October 16, 2022
Get Caffeinated: The Inflation Grind Continues
The Big Story: Insurers predict 10% health cost hikes globally
Overuse of care and poor health habits were cited as the top reasons for the expected increase.
What It Means for You – And All of Us
Sorry if you’ve already thrown your Sunday coffee against the wall, but, like you, we can’t ignore it. More coverage of relentless inflation. More eye-watering numbers like the just-released consumer price index for health insurance showing a nearly 30 percent increase since last September.
These numbers matter because they affect everything and everyone. Your patients, your colleagues, your organization and you. Your strategies, expectations for behavior change – even the tone and temperature of your communications must consider this deterioration of our economic barometer and how it harasses our collective and exhausted cultural psyche.
Ten percent here, almost 30 percent there…Can’t we have any good news?
Actually, yes. In North America, payers predict health benefits cost will rise a measly 6.5 percent (versus 10 percent globally). That’s down from 9.4 percent this year, according to the WTW annual Global Medical Trends Survey which tracks medical costs of 257 insurers in 55 countries.
Breathing a small sigh of relief about the prospect of only a six-plus percent jump says something about the current state of things:
- With rampant inflation, people are fully sensitized to any kind of price increase.
- With healthcare in the headlines nonstop for three years, people are highly sensitized to any bad news about their care – especially when it intersects with bad news about their wallets.
- When payers have been increasing pressure on providers to bear more of the burden of inflation – despite payers’ own
better-than-expected profit numbers – expect those WTW numbers to start showing up at the negotiating table.
- When poor health habits are as American as apple pie AND we now have tens of millions suffering from an entirely new and as-yet poorly understood disease in long-COVID, there will be more tough decision about how to pay for it all.
Let’s take a beat for Bullet Point Four. Despite the tense payer-provider relationships present today, the root cause of ballooning prices isn’t presented in the survey as a business arms race. Instead, it’s overutilization and too much junk food. That’s on us, as individuals and society. Despite the decades-long conversation about improving public health and better managing/preventing chronic disease, the catastrophic consequences loom larger by the day – both in terms of cost and outcomes.
All told, this survey is a harbinger of conversations about cost that have already started and will accelerate. It’s not hypothetical. Cost of care continues to keep leaders of healthcare organizations – and patients – up at night. It’s not stabilizing any time soon. And much of that cost ends up being placed on employers and individuals.
Expect this issue to be front and center next year. Expect hard questions. Steps to prepare for those conversations:
- Assume that a story about your organization will be written. It will look at the cost of your care, how you bill, how transparent your organization is about these issues. And it will highlight gaps, perceived and real. Reporters will want to know if you’re providing levels of charity care commensurate with your tax breaks and whether you’re sending patients to court for unpaid bills. With this in mind, collect the information about your prices, billing practices and charity care policies you need to respond. And then, compile and translate it in a way that helps people understand it all, not in a way that obfuscates and distracts.
- Look at your public health work. As the slow transition to value-based care has downshifted into idle, it’s crucial to improve health upstream of a hospital visit. While that means fewer patient visits, it also has potential cost savings by reducing expensive overutilization. Support public health organizations in that upstream work. They can do things a large hospital can’t, and the partnership will benefit everyone.
- Anticipate payer issues in 2023 and the associated drama. Just because insurance companies didn’t point the finger at hospitals in the WTW survey doesn’t mean they’re not doing it during negotiations and in the media. Your organization will remain under fire for being a Big Business focused on profits over people. Continue proactively telling the story of the work you’re doing to serve your community and how you’re taking steps to help patients improve their physical and financial health.
Finally, be fully the advocate you are. It’s why you took this job in this industry in the first place. To be an advocate for your patients, your colleagues, your team and yourself.
Oh, and go refill that coffee mug. You’re going to need it.
This piece was originally published over the weekend in our Sunday Quick Think newsletter. Fill out the form to get that in your inbox every week.