There are only three possible outcomes from the SC’s ruling. The ACA will be thrown out altogether, the individual mandate will be thrown out but ACA will stay or the ACA will stay in its entirety. Whatever the outcome maybe, the genie is out of the bottle and there is no going back.
The healthcare reform has caused the providers, insurers and employers to seriously rethink the healthcare status Quo. Even if the ACA and the individual mandate go away, the healthcare companies and the new businesses that have emerged in result of the mandates will still continue with their research and marketing. There are already new healthcare models emerging that will take the center stage as we move forward.
Healthcare cost is one the top concern for both the employers and the employees. Employers blame the doctors and the hospital while the employees think it’s the insurance companies that are to blame for the higher costs. Either way, both agree that they need to entertain different methods to reduce costs.
Majority of the employers are likely to adopt DCM (Defined Contribution Model). In DCM the employer would pay a specific amount (let’s say $1000) to an insurance company for its employee and the employee would go to that insurance’s private exchange and select the plan. If the total purchase made by the employee ended up being higher than the $1000 contribution, the employer would deduct the difference from employee’s paycheck.
The reason most employers will shift to defined contribution model is because:
- It puts a limit on their healthcare costs
- Employers can define a fixed “cost” vs. having to define a “benefit” for their employees
- Employee decides how to best spend the money
- Works similar to 401(k)
Private exchanges will be a hot item with health insurance providers since they could lose revenues to their competitors who will have a running exchange. The private exchanges will not only accommodate the contribution model for employers, but they will provide an easy platform for individual needing help finding the right plan. In additional to the private exchanges, the insurance providers will develop health pricing tools to help patients make better and cost affective decisions.
The comparison shopping
Healthcare is one of the few industries where the total cost of the product being bought is not always known. Majority of the employees either do not go the doctors or make the wrong decision due to the fear of the high cost. This at the end hurts everyone from the employers to provider and the insurance companies. To help with this issue, the implantation and use of “healthcare pricing tools” will come in. The pricing model is already catching up and big players and investing in such products.
Castlight was able to secure $100 million dollars in venture capital for a product that will allow employees to compare costs and check reviews before making decision. Castlight’s funding success is a proof that we will see more of these comparison products in near future.
All of these changes will help bring additional transparency and innovation in healthcare. However, there is a possibility of a pushback from some hospitals and providers given that they will be judged on their satisfaction ratings, customer feedback and cost comparisons in their area.