My latest Fast Company blog post here. A new Kaiser study shows that health care premiums are skyrocketing, but as new provisions of health care reform come into effect, companies can do a lot to make their employees healthier for less money.

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Visit Extend Health – the nation’s largest private Medicare exchange.

Yesterday I spoke with Emily Chasen, writer for the Wall Street Journal CFO journal, and today she published this piece about the future of private exchanges as a mechanism for providing health care benefits to active employees. You must be a subscriber to see the whole story, but here’s a snip:

“…a corporate exchange could be a middle ground between keeping a group plan and leaving employees to  use the state exchanges. Regulations that would affect corporate exchanges are still being written, so most companies will probably want to wait for the new laws to take effect in 2014 before deciding whether to use them….According to Bryce Williams, CEO of health-care exchange operator Extend Health, such corporate exchanges could offer companies an alternative to buying group plans from a health insurer.”

Visit Extend Health – the nation’s largest private Medicare exchange.

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Earlier this year, I wrote an article for InsuranceNewsNet offering my opinion that the individual mandate provision of the Patient Protection and Affordable Care Act (PPACA) is not essential to achieving the law’s goal of ensuring that tens of millions more Americans have health care coverage.  The individual mandate provision requires all citizens to obtain health insurance by 2014 or pay a fine.

In the past 30 days, court rulings on both sides of the question of whether the individual mandate provision is constitutional makes it even more likely that the U.S. Supreme Court will review the matter sooner rather than later.

The unconstitutionally of the individual mandate has become the central argument of opponents in legal challenges to the entire law. They argue that if such a key provision is ruled unconstitutional, the entire law should be unconstitutional. It also remains unpopular with average Americans. In a new poll out last week from the Associated Press and National Constitution Center, 82% of respondents said “no” when asked, “Do you think the Federal Government should have the power to require all Americans to buy health insurance, and to pay a fine if they don’t?”

We’ll have to wait and see how the U.S. Supreme Court rules to know the fate of the provision. But my own opinion hasn’t changed. Based on our experience at Extend Health, if a health insurer offers seniors a private Medicare plan that meets their needs at a price they can afford, they will buy. This is because certain conditions for Medicare-eligible seniors exist that do not exist for all Americans. Most important, Medicare is guaranteed issue and requires standard plan designs.

Guaranteed issue means seniors cannot be denied coverage because of their health status. Standard plan design makes it possible to compare and contrast different plans from different carriers more easily. And these are exactly the conditions all uninsured Americans will experience under PPACA starting in 2014.

While I still believe that these conditions are necessary for large numbers of uninsured Americans to buy health plans without a mandate, today I would also argue they are not sufficient. In addition, the key stakeholders driving the extension of health care coverage to more Americans will need effective outreach programs to ensure that all Americans know their options, understand their eligibility for the federal subsidies that will be offered, and know where and how to purchase health plans.

A large group of these stakeholders – health insurers, health care providers, associations and health care nonprofits – took a major step in the right direction last week when they launched a nonprofit coalition with the mission of ensuring that “all Americans are enrolled in and retain health coverage.” Enroll America  will do this by working to ensure that enrollment processes are simple and streamlined and that people know where they can go to find the right information at the right time.

It’s too early to tell whether Enroll America will be successful. But the importance of its mission cannot be underestimated. While the ACA lays the foundation for insuring tens of millions more Americans with guaranteed issue and standard plan design, finishing the job will require that every American understand what’s coming, and what they can do and when.

Visit Extend Health – the nation’s largest private Medicare exchange.

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The Jan – Feb Harvard Business Review contained an interesting article entitled “Created Shared Value” written by Michael Porter and Mark Kramer. Porter is revered in both corporate strategy and health care circles — which is why  I was surprised that he didn’t use health care as the prime example of a sector of the economy where corporations can  embark on a new mission to create shared value — with far reaching, long term potential impact.

Creating Shared Value Forum 2010

Image by Nestlé via Flickr

In health care, the provider sector wants more procedures at increased prices in order to be profitable. Self-insured payers (American corporations) want cost control, price transparency and employee engagement. It is the most inherently conflicted sector of the U.S. economy and one ripe for the creation of shared value across providers, payers and American health care consumers.

One month after this article appeared, in the March edition of HBR, loyal readers criticized Porter’s piece as being “cheerleading” and unrealistic given our capitalist economic system. Porter responded saying (I’m paraphrasing), “The key is to harness the connection between shared value and the core economic principles of competition.” We see this happening today on our Medicare exchange. Shared value is being created through hundreds of plan selections and enrollments.  Here’s why and how.

Before the advent of Medicare exchanges, employers only knew one way – a group Medicare wrapper plan — for their post-65 retirees. These group plans were underwritten by one of five major health plans in the US. There really isn’t any competition in the group market; as the former EVP of sales for the largest national health insurance carrier once said to me, “Bryce, all the large health plans do is trade each other’s pissed off corporate customers every three years via a predictable RFP process.” Medicare exchanges allow employers to cancel shoddy group plans, and as a result, create consumerism by giving their retirees a subsidy and allowing them to buy their own plan from an exchange featuring many carriers and thousands of plans.

When real apples-to-apples plan pricing and competition happens, an interesting dynamic occurs. The employer can pay less for the same or better benefits. This is where the “shared value” effect emerges. Employers contribute less because individual competition holds down plan prices. Retirees benefit because they buy only the plan they want or need, not a plan chosen for them back at headquarters that may not be competitive in their zip code and may not even have their doctors and hospitals “in network.”

When we installed a Medicare exchange at the Ford Motor Company, the average retiree household received $500 a year more in benefits, at a lower cost to Ford.

Because an individual (not a group) plan is personalized to the recipient’s needs, it is far more efficient. Only benefits needed are bought and used. This is especially true when matching seniors to the right Part D drug plan. In addition, now that the retiree is paying for the plan with a fixed subsidy, they become better buyers. Every day in our call center, retirees ask “Is this plan the best deal for my dollars?” That conversation is not occurring in many places in the health care ecosystem today. Why? Because traditional group plans obscure real health care costs from the end user.

I agree with Professor Porter that shared value is a great vision on which the “new” corporate America should set its sights. I suggest that health care is the largest sector of the economy where this concept is sorely needed. As exchanges, both public and private, replace the obfuscation of group coverage, I predict that competition will drive massive shared value. Extend Health has saved its clients more than $1 billion in just five years, and we only work within the post-65 retiree market. The shared value revolution will be led by the most powerful force in any capitalist society: a consumer empowered with choices, transparent cost information and the radical notion of a person with self-interest in getting the best deal. Imagine that.

Visit Extend Health – the nation’s largest private Medicare exchange.

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I’m on the road so only a quick note today. IndustryWeek just published a piece I wrote about keeping retiree health care costs in line for manufacturing companies. Manufacturing has a long tradition of generous benefits for retirees, and has been hit hard in recent decades with the rising cost of retiree health care. There is a solution that allows them to continue to provide benefits while making the cost sustainable.

Visit Extend Health – the nation’s largest private Medicare exchange.

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