in a situation where you're paying a deductible, some sort of gap, and then once you're done paying that deductible, then you get full health coverage that you can get access to the different physicians you want. Wrapped all around this were tools, web-based tools, and phone based tools for disease management. Another innovation too on the side here is preventive care covered at 100%. One thing that a lot of the early developers these plans is they didn't want to discourage moms from getting their kids to be well child visits or folks getting physical exams so they just covered them 100% and priced it under the premium. Which really made the designs quite novel. HSAs come online basically in 2004. The difference is that HSA account is actually owned by you, it's in a separate bank account, it could be a Wells Fargo, it could be US Bank, but otherwise it's the same design for the consumer driven health plans with a deductible and it needs to become much, much more popular now with the Affordable Care Act in 2014. It's just the deductible when it needs to be in these designs might have been say $4,000, now that deductible for an individual could go up to $7,000. And for a family that deductible could be as high as $15,000. But that keeps the premium low and it means they have some sort of coverage, and all of them have to have some preventative care still that's covered for free effectively. And the other thing is that health coverage in the HSA it's just like it is in the HSA, it's basically they get a national network of providers. They don't necessarily have to have referrals. It's just that they have to cross a threshold here say for a family of say $15,000, which is high, but if you have cancer it's going to cost you $300,000. So at least you're going to live. This goes back to our illustrations of what's the point of insurance if you're going to die, it's helpful to have this insurance that gets you to live. And this will do this and even if you're out $15,000 that's half the cost of a good kitchen remodel. So is your life really worth half a granite countertop? That's up for you to decide. So, demand side controls, what goes into this, coinsurance, copayments, deductibles, things that basically give you more skin in the game to pay. Physicians that say no to you, in case you don't necessarily need to have care. Disease management programs if you have more advanced diseases to have a nurse reviewer or somebody else talk to you. And then pricing differentials to consumers to say, if you really want to get that drug, that's a brand name drug, you're going to have to pay a little bit more for it, than just a generic. All these things basically try to get the consumer to mitigate moral hazard, the thing that we talked about earlier. On the supply side, we have all sorts of controls that are in place. Here we have the fee schedules. I mentioned the DRG system that Medicare had. RBRVS which is done for physicians to basically control how much they charge for their services, lots of variations there. Utilization management, basically insurance companies saying no after a review of say, a claim, to make sure that it's unnecessary care. It's allowed in the contract for insurance companies to do that and that's essentially what they do. Case management's a different variant. Basically for serious illnesses the thought is to have someone that's either a physician or a nurse working with you to make sure that your expenses and your cares coordinated better. And the idea as we're trying to reduce the probability of provider induced demand that is a doctor or hospital saying you know I think you need this and you may not really need it and it just helps the hospital's bottom line. Doesn't happen a lot of times but there moments and law that we see that it does happen and something that have to be guarded against. So when we think about the successes of this market, there's actually a lot of stuff that's happened in the US market that's kind of interesting. The primary funding source for medical innovation comes from this private insurance market. There's some stuff from the public insurance market too, certainly Medicare put a lot of money into that but in terms of the year over year growth, it really comes from that. People have a lot of choices in their providers. People might argue they have too much choice, but they certainly can get to where they want to be if they have insurance. There's a lot less rationing. The government does not say no generally for, in many cases, for technologies the fewest that they will do is they say not to a hospital to build something, depending on the state you live in but generally they don't really restrict that, and it's a pretty flexible market. It adapts to changing politics and economy. We're seeing more insured now because of the Affordable Care Act, and that's just part of the innovation. What are some of the failures? Well our costs are just going up. We spend more than anybody else in the country, and it's an expensive proposition. It's unfortunate that it's so expensive to have health care costs here, though you could argue that some of that money blows back to give different innovations in the cycle, but one could also argue that it's potentially just too much cash. The other thing is that obviously we have still about 37 million or so uninsured. Now that's down from 50 million uninsured. The Affordable Care Act has helped with that, there could be other successes. And keep in mind that of that 37 million, about 15 to 20, well like 15 million are undocumented workers, so that's going to be a hard thing to fix without immigration reform. But, when we look to other countries and they have comprehensive coverage we're not quite there with them yet. This concludes our module talking about where health insurance is today.
