By Kate Woods
I’m in Las Vegas this week attending the annual Healthcare Compliance Association’s Managed Care Organization Conference. And, no surprise – I’m thinking a lot about healthcare.
Right now, I’m thinking that there a lot of similarities between the gambling industry and the U.S. healthcare industry.
A brief comparison of the two industries might be illuminating. And maybe, even a little bit fun. Specifically, let’s look at the concept of risk and wealth transfer in both industries and where the Affordable Care Act has succeeded in using that understanding to the benefit of patients and members and at least one area where the failure to contemplate how the concept of insurance in action has failed members (thus far…there is always the opportunity to remediate and correct).
Casinos are intentionally designed to disorient. Disorientation meets its two primary objectives: to entertain and to transfer wealth. From the minute you walk into a casino, you are set up to disassociate from reality. From the dimly lit rooms, the carnival atmosphere, the drinks, the lack of clocks, and most importantly, the exchange of real legal tender for gambling chips (play money!), the experience is meant to set you into a fantasy state. And it does.
Healthcare systems, on the other hand, are not intentionally designed to disorient. But they do. Healthcare’s two primary objectives are to cure illness and advance overall public health and wellness. Care, delivery, and research costs are associated with these primary objectives, which leads to wealth transfer. And, this is where things get tricky. As our health care delivery and insurance system was set up, we adopted some practices that may have been beneficial at one point, but now are relics that are more analogous to the casino disorientation model than to productive advancement of a healthcare delivery model.
Some examples:
Employment driven subsidized health insurance has the same effect on patient-members as the exchanging of real money for gambling chips has on casino visitors: it disconnects the end user from the full psychological impact of their actions. The Federally Facilitated Marketplace (FFM) or the “Exchange” can actually resolve this issue – if interference in market innovation and pricing were kept to a minimum.
On the facility and provider side, the complicated model of sitting areas and paperwork completion required pre-service required before ever seeing a physician or allied health professional is not dissimilar to the maze of paths and touch points a casino visitor passes through to reach their desired game (be it the slots, roulette wheel, or craps table). By the time the patient-member or their caregiver reaches the physician they can already be frustrated, confused, and tired. So much so that they fail to fully engage in their own healthcare decisions and plans. And unlike at a casino, there probably isn’t a drink at the end of the exercise. Here, many are hanging their hats on technology as the solution. Technology is a big part of the solution – but so is basic simple understanding of human behaviors and human workflow engineering (Six Sigma, anyone?)
These problems aren’t new.
In 2010, the Affordable Care Act (ACA) was enacted to address these and other myriad and sundry issues (including escalating costs to patients and employers) to our very complicated and disorienting healthcare system. And, it has worked – on some levels.
The best example of ACA success is that it has opened new channels for patients previously ineligible for or unable to afford health insurance. In doing so, it has overlooked the important ways in which healthcare delivery and insurance models and casinos are fundamentally the same; they are both based on risk sharing and risk transfer models. This is important because contrary to whatever original intentions existed in its creation, the ACA is a health insurance law – not a healthcare delivery law. In order for it to work effectively for members it has to create efficiencies and encourage innovation. Increasing oversight and monitoring requirements without understanding how insurance companies conserve and appropriately disburse monies collected from member pools simply sets up an unsustainable system.
There are many opportunities to advance and improve the functionality of the ACA, and the healthcare delivery system in general. Collectively, we are getting there. We need to acknowledge and address bad individual behaviors and not just maleficent corporate behaviors if we are ever to get to a place of functional and affordable provision of healthcare services and access in the U.S. (medical professionals can’t work for free and infrastructure doesn’t upgrade on its own).
Returning to the casino analogy – casino visitors choose to assume the risk of losing all of their money in exchange for the thrill of winning, hitting it big – or simply, just enjoying full throttle entertainment for one night.
“Visitors” to a healthcare delivery system – or patients, as we like to call ourselves – are not always in the same position. Some patients engage voluntary medical or healthcare procedures but oftentimes, patients are in need of medical and healthcare services. They do not have a choice; they must visit the healthcare system if they want the potential reward of good health or a cure for an immediate health ailment. Either way, this is where health insurance comes in. The creators of the ACA inherently understood this, of course, and set about to create a system that allowed greater access to health insurance across a broad spectrum of the population. This is good. And again, this has been a success of the ACA.
However, in order to be able to sustain and control and project anticipated healthcare costs across a particular patient-member population or universe, insurance companies must be able to project the likelihood of certain adverse health events occurring within a given time period. One way they do this is by controlling enrollment periods. At its simplest, this allows insurance companies to make reasonable projections on claims in the aggregate and to manage and maintain fair premiums for the group members on the whole. It is risk sharing at its most basic level. Effectively, it spreads the potential for “winning” across the member population. Much like at the casino. Except, in this scenario members are betting on either 1) needing high-cost medical and health services during the year or 2) not needing them. And they shop the price against the service offerings, accordingly. This is fair.
Some may have an initial reaction to a controlled enrollment period as “unfair” to members. On the contrary, this practice is most fair to members. It generally ensures that all potential beneficiaries of the insurance system are participating and contributing at the same level. Under this practice, all members contribute into the system on an equitable level. If life has shown us anything, it is that there are always exceptions to the rule. This also is fair. So long as the exceptions are clearly defined and understood by the players involved ahead of time. And so, health insurance plans have both defined enrollment periods (Annual or Open Enrollment Periods) and Special Enrollment Periods (SEP). Some examples of SEP include change in marital status, birth or adoption of a child, or change of job.
Annual or Open Enrollment Periods help to create fairness for the members because they lock in the member populations. From the member perspective think of it like being at the craps table – one player is on a roll (“winning!”) and he believes that the group of gamblers surrounding him are his “luck”. No one in that situation wants a member to leave – or worse – wants a new member to join. That new dynamic may upset the mojo.
SEPs are fair to members when they are known in advance and the rules are understood. In this scenario, any member has just as much likelihood of triggering the benefit of a SEP as another. No one is gaming the system –or counting cards, so to speak. It is only when members are allowed to enroll at almost any point in the year through Special Enrollment Periods (SEP) that are not subject to strict oversight, that it creates chaos and unfairness for the other members. This is because the system is vulnerable to game-rigging and patient-member manipulation (for the benefit of a few to the detriment of the many). Too many SEPs with no prospective testing for eligibility effectively ensures that health insurance costs will continue to increase for patient-members on and off the FFM Exchange. This is because potential members with knowledge of an upcoming high cost health care event can manipulate the current rules and enter the insured pool only when they need and intend to utilize healthcare services. This allows them to get the most benefit with the least contribution to the shared pool. They can leave after using the health care services. It leaves other “fair player” members at risk for fluctuating costs year over year. And it creates chaos and uncertainty in the market – disallowing insurance plans to stabilize rates based on reasonably reliable member data. At its worst, it perpetuates the disconnection of some patient-members from feeling the full impact of lifestyle behaviors while punishing others who have appropriately participated in the system.
If the healthcare industry were the casino industry, CMS would be not only the regulator of the industry (i.e. the Gaming Commission), it would also be the casino manager, and security, and the pit boss. Because one of the greatest risks for patients in the search for adequate access to health insurance (and eventually actual care, one hopes), is other patients who don’t want to participate fairly in the system. People who want to share in the collective benefits of the system but not share the risk are a part of the problem. Casinos can and do ban card counters and others who know how to game the system. Maybe we can start to consider how we can do the same in the healthcare industry. Precedent is there (see the annual tax/fee for failure to maintain health insurance).
Healthcare, unlike gambling, is a necessity. We can’t ban these bad players from obtaining services but we can and should figure out how to penalize the bad behavior. Maybe that’s creating an additional tax penalty – to be paid directly into a pool for the uninsured or a premium pricing scale for known manipulators. That is, if caught they pay an increased premium for the plan they were previously enrolled in. Every problem has a solution; no doubt, there are numerous solutions to this one problem. In the meantime, let’s at a minimum correct the SEP smorgasbord that currently exists on the FFM – Exchange. Oversight and pre-enrollment verification and proof of eligibility standards is a good place to start in order to keep it fair for all. That’s good business, that’s good government, and that’s good member advocacy. And it will keep ‘em coming back for more… Viva Las Vegas!