Health plans and reform: How will they be affected?

This week, a reader wrote to me to ask what changes I thought health plans would have to undergo to make it in a post-health reform world. Below is the response I offered. I thought I'd share it with you as well, as I imagine some of you will find fault with my logic--and I welcome your saying so!

"What changes will health plans have to undergo if health reforms take place (but don't turn the system into a single-payer model)? My instinct tells me, assuming as you have, that any reforms will-be primarily market-based, that the biggest change will involve the way health plans think about return-on-investment in health. If that sounds cold, bear with me.

Right now all of their incentives are to see to it that a patient doesn't bankrupt them in three to five years, which is about how long they're likely to be in a plan. In short, health plans are not in the lifelong health business. Of course, that's why health plans often refuse to pay for expensive procedures (say, bariatric surgery) that don't have a return-on-investment for a few years, but may save many dollars and improve quality of life later.

But if new structures, such as in Massachusetts, involve forced health insurance buy-in and state subsidies, officials may insist on changing the rules. Even without a complete takeover, the government will still do more to push health plans to take a longer-term view of patient health. And as just happened in the case of Massachusetts, officials may go so far as to force health plans to change their reimbursement structure completely.

I believe this will force health plans to move more in the direction of staff models in some cases, as they'll have to think population and
lifetime health--which means, among other things, having more control of primary care inputs and outcomes. They may have to redefine their relationship with other plans radically, as well, to move into line with the notion of caring for a patient across their lifespan. For
example, perhaps plans will offer each other bonuses if a patient transferred from one group plan to another is healthy. (Yes, a wild
idea I suppose.)

Actually, I believe the Obama administration does have more ambitious--arguably radical--reforms in mind, based on hints I'm gathering from what I read. But that, of course, remains to be seen

So, readers, what do you think? Will health plans be forced to change their thinking substantially? Will they end up cooperating more closely? What's your prediction? - Anne