Market reforms - Market-Based, Not Policy-Based Reform

For sometime, I have maintained most health reforms will occur in the market, from the bottom-up, not from a top-down government. This belief is not conventional wisdom. But as I see it, employers and employees can move faster and more decisively than bureaucratic government suffering from political gridlock, paralysis by analysis, and delusions of power.

In business, survival and jobs are at stake and involve real money, while government will always grow (now 22% of our economy but aiming for 25-30% or even higher). Government technocrats seem to believe they can always print more money and government sources of tax revenues are inexhaustible.

Let me give two examples that support my belief system.

• Work site clinics - These clinics already exist in great numbers at worksites, perhaps 1000 or more, and feature a salaried primary care director, a supporting clinical team, an EMR with links to best practice information, free generic drugs, and a cadre of outside specialists pre-selected on the basis of data indicating high performance, reasonable costs, and good outcomes.

Walgreens, and its subsidiary Take Care, already operates hundreds of these clinics, for major corporations. Walgreens estimates American have 7600 corporate campuses with 1000 or more employees – the ideal number for supporting these clinics. About half of all Fortune companies will have these clinics by 2010. The trend is also catching fire with firms with as few as 250 employees, and can be implemented in organizations as diverse as city and state government, universities, school systems, business parks, malls, and Indian reservations. So far savings have been in the neighborhood of 30% or more.

• Health Underwriters, Agents, Brokers - There are about 100,000 agents and brokers selling health insurance plans to companies large and small and other organizations, profit and non-profit, across America. Their work tends to be carried out beneath the health policy radar, but it has a profound overall effect. Agents and brokers, sometimes functioning as third-party administrators, talk and make presentations before employers and their employees. Generally these presentations feature dual choices, , meaning choices and trade-offs between traditional HMOs and PPOs, and the newer high deductible plans, either as stand alone or linked to HSAs, HRAs, or cafeteria like arrangements.

These new plans, which may involve deductibles of $500 to $5000, have captured 20% of the non-Medicare health insurance marketplace over the last 5 years (HSAs became widely available with the Medicare Modernization Act in December 2003). High deductible plans often results in substantial savings for them employers and lower premiums for the employee, and more often than not are renewed by employers and employees when given a choice between the new and more traditional plans. About 25% to 30% of those signing up for high deductible plans were previously uninsured. High deductible plans and their variations are not without their critics, who say they offer less comprehensive care, may be unaffordable to low paid workers, and offer inadequate care for those with chronic diseases. In short, these new fangled plans are only for the healthy and wealthy. Be that as it may, the new plans continue to grow in popularity and will hard to dislodge even with government reform.

Conclusion: It won’t be big government, but big, medium-sized, and small business that drives change.