Health Care Reform: Let's Not Wait and See

A March Wall Street Journal Article, “Health-Care Law’s Many Unknown Side Effects,” quotes Paul Keckley, the head of the Deloitte Center for Health Solutions, as saying, “If my competitor drops benefits, I’d want to be out the door just behind them.”

Would your clients agree? Where do they stand with changes that health care reform will bring? Are they planning to make changes once you let them know what other companies are doing, post factum? Are they approaching health reform by watching their competitors? Monkey see, monkey do?

We’ve been stewing ever since we read that March article, which closed with a completely unhelpful warning:

“Beware the facile, confident prediction about what the health-care law will yield. Nobody really knows.”

That line goes against everything we believe about competitive strategy. The health care law has significantly altered the structures and incentives which influence employer benefit plans. The primary tools of reform – where people get their coverage and how much money the federal government subsidizes – are going to be with us for the long haul. As one of your clients recently commented, “I cannot be 100% certain where the cost of cotton is going to be in twelve months either, but it doesn’t keep me from critically looking at different cost models and determining how our strategy should change.” 

The macro trends which have affected employer plans over the past 10 years (excessive inflation, changing tax policy, and changing importance of alternative markets) were with us before health care reform and will be with us regardless of the outcome of the election. Doug Elmendorf of the Congressional Budget Office stated, as he testified before Congress in March 2011, “Many of the effects of the legislation may not be felt for several years, because it will take time for workers and employers to recognize and to adapt to the new incentives.”

Our argument is that leading employers will not be the last to know. If they are, they will no longer be leading employers. We believe that health care reform provides the single greatest opportunity in our lifetime for businesses to rethink how they allocate compensation toward benefits. Leading brokers and consultants are talking to their clients (and prospects) about how they can turn benefits into a competitive advantage, instead of a competitive threat. Cost containment and risk management strategies are still important, but understanding the underlying strategic levers that have been highlighted in the latest reforms provides “real” differentiation. 

So do what we’re doing: counter the “facile, confident predictions” with the arduous but profound work of scenario-based modeling. Get strategic plans in place for each of your clients, because our argument is true for you, too: leading consultants will not be the last to respond to health care reform, and if they are, they will no longer be leading consultants.

Eric Helman

This article was first featured in the June 5th edition of our e-newsletter, Directions. If you'd like to receive that weekly email, contact directions@continuoushealth.com. (Your email will never be shared, sold, or otherwise distributed, and you will receive only the type of content for which you sign up.)

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