Joseph Newhouse, PhD
HEALTH PLAN 2009

Joseph Newhouse, PhD

Joseph Newhouse, PhD, is the John D. MacArthur Professor of Health Policy and Management at Harvard University and head of its interfaculty initiative in health policy. He also sits on Aetna's board of directors.

Envisioning what health care will look like in five or six years can be difficult because extrapolation depends partly on political sentiment. If the political cycle lurches left, for instance, we could have major expansion of government involvement in direct financing. Let me hasten to add that that doesn't appear likely because the political system is set up to favor the status quo. On the other hand, the American electoral process does seem to run in cycles.

Health care spending is not only likely to continue to grow, but it will grow at rates that match or exceed what we've seen over the last decade. The molecular biological revolution is upon us. There are likely to be more effective treatments for cancer and other diseases that will exploit this new biology.

Some argue that better technology will lower costs in the long run — that the "magic pill" will eradicate costly emergency and end-of-life services.

But no one can guess how much this "magic pill" will cost. History suggests a different trend. New capabilities, on balance, have boosted costs. There aren't a whole lot of examples, like the polio vaccine, where we eradicated the disease, for all practical purposes, with a cheap technology.

Up to now, people have wanted what's coming out of the laboratories, and that is something that is likely to continue as long as someone else pays their bill.

In five years, health care will respond to the demand for greater accountability. Quality is to some degree measurable, and consumers will purchase what they think is worthwhile. That's particularly true as noninvasive or minimally invasive technologies spread. If someone else is paying and there is no risk and some possibility of gain, an increasingly educated population will increasingly want it.

Confronted with the choice of potentially being denied care versus paying more, so far we have opted to pay more in the form of higher taxes and premiums, the premiums being boosted by their advantageous tax treatment. The rebellion against managed care in the 1990s occurred because people didn't want to be denied services.

Within five years, health plans will attempt to stem the tide of negative public perception by proving that they add value. Some methods they may employ include improving quality with effective disease management, case management, and selection of high-quality providers for their networks.

But if this doesn't happen and if health plans are seen merely as entities that process claims, the public will ask: "Can't the government do that cheaper?"

Health care five years down the road will depend much more on information technology. This change, which was a revolution in the rest of society has, unfortunately, been an evolution in health care. But it cannot be denied.

Think of how often doctors now look up information on the Internet as compared to five years ago. Consider the exponential rise in hits on Medline at the National Library of Medicine — from all over the world. There are already efforts under way to computerize physician order entry in hospitals. This is still on a small scale, but it's there and will soon spread. The recent Medicare law encourages electronic prescribing.

Within five years, the current mostly-theoretical interest in consumer-directed health care will gain traction, as we see a merging of pension plan policy with health care financing in the new health savings accounts (HSAs). This will be particularly true of the healthy, wealthy, and wise — the sort of patients who will find the HSAs allowable in the Medicare law appealing.

As far as the industry itself is concerned, mergers and acquisitions will slow, except for those occurring among Blues plans.

In short, health care within five years will look blessed and cursed by the same angel: technology.

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There’s a lot more going on in health care than mergers (Aetna-Humana, Anthem-Cigna) creating huge players. Hundreds of insurers operate in 50 different states. Self-insured employers, ACA public exchanges, Medicare Advantage, and Medicaid managed care plans crowd an increasingly complex market.

Major health care players are determined to make health information exchanges (HIEs) work. The push toward value-based payment alone almost guarantees that HIEs will be tweaked, poked, prodded, and overhauled until they deliver on their promise. The goal: straight talk from and among tech systems.

They bring a different mindset. They’re willing to work in teams and focus on the sort of evidence-based medicine that can guide health care’s transformation into a system based on value. One question: How well will this new generation of data-driven MDs deal with patients?

The surge of new MS treatments have been for the relapsing-remitting form of the disease. There’s hope for sufferers of a different form of MS. By homing in on CD20-positive B cells, ocrelizumab is able to knock them out and other aberrant B cells circulating in the bloodstream.

A flood of tests have insurers ramping up prior authorization and utilization review. Information overload is a problem. As doctors struggle to keep up, health plans need to get ahead of the development of the technology in order to successfully manage genetic testing appropriately.

Having the data is one thing. Knowing how to use it is another. Applying its computational power to the data, a company called RowdMap puts providers into high-, medium-, and low-value buckets compared with peers in their markets, using specific benchmarks to show why outliers differ from the norm.
Competition among manufacturers, industry consolidation, and capitalization on me-too drugs are cranking up generic and branded drug prices. This increase has compelled PBMs, health plan sponsors, and retail pharmacies to find novel ways to turn a profit, often at the expense of the consumer.
The development of recombinant DNA and other technologies has added a new dimension to care. These medications have revolutionized the treatment of rheumatoid arthritis and many of the other 80 or so autoimmune diseases. But they can be budget busters and have a tricky side effect profile.

Shelley Slade
Vogel, Slade & Goldstein

Hub programs have emerged as a profitable new line of business in the sales and distribution side of the pharmaceutical industry that has got more than its fair share of wheeling and dealing. But they spell trouble if they spark collusion, threaten patients, or waste federal dollars.

More companies are self-insuring—and it’s not just large employers that are striking out on their own. The percentage of employers who fully self-insure increased by 44% in 1999 to 63% in 2015. Self-insurance may give employers more control over benefit packages, and stop-loss protects them against uncapped liability.