That’s the title of a talk I’m giving today at the New York Academy of Medicine. There’s a lot of discussion around the major changes associated with health reform; access to care concerns, fear of adverse selection, provider and payer integration, Exchanges and Medicaid expansion.

The key is understanding that health insurance has fundamentally changed.  Today, health insurers make money by underwriting; figuring out who is going to have claims, avoiding them if possible and budgeting for the claims they can’t avoid.

That’s over.  Now, success will be driven by branding, marketing, and population health management.  Those are areas of expertise not associated with health insurers, ones they are trying to understand/obtain/build as fast as they can. That is perhaps the biggest change coming, a 180 degree shift in business operations and focus.

Here are the other changes on the horizon…

Disability Management will be the next big thing – buyers will want to know what they get for their dollars, and that deliverable will be healthier, more productive people.

Broad access is over.  Amidst all the caterwauling about small networks and restricted benefit plans is a hard truth; providers will give better deals to health plans who can direct patients to them.

Rise of the non-physician will be rapid and reach surprising heights. No question there aren’t enough docs to deliver the same medical care to more people – but that assumes that is the right care (which about a third is not) and docs should be delivering this care – which in many instances is not necessary.

(Almost) every state will expand Medicaid.  When Medicaid was first introduced in the sixties, many states did not go along – initially.  Yet all did within a few years.

Vertically integrated systems will be big winners.

Medicine will become less art and more science.  This goes to the heart of the first issue; a lot of care is the wrong care, delivered at the wrong time, in the wrong setting.  Within ACA is significant funding for outcomes research and dissemination, and the work is proceeding at a rapid pace.

Hospitals will get back to basics.  While some will continue to spend billions on fancy technology and patient rooms, most will not see much of a payoff from that investment. Instead, expect facilities to focus on streamlining processes, improve administrative efficiency, and reduce costs.  They have to in order to survive.

Revenue maximization will get ever more sophisticated.  Providers are getting really smart about coding, payer contract negotiations, and reimbursement “management”.  Payers who are vulnerable (that’s you, property & casualty) are going to get hammered.

What does this mean for you?

Prepare.  Watch, listen, and read.  The world is changing, and it will affect you.  

Refusing to accept reality, the efforts of some states, individuals, corporations, and elected officials to “repeal and replace” Obamacare continue; a recent conversation on Mark Walls’ WCAG focused on this issue as well – with far too much demagoguing and scare mongering. Bluto would be proud.

The “plans” to replace Obamacare typically include some/all of the following:

• allowing people to buy insurance across state lines
• providing a refundable $2500 tax credit to all to buy insurance
• giving states block grants to use for their Medicaid programs and freedom to spend it however they want
• funding high-risk insurance plans for people with pre-existing conditions so they can get coverage when insurers reject their applications.
• additional tort reform

Let’s briefly review these ideas, focusing on their implications for coverage and cost control.

Coverage across state lines

Folks advocating this idea base their view that selling coverage across state lines will reduce costs by eliminating mandated benefits, which one wag says would reduce costs 30-50 percent.

Ha.  That view reflects a complete lack of understanding of the cost drivers in health insurance, the primary driver being – you guessed it – the cost of medical care.  For anyone to suggest that a person in Massachusetts will save thousands if they can buy a policy sold in Idaho is lunacy.  yes, mandates do influence costs, but the underlying cost of insurance is the cost of care.

Refundable tax credit

People can’t buy insurance for $2500, so giving low-income people that amount won’t make them buy it as it is still unaffordable – especially if there’s no mandate to do so. Moreover, many who don’t have insurance couldn’t get it due to pre-existing conditions, and no insurance company would sell insurance to anyone who may end up costing the insurance company lots of money.  That would be foolhardy.

Block grants

Good idea, if they actually use the money to increase the coverage and benefits for Medicaid eligibles, instead of trying to dissuade or discourage potential eligibles from signing up.

Funding high risk pools or insurance plans

These have been tried, and almost all have failed miserably as states don’t like to keep funding them.  Florida’s high risk pool has been closed for years, and only a couple hundred citizens are still covered.  Moreover, this dumps the potentially high cost individuals on taxpayers, allowing commercial insurers to cherry-pick the best risks that will generate the largest profits.

Tort reform

Tort reform will not appreciably reduce medical costs. 

Research indicates defensive medicine accounts for 2.4 percent of US health care costs.  That’s not to say medical malpractice and associated costs are not significant contributors to health care costs as they most certainly are.  However, the majority of malpractice victims never pursue a claim.

Of course, lost within this mishmash of convoluted half-thoughts and unworkable, un-informed, and simplistic “solutions” is a rather awkward truth; the individual mandate and other key parts of PPACA, currently reviled as socialism, communism, or worse, came from ideas advanced by conservative icon William Kristol, right-wing think tank Heritage Foundation, Sen Orrin Hatch (R UT) and former GOP Presidential candidate Mitt Romney, among others.

So, repeal and replace, with, what?