State Innovations Models? Really?

I attended a Texas State Innovation Models Initiative Stakeholder meeting, an initiative of the federal government to design and test innovative health delivery and payment models with the intent of lowering health care costs.  I should clarify, the intent, I believe, is NOT to lower health care costs, rather it is to lower government expenditures on health care.  Those are two entirely different goals.  Lowering health care costs saves money for everyone, lowering the government’s health care expenditures nets saves money for the government.  I don’t see any substantive efforts to cut total expenditures on health care, there may be some REAL efforts going on somewhere in the vast country of ours, I just don’t see them.

The meeting was conducted by a private company, Health Management Associates, a consulting company that will collect information from various locations and parties throughout the state and submit a report to the Texas Health and Human Services Commission.  The two company representatives who led the meeting are former state employees.  Now wrap your head around this, the government hired retired government employees to tell the government how to save money.  Doesn’t that sound a bit oxymoronish?

The target audience was health care providers and health care payers.  Consider these two groups for a moment.  Health care providers, they were mostly referring to physicians and hospitals, want to increase their revenue, cut their costs, and simplify their processes.  The payers are insurance companies and managed care organizations that seek to increase their revenue, cut their costs and simplify their process. These two industries have engaged in a cat and mouse ritual, the providers submits claims to the payer.  It is in the provider’s financial interest to extract as much money from the payer as it can; and it is in the payer’s financial interest to reimburse the providers as little as possible.  The missing element in this equation is the source of health insurance premiums, America’s employers and those private citizens who purchase health insurance.

Wrap your head around this, the government wants to spend less on healthcare, and the healthcare industry wants to improve its bottom line.  Am I the only one who sees the inherent contradictions?  Caught in between the proverbial rock and the hard place are health care consumers and purchasers of health insurance.  Will the consumer have better health outcomes?  Will insurance purchasers, mostly employers, have lower premiums.

Enter the government’s initiative to reduce expenditures.  It is pitting competing interests of the government’s expenditures, the provider’s interest and the payer’s interests, against one another.  The challenge to the payers and providers is to come up with innovative ways to cuts costs.  Caught in the cross hairs is the American public, the same public that is actually funding all of this activity.  After the meeting, a hospital executive commented about the low profit margin for hospitals, lost in his analysis is the total dollar amount in profits.  While salaries are growing at 2 to 3%, and inflation is at, or below, that rate, insurance premiums continue to increase by more than 8% annually.