In the first half of 2016, two national trends have been driving changes in the state health care industry: expanded coverage under the Affordable Care Act and aging baby boomers.
As demand for medical care increases, experts expect a shortage of between 60,000 and 95,000 physicians to emerge over the next decade. To adapt, hospital systems and insurance companies are redrawing industry lines, giving rise to consolidation, as well as experimentation with different types of insurance and care models — many designed to reduce costs.
Vitals, a health care startup based in New Jersey that recommends highly-rated and inexpensive medical care to customers, examined data from major cities across the country and recently ranked Milwaukee the second-best city in terms of health care access.
This year, Wisconsin was named the sixth-best state for health care access in the country in a study by New York-based financial planning firm SmartAsset. But it was also one of the most expensive places in the country in which to receive health care.
The results of a study conducted by the Health Care Cost Institute that analyzed claims data from three of the nation’s largest insurers found medical services for commercially insured patients under the age of 65 cost 81 percent more in Wisconsin than the national average.
The only state with higher health care costs was Alaska, where the relatively sparse population’s distance from suppliers makes shipping more difficult and more expensive.
To reduce administrative costs and pick up larger shares of a growing market, hospital systems have started consolidating. St. Louis, Missouri-based Ascension Health this spring acquired of Wheaton Franciscan Health Care, which operated eight hospitals, three long-term care facilities and several clinics with nearly 11,000 employees in the Milwaukee area.
Insurance companies have adapted to changing market forces in year three of the ACA by either consolidating — industry giants Aetna Inc. and Humana Inc. could close a $37 billion merger this year — or withdrawing from public exchanges and cutting plans.
UnitedHealthCare announced in April it would pull out of most public health care exchanges by 2017, giving rise to concerns over limited competition in certain public exchanges. The company cited losses related to claims filed by participants in its plans offered on public exchanges.
Louisville, Kentucky-based Humana announced in May it would discontinue individual major medical insurance plans in Wisconsin after encountering what company spokesperson Mark Mathis called “persistent issues” with enrollment. Analysts said at the time of the announcement it was possible increased competition from plans on public exchanges may have contributed to a drop in enrollment.
Lines between hospitals and insurance companies also are blurring. Aurora Health Care formed a joint venture company with Anthem Blue Cross and Blue Shield this spring called Wisconsin Collaborative Insurance Co. that will begin offering a commercial insurance plan to employer groups this year.
Aurora has also entered into a partnership with UnitedHealthCare to share data on patients enrolled in United’s Medicare Advantage plans.
Wauwatosa-based Children’s Hospital and Health System owns an insurance plan that oversees care for people covered by BadgerCare Plus, the state’s largest Medicaid program, and in 2017 plans to begin selling that plan on the federal marketplace set up through the Affordable Care Act.
Industry analysts and insiders such as Scott Weltz, a principal and consulting actuary at Milliman’s Brookfield office, see hospital systems entering the insurance market as a possible positive development for consumers.
Weltz co-authored this year’s Milliman Medical Index, which estimated the total cost of health care for the average family of four covered by a typical employer-sponsored health plan will exceed $25,000.
It’s the highest projected cost since the index began tracking annual health costs in 2001, but the jump happened at a lower rate than in previous years – costs are expected to increase by 4.8 percent, compared to 6.8 percent over the past decade.
Weltz told BizTimes in May it’s difficult to explain the relatively low year-to-year price increase, but an industry shift toward insurance models that encourage preventative care is one possible explanation.
Hospital systems with a financial stake in insurance plans would theoretically have an incentive to keep patients enrolled in their plan as healthy as possible for as long as possible to reduce their number of expensive emergency care claims. Promoting healthy lifestyles and getting patients in for frequent checkups to catch certain medical problems early on, when they are relatively inexpensive to treat, would help the bottom line.
