Mobilizing healthcare stakeholders can help control rocketing costs

March 1, 2005

The single most important task for managed care executives is leading a serious broad-based effort that brings together business and healthcare decision makers, industry experts say.

TAMPA, FLA. - The single most important task for managed care executives is leading a serious broad-based effort that brings together business and healthcare decision makers, industry experts say.

"There is a cost explosion that is pricing mainstream Americans out of the healthcare marketplace in successive waves," according to Greg Firestone, chief executive officer at NCI, a Tampa, Fla.-based healthcare strategic education company. "That group would work to establish consensually developed recommendations for adjustments to health policy that can help us make the healthcare marketplace work, and that will allow us to understand and manage out of control healthcare costs.

"The question is: what is the narrowest set of changes, meaning 'ecompromises,' that every group can agree on-if they believe that the only alternative is market instability."

ENROLLMENT DROPPING According to recent data on enrollment in private sector health coverage, from the Bureau of Labor Statistics, the percentage of private sector employees with benefits has dropped by 32% in the last 12 years, and the erosion is accelerating. Between 1991 and 2000, the enrollment dropped by 2.4% per year, but between 2001 and 2003, when premium inflation was rising 8, 6 and 5 times as fast as general inflation, it was deteriorating by 4.5% per year.

"There's every reason to believe that, by 2010, only about 15% to 30% of private sector employees will have health benefits," Firestone says. "Keep in mind that private sector coverage is half of all healthcare dollars. So that 4.5% drop in enrollment really translates to a 2.25% reduction in the premium that translates to the revenues available to buy all healthcare products and services, after you adjust for medical inflation."

As cost-control measures, Firestone says that Medicare probably will move from a defined benefit to a defined contribution, and Medicaid could move from a fee-for-service program to another arrangement, such as block grants.