2018 Review: The Year of Disruption

It’s the time of year when people say… “I can’t believe it’s this time of year already!” This is also a time when people look back and reflect on the prior year. And what a year it was! 2018 saw the health insurance industry disrupted by mergers and acquisitions, big technology entering healthcare, election shake-ups, and the continued rise of Medicare. Below are a few key industry events from 2018 that either had an immediate impact or will drive further change in 2019 and beyond.

Where to start? How about the mid-term elections?

Just prior to the election the Pew Research Center indicated that 75 percent of registered voters said healthcare was a very important issue for them, more important even than the economy. Democrats took control of the US House of Representatives, which will likely have a significant impact on policy and any changes to the ACA moving forward. And three states, Idaho, Nebraska and Utah voted via initiative to expand Medicaid.

Big Tech making moves into healthcare

Amazon announced a joint venture with J.P. Morgan and Berkshire Hathaway intended to reduce the cost of healthcare for the 1 million+ people they employ. The venture has since announced that Atul Gawande will serve as CEO. Amazon bought mail-order pharmacy company PillPack for $1 billion in June and has made significant moves into the medical supply market. It’s also been reported that they are working to make Alexa healthcare friendly for the purpose of helping people manage their health issues and building deep learning and AI technologies healthcare.

Google recently hired Dr. David Feinberg away from Geisinger, where he served as CEO since 2015. Dr. Feinberg will drive Google’s healthcare strategy. Google’s parent company, Alphabet, invested $375M in Oscar Health, which indicated it will use the funds to upgrade technology and enter the Medicare Advantage market in 2020.

Apple received FDA approval for ECG capabilities in their smartwatch and launched their personal health record in March with 39 partner health systems.

The rise of Medicare Advantage

Medicare Advantage enrollment surpassed 20M in 2018 according to the Kaiser Family Foundation (KFF). KFF also found that insurers offered more Medicare Advantage plans in the US than any year since 2009, and project even more plans to be available in 2019.By 2020, CMS believes 20 percent of the population will be Medicare eligible, many of whom will opt for Medicare Advantage plans.

How about merger and acquisition activity?

CVS closed its nearly $70 billion acquisition of Aetna in November, a move many believe is designed to fend off competition from Amazon. In September the US Department of Justice approved Cigna’s $52 billion acquisition of pharmacy benefits manager Express Scripts. Humana, meanwhile, continues to deepen its partnerships with Walgreens and Walmart, while rumors persist that Walmart is considering the acquisition of Humana.

How goes the value-based care journey in 2018?

In a survey of 120 plans this year by ORC International, 80 percent of respondents indicated that they have established, are piloting or planning value-based reimbursement models. Insurers report an average 5.6 percent savings using the model and nearly 80 percent report improvements in quality of care, provider relations and patient engagement. And in a survey of 117 of their members, the HFMA (Healthcare Financial Management Association) reported that 70% of respondents cited positive financial results from value-based reimbursement arrangements.

Along the road to value-based care in 2018, providers and payers seemed to focus more on social determinants of health than ever before. In November HHS Secretary Alex Azar pointed to social determinants of health as “the root cause of so much of our healthcare spending.” Humana and UnitedHealthcare both invested millions of dollars in social determinants of health programs. In addition, the American Hospital Association released a report this year indicating that social determinants of health account for 40 percent of a person’s overall health, compared to 20 percent for access and quality of healthcare.

Given the fact that the above represents only a smattering of industry news for the year, 2018 was huge for the healthcare payer community. The only constant is change and the ability to respond to that change rapidly will separate successful organizations from the not so successful or the long gone. 2019 looks to be another year proving “the only constant is change” and health plans must take steps now to be prepared for changes.


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