Against the odds: How payors can succeed under persistent uncertainty

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The health insurance industry in the United States continues to be defined by uncertainty. And, increasingly, it looks like uncertainty is here to stay—at least for the next several years. The new administration in Washington has promised regulatory and policy changes with the potential to significantly alter the healthcare landscape. New models of care delivery, from retail sites of care to virtual visits, are challenging the centrality of traditional institutions. As data becomes more accessible, new technologies and analytics capabilities are upsetting old ways of doing business. Consumerism continues its march, with digital technologies providing new fuel for disruption. And the shift of risk across the value chain through value-based care continues. All signs point to continued industry uncertainty, though the pace of transformation remains unclear.

Despite these disruptions, healthcare remains fundamentally important to our society. A few core themes will remain relevant, regardless of what changes lie ahead. Health insurers, like healthcare providers, have an obligation to help keep people healthy and ensure that those who are sick can receive high-quality care. The quest for affordability will remain paramount. The need to improve productivity and promote appropriate utilization will continue to be crucial. Moreover, healthcare will remain a vital cornerstone of the US economy. These truths give rise to the central task facing all healthcare stakeholders: to ensure the sustainability of our healthcare system over the long term. Payors will need to tirelessly pursue this goal if they want to succeed in coming years.

We hope that the insights in the articles that follow will provide guideposts to help you navigate this uncertainty. In this book, we begin by examining broad shifts in the industry. “The next imperatives for US healthcare” describes the two central requirements for ensuring sustainability: achieving rapid, dramatic gains in productivity and improving the functioning of healthcare markets through more effective demand- and supply-side incentives. “Where to compete in today’s healthcare market” provides advice on how health insurers can best identify where to concentrate their resources—both within their core health plan business and in adjacencies. “US health insurers: An endangered species?” challenges the notion that the confluence of disruptive forces presents an existential threat to the industry. Rather, the authors contend that successful health insurers could have their best days ahead. “Why understanding medical risk is key to US health reform” argues that our healthcare system must align risks with the parties best positioned to influence them. This goal will require payors to develop appropriate financing mechanisms and provider reimbursement models for each category of health risk.

Following these pieces on macro trends, we profile five major forces to watch, including the narrowing of networks, the movement to value-based care, the creation of a robust market for retail healthcare, the transformation driven by digitization, and the growth in spending on pharmaceuticals. We then focus on specific lines of business, exploring dynamics within the commercial, individual, Medicare, Medicaid, and provider-led plan markets.

Finally, we close with insights about key functional capabilities that payors must master to thrive in coming years: consumer engagement, digital sophistication, and organizational agility. In addition to describing our latest consumer research findings, we debunk common myths about healthcare consumers and explain how health insurers can offer a great customer experience. We then look at digital from two perspectives: how consumer-facing digital technologies could alter the healthcare industry and how health insurers can harness digital to improve operations. Our last article, “Why agility is imperative for healthcare organizations,” explores how healthcare leaders can cultivate the ability to adapt quickly to respond to a constantly changing environment while maintaining organizational stability.

While the uncertainty that defines this time can produce heartburn, it has also created opportunities for new thinking and new solutions. We look forward to hearing your reactions to this collection of articles. Please feel free to reach out to any of our authors to discuss the implications of these insights for your organization.

Download the full compendium (PDF–13.09 MB)