Five Health Insurance Predictions for 2009

A new president and Congress promise to make wholesale changes in healthcare, and those changes are causing both excitement and trepidation for the health insurance industry.

I've got some good news or bad news depending on where you stand on the issue of healthcare reform: Major changes will not happen this year. Sure, Congress will cover more children and cut Medicare Advantage payments to private insurers, but 2009 will be a year of minor reforms, and plenty of debate and discussion rather than action.

Now that I have depressed some of you, here are my five predictions for 2009:

Healthcare reforms: Think incremental

Don't believe the talking heads who predict major healthcare reforms this year. The election of Barack Obama has pundits gushing about the possibilities as they believe this wave of positivity will result in major healthcare reform in 2009.

Another reason that pundits point to major changes in healthcare is that Senator Ted Kennedy has brought together a number of stakeholders in hopes of producing legislation that could cap off a Senate career that has lasted nearly half a century.

Those are definitely two positives for those who want major reforms, but it's naïve to expect major changes this year.

Yes, there is a fresh wind blowing in Washington and overwhelming support for healthcare reforms, but there is still the issue of what is the best system. Is it a single-payer system, a public insurance option coupled with the employer-based system, Medicare for all, or the individual market?

Nearly everyone agrees that healthcare costs are out of control and not enough Americans have health insurance. The issue is how to create a system that can tackle those two issues, as well as the plethora of other healthcare concerns, such as quality care, physician payment reform, and the primary care shortage.

That said, the number of groups presenting their own reform plans is impressive. Stakeholders are playing nice now, but those good feelings will melt away once a concrete plan is presented.

Healthcare makes up about 14% of the nation's economy. It should take longer than a year to create a solution to the problem.

There is some good news for reform-minded people though. Expect states to continue to implement their own reforms this year and major healthcare legislation from Washington in 2010 when the House of Representatives and one-third of the Senate run for re-election.

Legislators will pass a bill in 2010 that is politically viable and not one that will go as far as many hoped.

More children will get insurance in 2009

Though major healthcare reforms will not happen this year, Obama and the Democrats will expand health insurance to more children.

Within Obama's first 100 days, Congress will renew the State Children's Health Insurance Program (SCHIP) and lower income thresholds that will allow states to provide coverage to more children.

Sometime in 2009 (either as part of the SCHIP renewal or in separate legislation) the Democrats will provide health insurance for most children whose parents or guardians do not have insurance through their employers.

Supporting an initiative like health insurance for children is politically popular and will happen this year.

Medicare Advantage fight begins

The president-elect made Medicare Advantage costs a campaign issue and the concept of private insurers running Medicare offerings is a Republican idea. With Democrats controlling Washington, expect Medicare Advantage payment cuts in Obama's first 100 days.

Reducing payments to private insurers will start a slow exodus with insurers dropping out of the program because it simply won't be as profitable.

The road won't be easy for Democrats though. The insurance industry and senior groups will push back claiming that Medicare Advantage cuts will lead to seniors not having access to these popular programs.

More employers will turn to CDHPs

Consumer-driven health plans (CDHPs) comprise a relatively small percentage of the market, but look for more employers to implement these plans as a way to reduce their healthcare costs.

The issue in 2009 will be the employers that view CDHPs simply as a way to shift costs onto employees. This is exactly what CDHP advocates don't want.

The idea behind CDHPs is to create educated healthcare consumers. Sure, the definition of a CDHP is a high-deductible health plan with a health savings account, but education is the critical third leg to the consumer-driven stool.

In order to create effective consumer-driven plans, health insurers and employers need to provide cost and quality information as well as educate members about how to be wise healthcare consumers.

If health insurers and employers do not create CDHPs with an educational component, members will see the plans as a way to transfer costs onto them rather than an opportunity for both sides to save money. That will cause individuals to rebel against the plans and view employers and insurers as the enemy.

It's up to health insurers and employers to make sure that does not happen in 2009.

Questions about DM

Supporters of disease management (DM) were glad to see the end of 2008.

The previous year was a difficult one for DM. Not only did CMS end the DM-inspired Medicare Health Support project because of disappointing results, but more experts questioned whether DM actually reduces costs and improves outcomes.

The turn of the calendar will not end those questions, but there is an opportunity for the industry. This year should see the DM industry release objective reports about which offerings work best for particular disease states.

In order for DM to have a seat at the healthcare reform table, the industry will need to fund research and look critically at its programs. Otherwise, 2009 could become the year in which DM was lowered into the ground alongside other healthcare acronyms that did not prove their value.

Those are just five predictions in what could become a watershed year for healthcare. I'll check back at the end of 2009 to see if any or all of my predictions come true.