Could Health Insurers be Part of the Cost Containment Solution After All?

Everybody and his brother has been beating up on the health insurance industry as one of the major causes of the cost explosion.  Much of that can be justified in fact when comparing the administrative costs of our predominantly private insurance system relative to those of other countries' where public insurance is more prevalent. 

Even in countries like the Netherlands, Germany and Switzerland, where almost all health insurance is private, relative to administrative costs in America, they are very economical.  So is there some other value that health insurers in America can bring to the table which may offset at least to some extent their considerably higher administrative costs?

 

That was the question posed to the Chief Medical Officer of Aetna by Peter Orszag, Director of the White House Office of Management and the Budget (OMB).  More than any other person in the Obama Adminstration (other than perhaps the President himself), the OMB Director has had the most influence in the shape and progress of healthcare reform. 

 

Aetna was able to point to a study analyzing a prospective, double blind, randomized controlled clinical trial involving 40,000 HMO patients.  Using software to deliver best evidence based practices to faculty physicians at a leading academic medical center, hospitalization rates were reduced a statistically significant 19% and overall costs by 6.1% in the approximately 20,000 patients in the intervention group whose physicians received this best practice information. 

 

Orszag was very impressed with the results of this experiment and urged that it be shared with Doug Elmendorf, the head of CBO.  Mr. Elmendorf has been relentlessly pouring cold water on all of the national healthcare reform legislative  proposals to date as not saving any money, and perhaps even costing America more.  

 

However, here, finally, was a study conducted using the most rigorous scientific methods which showed conclusively that improving care through closer adherence to best evidence based practices could not only improve clinical outcomes, but also save a substantial amount of money.  Insurers, as the repositories of tremendous amounts of clinical data, are in as good a position as any type of organization to promote these kinds of studies in the future, which may demonstrate how quality and safety improvement interventions may save lives while saving money (in the words of Former Speaker Newt Gingrich, the title of his book, which references this study on page 213).

 

Companies, in addition to Aetna,  that may be impacted by this study and by the prospect of their doing more of these in the future include:

 

1.  United Health Group;

 

2.  Cigna; 

 

3.  WellPoint;

 

4.  Health Net; and

 

5. Humana

This author consults with leading institutions through GLG