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Health Plans Prepare for Health Care Reform: Comparative Effectiveness, Consumerism Drive Future Changes, According to Deloitte Study

SAN DIEGO, June 4, 2009 — As the administration moves forward with health care reform, U.S. heath plans are bracing for change.  New research released this week by the Deloitte Center for Health Solutions at America’s Health Insurance Plans Institute conference in San Diego, highlights how comparative effectiveness and consumerism will challenge the status quo of the existing health care system.

During a time when the majority of U.S. consumers (84 percent) believe that the current economic conditions will make it harder for consumers to pay their medical bills, nearly 40 percent of consumers (70 percent of the uninsured) are already forgoing care when they are sick or injured, according to the Deloitte "2009 Survey of Health Care Consumers."

Recognizing the significance of health care reform required to fix the U.S. health care system, the Deloitte Center for Health Solutions profiled the comparative effectiveness systems of the United Kingdom, Australia, Canada and Germany to better understand how comparative effectiveness may affect the U.S. system.  The study, “Comparative Effectiveness: Perspectives for Consideration,” available at ( www.deloitte.com/us/comparativeeffectivenessreport), concludes that if implemented correctly, comparative effectiveness has the potential to improve care and reduce health care costs for Americans.

Deloitte examined three clinical examples of comparative effectiveness studies across the four countries’ national programs. The three examples are diagnostic screening detection (colon cancer), a medication (the use of statins for treatment of elevated cholesterol) and a surgical procedure (treatment for benign prostatic hyperplasia). 

“The results of our study demonstrate that, while the lessons from the other countries’ approaches to comparative effectiveness are instructive, a cut-and-paste approach will not work in the United States,” said Paul H. Keckley, Ph.D., executive director, Deloitte Center for Health Solutions.  “Comparative effectiveness can be seen as an engine for renewed innovation in the design and delivery of evidence-based care.  Report findings conclude that, in the United States, a ‘tools, not rules’ approach, with industry and policymakers working side by side, will result in a comparative effectiveness model that delivers better value and lower costs.”

The study illustrates the complexity and usefulness of comparative effectiveness to identify the benefits and limitations that can help the U.S. health care system learn from the other systems as health care reform and comparative effectiveness programs are further developed and funded in the United States.
Findings from the report conclude:

  • Although the current annual health care investment in the United States is $2 trillion, less than 1 percent is invested in assessing the comparative effectiveness of available interventions. 
  • The American Recovery and Reconstruction Act of 2009 allocated $1.1 billion to comparative effectiveness research. 
  • National governments in Britain, Canada, Germany, Australia, France and the Netherlands have responded with unique strategies to deal with evidence development in clinical and comparative effectiveness.
  • Britain and Australia have designed programs that are directly linked to decisions that determine national health benefits. Germany and Canada use the outcomes of their programs in an advisory capacity for national health benefit decisions.
  • Comparative effectiveness provides health plans a valuable framework for utilization review, provider profiling, safety and quality assessment and medical management. However, the willingness of health plans to collaborate on measures, reporting metrics and transparency programs will be important to optimize collaboration with providers.
  • Statistical variation in actuarial models is likely to decrease as care becomes more standardized based on best practices discovered with comparative effectiveness. As variation decreases, risk margins charged to customers will likely reduce premiums.
  • With the additional granularity that ICD-10 offers for comparative effectiveness research, its deeper refinement in defining diseases and conditions could potentially lead to more customized medical management programs.

“As the health plans sector prepares for health care reform, comparative effectiveness has the potential to fundamentally change the industry,” said John T. Bigalke, vice chairman and U.S. Health Sciences and Government industry leader, Deloitte LLP.  “Generating better evidence about the costs and benefits of different treatment options — through research on the comparative effectiveness of those options — has the potential to bend the curve in health care spending and reduce inappropriate variation in the system.”

Consumerism

Consumers, as the primary recipients of the product of the health care system, have an incredible stake in the effectiveness and efficiencies of health care services.  Yet, data from the Deloitte 2009 Survey of U.S. Health Care Consumers indicates that only 27 percent of consumers report that they understand how the health system works, with 16 percent reporting that they have no understanding or very slight understanding.  These findings underscore the significance of the potential gap regarding comparative effectiveness research findings and what consumers feel they know about how the health system works and how they view health system performance.

As comparative effectiveness programs are developed in the United States, health plans may find the following information from the Deloitte 2009 Survey of Health Care Consumers valuable about the attitudes and behaviors of health care consumers:

  • Fifty-three percent are satisfied with their health plan — an increase from 44 percent in 2008. Satisfaction is highest among enrollees in Medicare (70 percent) and military health programs (67 percent), lowest among individual policy holders (45 percent).
  • Forty-six percent say they would recommend their health plan to others.
  • Cost is the reason the uninsured lack coverage. Forty-five percent of the uninsured say it is too expensive to purchase health care coverage.
  • Seventeen percent of insured consumers say they switched insurance companies or plans in the past year, an increase from 13 percent in 2008. Lower premiums and co-pays (29 percent) and job changes (25 percent) were major reasons for changes.
  • Four in 10 say they would like to customize their insurance product by selecting benefits and features from a menu, knowing the cost would reflect what they choose; the desire to customize is higher among the uninsured (57 percent), lower among Medicare enrollees (36 percent).
  • Customizable features that consumers consider most important include prescription coverage (81 percent), dental coverage (69 percent), waiver of referrals to specialists (67 percent) and pre-authorization (60 percent) and a wide provider network (60 percent).
    Familiarity with and the reputation of the insurance company is important to three in five consumers.

Related Content
Report:  Comparative Effectiveness
Report:  Health Care Consumerism - Opportunities and Challenges for Health Plans 
Overview:  Deloitte Center for Health Solutions
Profile:  Paul Keckley, Ph.D
Profile:  John T. Bigalke

About Deloitte
As used in this document, “Deloitte” means Deloitte LLP and Deloitte Services LP, a subsidiary of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries.

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John Pappas
Company:
Deloitte Services LP
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Manager
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jpappas@deloitte.com

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