June 13, 2014by Tim Schauer

Health Care in Texas Assumptions, Structure

And Change

Historical Assumptions

1. People get sick and hurt2. Health care is not a “Free

Market”3. We strive to be a civilized

society4. Complexity makes health care

a difficult political issue5. Health care is evolving

#5 - Evolution of Health Care

• Change drivers:– Cost of care – Health care inflation rolls on…– Innovations – Science, R&D, Business models… – Expectations – Patients, Providers, Public…– Governance – Who is accountable???– Laws – Major changes to the rules of the game:

• M/M in 1965• ERISA in 1974• SSRA (PPS) in 1983• COBRA in 1985• EMTALA in 1986 • HIPAA in 1996• BBA in 1997• ACA in 2010

The People of Texas (74% Insured, 26% Uninsured)

County Government

State of Texas

US Government

Hospitals(Public)

MDs

Clinics

Ancillary Services

Taxes

Hospitals(Private)

Hospital District, CIHCP

Med Schools

HHSC

Medicaid/CHIP DSHS, DADS, DARS, DFPS

DSH and 1115 Waiver

CMSDHHS

Traditional Medicaid

FMAP

Match

Star and Star+Plus

ESI via small business

ESI via big business (ERISA)

Premiums

Medicare (plus Advantage)

DOL

TDI

Individual Insurance (FFE)

*** All boxes of this color pay for health services via patient claims processing with some level of managed care strategies

#1 - Sick and Hurt

• All humans will get sick and/or hurt at some point in their lifetimes.

• Risk management can be approached in fundamentally two ways:

• Wait for something to happen, respond; then figure out how to pay for it afterwards.• Plan for it, insure it (share the risk),

and manage the response when it happens.

#2 - Not a “Free Market”

• No resale market• No power to repossess for lack of

payment• Poorly informed consumer choices– Little to no input on disease, ailment or

injury–Who wants cheap health care?– Personal relationship with MDs– Price transparency challenges

#3 - Civilized Society

• We want to live healthy, happy and safe

• We love children, the elderly and people with disabilities (somewhat)

• We want to cure disease and ease suffering

• It is uncivilized to let people die in the streets

#4 - Complexity

• Difficult for individuals and families when they need care – rely on the experts (MDs)

• Uncompensated care – the uninsured – cause financial contortions for the system

• R&D in medicine makes it difficult to keep up

• Public health and wellness help prevention but do not eliminate #1

• Sound-bites are rarely correct or helpful in health policy discussions