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Commentary: 3 Health Care Challenges Employers Will Face in 2018

December 22, 2017, 4:35 PM UTC
About 500 protesters chanting Kill the Bill, Dont Kill
NEW YORK STOCK EXCHANGE - WALL STREET, NEW YORK, UNITED STATES - 2017/12/19: About 500 protesters chanting Kill the Bill, Dont Kill Us! filled the street outside the New York Stock Exchange on December 19, 2017; where the resources siphoned from the poor and middleclass by the Republican tax bill will be concentrated. More than 60 people lay down in the street for a die-in and 15 protesters were arrested blocking access to the Stock Exchange. (Photo by Erik McGregor/Pacific Press/LightRocket via Getty Images)
Erik McGregor—Pacific Press/LightRocket via Getty Images

I used to say that the health care system changed so slowly, I didn’t need a crystal ball. Now, with the pace of change quickening as it has in other industries, it’s getting harder to anticipate what’s next. But in hearing directly from large employers and other health care purchasers every day, I feel confident in sharing a few predictions about 2018 and the challenges they may pose for employers and other organizations buying health care.

There will be continued progress on payment reform in the private sector, along with continued questions about its impact

As we await a new Secretary of Health and Human Services, we have little indication from the Trump Administration about whether it will promote provider payment reforms, impede them, or remain neutral. Despite this uncertainty, commercial payers appear strongly committed to continuing reforms to how they pay health care providers.

According to research by my organization, Catalyst for Payment Reform, around 50% of payments to health care providers today are linked to the quality of care they deliver. Some of those payments also reward efficiency. The large employer customers of commercial plans are eager to keep the pressure on for experimentation with payment reform in hopes that it will improve quality of care and affordability. As a result, payment reform is likely to continue.

The continued challenge employers face, however, is that they have minimal evidence to support whether these experiments are worth keeping, altering, or expanding—or even abandoning. While the Centers for Medicare and Medicaid Services evaluates its programs and shares results publicly, private sector players keep results close to the chest. This means that despite continuing rapid changes, employers still won’t know much about which strategies work. Employers must demand this information. Outside of finding ways to introduce more competition among health care providers, or regulating health care prices, payment reform may offer the greatest hope for improving health care quality and affordability.

Employers and payers will work hard to direct consumers to high-quality, more affordable health care providers, but educating consumers and creating the right incentives will be a heavy lift

Compared to a decade ago, both employers and consumers now seem to understand that health care in this country is highly variable. As employers look for ways to eliminate wasteful spending, they are implementing a variety of benefit designs to encourage employees to seek care from higher-value health care providers. Higher value can either mean the same quality for a lower price, higher quality for the same price, or higher quality and lower price. By eliminating providers with higher-than-competitive prices and sending patients to providers who get care right the first time, both employers and consumers may win.

In fact, more than 50% of employers with at least 1,000 employees say that they will offer “high-performance provider networks”—health plan options that eliminate overpriced providers—by 2019, according to a survey by Willis Towers Watson. If the selection of lower-premium products with restricted provider choice by consumers in public exchanges is any indication, Americans appear more willing to trade off choice for affordability.


But any new benefit design requires extensive communication to be effective. When employers offer these innovative designs, such as high-performance provider networks, a tiered network that reduces cost sharing when consumers choose higher-value providers, or a centers of excellence program for high-risk or expensive procedures, they find they need to repeat communications, provide navigation support, and reduce cost sharing to ensure employees choose these options.

Implementation of high-deductible health plans may plateau, but countering their unintended consequences will grow in importance

In anticipation of the Cadillac Tax—an excise tax on high-cost health plans scheduled to take effect in 2020—to save money, and to activate employees as active consumer-shoppers of health care services, employers turned in droves to offering high-deductible health plans, though this trend has slowed. The idea is that when employees need to spend their own money for health care services up until a deductible, they will think twice about seeking frivolous care. Unfortunately, it turns out that consumers in high-deductible plans cut back on all services, including those they need.

Finding ways to counter this negative, unintended consequence will require adding nuance into these plans, which will prove tricky and, in some cases, require new regulations from the IRS. For example, how do we lower barriers for diabetics in these plans who should be encouraged to buy the medications that help keep their blood sugar under control? With tinkering we can make progress, but should anticipate bumps in the road until we get it right.

These trends and challenges likely provide a frustrating distraction from your company’s core business. But given the large role that health care costs play in your company’s bottom line, it’s best to enter the new year with eyes wide open.

Suzanne F. Delbanco is executive director of Catalyst for Payment Reform.