HFMA VIEWS

Kevin C. (Casey) Nolan
Managing Director, Navigant Consulting Inc.

For those of us old enough to remember what was then the ground-breaking TV sitcom “Archie Bunker,” the show opened with the stars (Carroll O’Connor and Jean Stapleton) sitting at a piano screeching out a tune that had something to do with “those were the days.” On a couple of cross-country flights recently (without any carry-on liquids, by the way!), I came across two articles that caught my attention and I began to “connect the dots” and long for the good old days.

The first article appeared in the Wall Street Journal and focused on the challenges the big insurance companies were facing in maintaining their profit margins. The key take-away from that article for me was that the insurance companies were maintaining “pricing discipline,” meaning that they were willing to trade off missing their enrollment targets in order to meet the analysts’ profit expectations (which is an entirely different subject for a future blog!!) by keeping or raising their premiums. The article went on to note that as a result of this “pricing discipline,” the rates charged to small employers were increasing dramatically, with many of these small employers increasing the employee cost or dropping their coverage altogether because of the cost.

The second article was an opinion piece in the Wall Street Journal by Andy Stern, President of the Service Employees International Union, in which he challenged the CEOs of the Fortune 500 to make healthcare their national priority. In his piece, Mr. Stern noted that we are currently experiencing the most profound transformation of the economic landscape in the history of our country—and perhaps the world. In this transformative economy, which is accentuated by the demographics of the United States, the average person entering the job market today will have worked for 8 to 12 jobs by the time they are 35 years old. As Mr. Stern puts it, “Employers will be pit stops for them (the younger employees), not permanent homes. In other words, we are rapidly moving from employer-managed work lives to self-managed work lives, in which workers must figure out on their own how to maintain things like health insurance and retirement.”

Combining these two articles with a segment I heard on NPR that commented that the number of defined pension benefit plans in this country was down to less than 30,000, we are clearly on the cusp of a profound shift in the way health insurance is structured and paid for in this country. Gone will be the days of company-defined and paid-for insurance. Welcome to the consumer-driven economy. And these are most definitely NOT the good old days! And the lesson for healthcare executives is the strategies that made you successful “back in the day” will no longer guarantee your success in this transformed economy. In fact, they may lead you to ruin. So understand that “those were the days,” but those days are gone. It is a whole new ball game!!!