Health reform is under way: repeal or no repeal!

On March 14, 2011, more than two hundred business leaders gathered to hear Jack Friedman, chief executive of Providence Health Plans, discuss what’s on the collective mind: The state of health care in Oregon and what it means for employers.

In a lively presentation, Jack spoke from an expert’s view in a layman’s voice. He covered the vast topic of health care in Oregon and chunked it into clear, meaningful messages, including what are the current issues and how are they impacting the economy and employers. Here are some key messages that Jack shared – saying it like it is – to members of the Medford Chamber of Commerce.

Jack opened his morning address with a very strong and clear message, “Our nation is facing a challenge and the numbers speak loudly about how health care is a growing social burden.”

Jack stated, “This is a very important time for national health care reform. Our nation is facing a challenge and we’re primed for transformation. Medicare spending is up 7.9 percent and Medicaid spending is up 9 percent. Our total health care spend made up 17.6 percent of America’s gross domestic product in 2009, which accounted for a 2.5 trillion total spend or a per-capita spend estimated at $8,086 on health care.”

He brought these figures home by comparing national health care’s costs to education’s costs. “Compare this to what we spend on education,” Jack added, “and you’ll find we spend less than 4 percent of the GDP. We’re out of balance. And, we’ve got work to do.”

But numbers are just one part of the eroding health care story. “Just looking at the current health care system,” Jack observed, “we see that the system is a contributor to the chaos.”

The numbers aren’t surprising when we look around to see what’s happening within our health care system. Waste within the system is holding steady and is estimated at an alarming 30-40 percent. Health of our people is deteriorating. Costs for health care have reached proportions that are not affordable for the middle class – even those who have insurance. Additional financial resources will not improve the system’s performance and will further take away financial resources from services that desperately need them. Even with a financial superhero, the system will still need to improve performance.

As he began to close his presentation, Jack brought the national crisis home. “The cost that members paid in copayments and deductibles jumped dramatically, increasing from nearly 8 percent in 2001 to nearly 13 percent in 2010 – noticing spikes as much as 18 percent during the same period.” And this has to be added to the increase in their share of the monthly premium. The natural fall out was some employers were no longer able to offer health insurance to their employees. In less than three years, Oregon lives covered by a commercial product shrank from 2 million in the fourth quarter of 2007 to a little over 1.5 million in the third quarter of 2010.

Conditions from the past several years – and more recently, conditions as a result of new legislation – are begging us to find solutions. We’re looking to solve this crisis by focusing on solutions within all of the following areas:

  • Payment Reform
  • Health Benefits Reform
  • Health Purchasing Reform
  • Health Delivery Reform
  • Consumerism

Jack insists that among the challenge there’s reason for hope and much can be done to make progress. Employers – large and small – can act:

  • Stay in the game
  • Look for value-based benefits
  • Offer a health plan with a strong utilization management component
  • Partner with a very good broker; don’t over purchase
  • Offer and promote wellness programs to assess risks and manage employee behavior

Jack wrapped up his time with the Medford Chamber members with pragmatic optimism. Borrowing a quotation from Michael Sachs, chairman and CEO of Sg2, Jack said,

As a health insurer we “expect to take on more financial risk and to be held accountable, clinically and economically, for what happens across the continuum of care—whether we own the continuum or not.” We are in a period of significant transformation – transformation that will work with a connected patient experience. It will not be easy, but it will be achievable.