Today’s health care debate seems to break down to a simple choice: Who is better to run our health care system — insurance companies or the government? It’s a healthy discussion to have.
My hope is that one of the things we’ll get out of it is a greater understanding of the value that private health care companies create in the health care system. Health care companies, in partnership with the government, have developed some remarkably effective programs to support the health care needs of our nation’s citizens, particularly older Americans.
The Medicare Advantage program is a textbook example.
MA, which allows Medicare beneficiaries to enroll in a private plan that administers their health benefits, was established to bring private-sector competition and innovation to Medicare. What makes MA an industry standout is its structure. The program has two unique design principles that drive innovation and motivate companies such as the one I lead, Humana, to constantly improve the health of our members and the services we provide them.
The first principle is consumer choice. Every year, Medicare beneficiaries get to choose their health benefits from original Medicare or an MA plan — from an array of competing plans.
The second principle is full risk, which means private plans are responsible for the total cost of care for the people they insure.
The significance of these two design principles? They ignite innovation. Private plans must continuously up their game to deliver ongoing value to consumers.
Humana invests hundreds of millions annually to improve the value of our plans. And because private plans are responsible for the total cost of care, they must develop highly effective care programs that improve the health outcomes of those they cover. Without such mechanisms, costs increase significantly.
Take diabetes as an example. By 2030, it’s estimated that 55 million Americans will have the disease. The consequences of not managing the disease properly are daunting both in the impact on quality of life and the cost of care.
For a Medicare beneficiary, low-severity diabetes costs $600 a month, whereas high-severity costs $4,500 a month. MA plans have created numerous solutions to slow diabetes progression.
At Humana, we’ve developed predictive models that indicate which members are most likely to experience adverse health events based on their severity level and chronic-care management programs to help people better manage the disease. Care managers work directly with members to develop action plans and provide additional services to improve health. These services include arranging transportation so members can make it to their doctor appointments, enrolling members in our mail-order pharmacy so they stay consistent in taking their medications, and connecting members with additional resources to support their financial and social needs.
Since we’re responsible for the total cost of care, we’re also motivated to address factors that fall outside traditional lines of health care, such as food insecurity and loneliness, that we know impact people’s health. We’ve spent the past decade addressing these social determinants of health, and we’re leveraging the size of our company to invest in new service models — in partnership with local communities — to address these issues.
Today, 34 percent of Medicare beneficiaries choose an MA plan. MA is popular with seniors for a reason. Companies have to compete to add and retain members, which yields lower costs and better services.
The average monthly premium for MA plans that include pharmacy coverage is $40, down from $46 a month in 2018. To reduce exposure to excessive medical costs, annual out-of-pocket costs are capped. Flexibility in MA, and the cost savings resulting from better health outcomes, means we can offer seniors vital additional health care benefits at no additional costs.
This helps seniors afford quality care, many of who live on a fixed budget. We’re thinking innovatively on supplemental benefits, which are unique in Medicare to MA, because we know these types of forward-looking benefits lead to healthier lives. A few examples include offering respite care services to caregivers, providing in-home resources to benefit daily living, so that seniors can avoid unnecessary hospitalizations, and providing seniors with access to nutritious food.
While the U.S. health care system is far from perfect, MA offers an example of the kind of system that the national debate is all about: a system where health comes first, where we treat the whole person, and where more consumer choice creates a competitive environment in which innovation thrives and ultimately drives down the cost of care. As the debate continues, programs such as MA, and those with similar attributes, serve as powerful, effective models for health care in the United States.
Bruce D. Broussard is the president and CEO of Humana.
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