Exchange Insights Courtesy of McKinsey

In May 2014, the consulting firm McKinsey and Co. published a series of articles about consumer behavior on the public healthcare exchanges. Their studies reveal several interesting insights, and I've pulled out a few here to share / comment on (you can find the full suite of articles here.):

• Perceived affordability was the reason most often given for not enrolling by both previously insured and previously uninsured respondents. About 90 percent of all those citing perceived affordability challenges were subsidy-eligible, and among these subsidy-eligible respondents, awareness of the subsidies has remained low. (For example, 66 percent of the April respondents and 65 percent of the February respondents who were subsidy-eligible and who reported that they had shopped but did not enroll because of affordability concerns were unaware of their eligibility). Among previously uninsured, subsidy-eligible respondents, those who indicated that they were aware of the subsidies were almost three times as likely to have reported enrolling as those who were unaware.
• There seems to be a recurring theme in many of McKinsey’s observations, which is the fact that consumer education / understanding of how the Exchanges work is very low.  Subsidized plans is a key provision for many of the consumers that the Exchange is meant to target.  It seems to me the success of these Exchanges is largely contingent upon awareness and education of how it actually works!
• Narrowed networks are available to 92 percent of that population; they make up about half (48 percent) of all exchange networks across the U.S. and 60 percent of the networks in the largest city in each state. The increased prevalence of narrowed networks gives consumers a wider range of value propositions and prices among health insurance plans. But, if a consumer purchases a narrowed network product, then at the point of access, the choice of providers is reduced. Compared to plans with narrowed networks, products with broad networks have a median increase in premiums of 13 to 17 percent (when the analysis is controlled for payor, product type, rating area, and metal tier); the maximum increase is 53 percent. Across the country, close to 70 percent of the lowest- price products are built around narrow, ultra-narrow, or tiered networks.
• They’re here!  Narrow, and ultra narrow networks.  I wasn’t even aware that Ultra-Narrows existed (defined as inclusive of less than 30% of a defined geography’s / rating area’s providers).  It will be interesting to see how this plays out over the next year – will consumers be disappointed at the point of access? I'm sure this will largely vary by consumer segment.  Additionally, for those with more complex medical conditions, what will happen if they need to go out of network for care?  Do the design of these narrow networks include provisions for outlier circumstances?  I remember a narrow network-like offering in Boston inclusive of a contract with Mass Gen that allowed patients to utilize the health system’s services for highly complex cases that could not be addressed in-network
• In our April consumer survey, 42 percent of the respondents who indicated they had enrolled in an ACA plan and were aware of the network type reported purchasing a product with a narrowed network. However, 26 percent of those who indicated they had enrolled in an ACA plan were unaware of the network type they had selected.
• Again, the education theme comes up – will be interesting to see how consumers respond to satisfaction with narrow network plans.  And what is the Exchange sign-up process like, and how can it be improved so purchasers are made more aware of what they are actually getting

"My Medicaid Coverage Means I can Use the ER!"

...is what people in Oregon are thinking.  Oh no...a policy nightmare!

A recent study published in the Journal Science followed a group of newly insured, low-income residents in the Portland area, and focused on their utilization of ER services.  The randomly selected group of people had entered a lottery to gain Medicaid coverage in 2008.  What the researchers found goes against the conventional wisdom that gaining healthcare coverage can reduce the use of Emergency Room visits because people now have access to primary care services and other outpatient specialists.  This is a particularly important concept, since the ER is a much higher cost setting than physician offices or outpatient centers. Instead, the study discovered that the newly insured visited the ER 40% more than their uninsured counterparts.  "The pattern was so strong that it held true across most demographic groups, times of day, and types of visits, including for conditions that were treatable in primary care settings," reports the New York Times.

While the study followed the "gold standard" in study design, critics claim that the time horizon is not long enough to establish a definitive pattern of behaviour.  I think what this highlights is Access to healthcare is not just about getting people insured, albeit that is a very important first step.  But this reminds me of Penchansky & Thomas' "5 A's to Access" (Afforadability, Availability, Accessibility, Accommodation, Acceptability).  While insurance helps with the first "A", afforadability, it does not address the others.  This study highlights the importance of Availability, Accessbility, and Accommodation:

1) Availability / Accessbility:  The ER is the first place people think to go to when they have minor injuries, headaches, pains, etc - things that can be easily addressed in different care settings, such as Urgent Care Centers, Ambulatory Care Centers, Physician Offices, Minute Clinics.  The Availability of these ambulatory settings of care are increasing, but still not as prevalent as your local hospital's ER.  This supply-side factor is just as important a consideration as patient demand.

2) Accommodation:  This may be stretching the definition a bit, but it has to do with the patient actually understanding the difference between when and when not to use the ER.  Especially the newly insured, who are probably not familiar with their own health and haven't had preventive services for most of their lives.
Once the system can figure out ways to address the issues of availability, accessibility, and accommodation, perhaps we can finally see a reduction in the use of costly ER services.

Health Sherpa

I have had many friends contact me in the past few weeks about that mess of a website, healthcare.gov - yes, it is frustrating.  Yes, they botched the roll-out and yes I am extremely disappointed.  There is no way I can defend this.

So I have to at least share a story covered in an NPR broadcast a few days ago when I was out in Seattle.  Apparently, 3 guys from Silicon Valley have created a super-easy to use website called Heath Sherpa that will tell you what insurance plans you are eligible for based on your income and location.  It's extremely fast and user-friendly.  One of its creators, Ning Liang, said on NPR that the goal was to have visitors get an "answer" in 5 seconds or less of visiting the homepage.

While the site does not have the ability to verify income or allow visitors to actually purchase plans, it is at least a starting point for those in the individual market to understand what plans may be available for them (and their costs) once the government site is working.  Link here:  http://www.thehealthsherpa.com/

Reducing Health Care Disparities

Update, 9/2/13:
My guide has been referenced in Beckers and Fierce Healthcare. Exciting.  Sophia and the Chua family would be proud.

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Had a great opportunity to take a short leave from the consulting gig this summer and work at the Health Research and Educational Trust (part of the American Hospital Association). They were kind enough to publish the guide I wrote during my time there - if you're bored enough, here it is:

http://www.hpoe.org/EOC-real-data

Abridged version: While many providers are collecting some form of race, ethnicity and language (REAL) data, many data sets are not comprehensive nor standardized for ease of analysis.  Given changing demographics (minorities will become the majority by 2043), a more empowered patient population (the internet!) and changing reimbursement mechanisms, reducing health disparities through data-driven interventions will only increase in importance.  The guide provides a high-level approach to ensuring good data collection efforts, and ways to use the data meaningfully in reducing disparities. It is intended to point readers to existing resources that will support both the use and collection of REAL data and provide a business case for doing so.

Insurance premiums to fall 50% for New Yorkers due to Health Reform

On the homepage of NY Times today.

Highlights:

• Health insurance exchanges established via ACA (online health insurance shopping), are driving transparency in pricing and competition, leading to more affordable premiums
• The exchange will offer a choice of 17 plans, including one offered by North Shore Long Island Jewish health system, who is just entering the health insurance market 
• UHG and Wellpoint will be on the exchange
• Initial estimate of 615K New Yorkers signing up within first few years

Will this be sustainable?  Will these plans be generous enough?  Didn't we already see this play out in Massachusetts?

The Decline of the Physician Private Practice

CNN released an article today noting that "the number of physicians unloading their practices to hospitals is up 30% to 40% in the last five years." Cost pressures, myriad policy changes and the shifting reimbursement landscape are forcing health care practices to become more efficient in the way they do business - and for a small physician practice, managing business expenses and operations is not an easy task. For many physicians, it's becoming easier to sell their practices (or even outsource their administrative functions to entities like University Hospital's UH Physician Services in Cleveland) so they can focus on patient care. Are the days of the private practice coming to an end?  I'm all for efficiency in operations and the benefits of scale - and maybe this will become more and more appealing to the next generation of physicians. Said one physician in the article, "my hours are better. I'm not spending hours on administrative work or worrying about my business."

You know, I would totally throw a fit if my favorite local coffee shop was ever pushed or bought out by a larger chain - but when it comes to health care?  Put me in the cheapest and most efficient setting, no problem.  As long as I can still see my doctor...

Setback for ACA?

The White House announced today that the ACA employer mandate, which requires companies with 50 or more employees to offer health insurance or face penalties, will be delayed one year to 2015. What will happen to these individuals?  Will they purchase coverage through the health insurance exchanges, which are supposed to "go-live" October of this year?  And is this really an indicator for the law's eventual repeal, which many Republicans are hoping for?  You can read more here.