Building A Culture Of Health - John A. Quelch

The Role of Corporations in Addressing Public Health

Category: Healthcare

Op-Ed: Can the Proposed American Health Care Act Improve on ‘Obamacare’?

Politics aside, the primary question to be asked about the newly proposed American Health Care Act is this: Will it improve choice, cost, and outcomes for health care consumers?

by John Quelch, Dr. Gordon Moore, and Emily Boudreau

Yesterday, President Donald Trump endorsed the American Health Care Act (AHCA), a plan proposed by Republican United States lawmakers to replace the Affordable Care Act (ACA), more commonly known as “Obamacare.” Democrats rallied against the new plan, arguing that it was likely to reduce access to coverage and increase premiums. However, the new proposal actually looks far more similar to Obamacare than many anticipated–causing some conservative groups to speak out forcefully against it. Criticizing the plan, Republican Senator Rand Paul of Kentucky even called it “Obamacare Lite.”

Representative Kevin Brady, a Republican from Texas and the House Ways and Means chairman, stated “our legislation transfers power from Washington back to the American people. We dismantle Obamacare’s damaging taxes and mandates so states can deliver quality, affordable options based on what their patient populations need, and workers and families can have the freedom and flexibility to make their own health care choices.”

This statement speaks to a strong attachment to personal freedom and choice in American society—particularly within the Republican Party. Not everyone agrees that freedom of individual choice should always trump government intervention but, perhaps more so than in other developed countries, this sentiment enjoys widespread support in America. The government should not be able to mandate that I buy health insurance or impose a financial penalty if I do not; an employer should not be able to require that I have an annual checkup. Individual consumers should have the right to decide whether they need these services.

It is wrong to contend that fostering consumer choice in health care is entirely a far-right idea. Proposals from both the left and the right have created larger roles for consumers in the health care marketplace. Obamacare opened up a mass market of coverage sold directly to individuals. This was arguably the largest driver of a consumer revolution in health insurance. It expanded options for those with pre-existing conditions, who often had little choice before, and markedly reduced the uninsured rate. However, consumers in some states found that their new plans had narrower networks and their physicians weren’t always included. In 2016, some of the largest insurers pulled out of the state marketplaces after sustaining substantial financial losses. Consumers had fewer options to choose from and many of the remaining plans raised their premiums.

Therefore, politics aside, the question everyone should be asking is: Will this new plan improve choice, cost, and outcomes for health care consumers?

The AHCA maintains several popular provisions included under Obamacare; it prohibits health insurers from denying coverage to patients with pre-existing conditions, or charging them more money, and allows children to remain on their parents’ health plans until age 26. Maintaining these consumer protections is a boon for many people and their families.

The AHCA’s most significant departure from Obamacare is the elimination of the individual mandate, which required individuals to sign up for health insurance or face a penalty. Consumers will now have a choice: should I purchase health insurance or not? For those consumers who value individual freedom, having the ability to answer this question will be seen as a benefit. However, if too many people do indeed opt out of purchasing plans, the potential downside is that, collectively, costs may rise. Risk pools of older and sicker individuals will undoubtedly raise premiums. To incentivize people to sign up for plans, the AHCA proposes age-based tax credits for low- to middle-income individuals instead of a mandate, with older Americans receiving larger credits.

Under Obamacare, older enrollees who hadn’t yet reached Medicare-eligibility (those in the 50s and 60s) benefited because health insurers could only charge them three times more than younger enrollees. The AHCA proposes that this could increase to five times. Therefore, younger and healthier individuals may see their costs go down, while older people will face a larger cost burden.

Wealthier Americans also stand to benefit, largely due to the legislation’s proposed tax cuts. In addition, the plan also advocates for expanded use of Health Savings Accounts, tax-advantaged savings accounts for medical expenses, which are currently only offered to individuals with high-deductible health plans. While these accounts do allow for consumers to better plan for future medical expenses, there is justified concern that these accounts would be more likely to benefit the wealthy and educated, who have more income to put away.

Many of the plan’s most significant changes deal with Medicaid. Obamacare expanded Medicaid coverage for nearly all low-income individuals with incomes at or below 138 percent of the poverty line, and almost half of the previously uninsured individuals who gained coverage under Obamacare received it through Medicaid expansion. The AHCA would end enhanced federal Medicaid funding for new enrollees starting in 2020. States would receive a set amount of funding per enrollee each year, letting them administer Medicaid as each sees fit. However, states without the money to fund the difference would likely reduce eligibility or benefits.

Summary

In conclusion, it seems likely that some consumers, particularly younger and healthier ones, may see their level of choice and therefore competitive pricing improve under the AHCA, while older, sicker, and lower income consumers may find their options reduced.

Finally, the bill was released without a score from Congressional Budget Office, leaving the total cost of the proposal, as well as its projected effects on coverage, unknown. Suffice it to say that given the unknown costs and heated politics—both between the two parties and among factions of Republicans—the debate is far from over. Significant changes are likely before it passes in Congress.

About the Authors

John A. Quelch is the Charles Edward Wilson Professor of Business Administration at Harvard Business School. He also holds a joint appointment at Harvard T.H. Chan School of Public Health as Professor in Health Policy and Management. Dr. Gordon Moore is a Professor of Population Medicine at Harvard Medical School. Emily Boudreau is a Research Associate at Harvard Business School.

Creating A Culture of Health

All American companies are in the health business whether they like it or not. The private sector directly pays for one-fifth of the whopping 17.5% of GDP spent on healthcare in the United States. Rather than viewing health merely as an insurance expense to be controlled, every company needs to embrace building a culture of health as a business opportunity.

Forward thinking companies are doing just that. After CVS removed tobacco products from store shelves and renamed itself CVS Health, new revenues more than made up for lost sales. Johnson and Johnson has achieved a $4 return for every dollar invested in employee health and wellness programs over 30 years. Bath Iron Works in Maine has extended a successful in-house diabetes prevention initiative into the wider community. It expects to cut participants’ future healthcare costs over 5 years by 60% on average.

Recognizing both necessity and opportunity, companies are scrambling to assess and improve the health impact of their business strategies and operations. Last month 150 top executives from diverse industries met for two days at Harvard Business School to hammer out an agenda for building a culture of health in American businesses across four domains: Employee Health, which companies invest in to improve the wellness of current and future employees; Environmental Health, which connects companies’ environmental policies to the health of populations affected by their operations; Community Health, in which businesses boost the health of the local communities in which they operate; Consumer Health, which targets the healthfulness and safety of a company’s products and services for its consumers. “This was not charitable work,” the vice chairman of a large food and beverage company told peers about reducing sugar, salt, and saturated fat in its product portfolio, “It makes business sense.”

The business imperative for companies springs from past neglect and the traditional healthcare system’s ongoing inability to solve America’s health conundrum: poorer health outcomes than in other wealthy countries despite much higher spending on healthcare. How is it possible that American children and adolescents—the future of the U.S. workforce—rank last in health outcomes against wealthy country peers? Not only does this represent a lousy return on investment nationally, it has consequences for American business, including flagging worker productivity and weaker consumer demand for other products and services as consumers spend more on healthcare.

Relying solely on medical care to fix America’s health problem, is futile. Medical treatments influence total health outcomes far less than prevention—defined not just as better diet and exercise, but also in terms of good education, good jobs, good housing, etc. The Affordable Care Act starts to address this complex challenge, but government, non-governmental organizations, and the healthcare industry simply do not have sufficient capabilities or resources to develop and execute innovative solutions on their own. That’s where forward thinking businesses are stepping in to implement health initiatives independently or through partnerships. Continue reading

The Marketing of Prevention

The US will devote 17.5% of GDP to health care this year, around $3 trillion. Yet only 3 percent of that will be spent on prevention, including both primary prevention (preventing illness in the first place) and secondary prevention (preventing sick people getting sicker or having a relapse). Medicine saves lives, doctors are heroes and the best earn Nobel prizes. Prevention, by contrast, is mundane, measurement of effectiveness is difficult, rewards and recognition pale by comparison.

 

In a recent NEJM paper, Tom Farley, Philadelphia Health Commissioner, bemoaned the underfunding of proven prevention programs while sick people certain to die nevertheless continue to receive expensive treatments. Why does a utilitarian greatest good for the greatest number perspective not prevail? Farley cites two reasons: when a life is at stake, it’s unethical to withhold treatment, regardless of cost effectiveness; second, medical treatments are funded by payers and providers whereas prevention programs are typically funded from public health budgets subject to annual budget cuts by short-sighted politicians.

 

There is another important reason. Diet, exercise and other lifestyle decisions are viewed by many as matters of personal choice, even though society may later have to pick up the health care costs associated with these decisions.  Prevention involves taking personal responsibility for one’s health. The worried well do so, wearing Fitbits or following diets, the chronically ill often do not.

 

Why do people not respond to good advice regarding diet and exercise? Continue reading