change health care now

Change Health Care Now

Mike McCallisterPresident and Chief Executive OfficerHumana Inc.

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Pe

rce

nt o

f GD

P

Spending per capita

Japan ($2,077, 7.8%)

U.S. ($5,267, 14.6%)

spent in the U.S. economy will go for health care USA Today 2/22/06

every $5 $1 out of

Within a decade,“

”

Adapted from Anderson, GF et al. (2005) Health Affairs

We Are Spending Inefficiently

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Employers’ number-one priority is to control health care costs

51%

16%

14%

10%

7%

Control health care costs

BRT Fourth Quarter December 2006 CEO Economic Outlook Survey

It’s Hurting The American Economy

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We Must Align New Roles

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All The Participants Must Transform

Employers Consumers Providers Government Health Benefits Companies

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Incorporate best practices Turn loose smart health plans to lower costs and

improve experience (integrated solutions) Encourage engagement, not dependency Encourage adoption of tax-advantaged financing

mechanisms, like HSAs and FSAs

Employers

Consumers Providers Government Health Benefits CompaniesEmployers

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Consumers

Be active consumers, not passive users Demand simplicity, transparency and guidance Be engaged, pursue healthy lifestyles

(behavior – 50%) Plan, budget and compare plan choice and financing

alternatives

Providers Government Health Benefits CompaniesEmployers Consumers

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ProvidersAbandon the past 45% of doctors don’t practice

evidence-based medicine It takes an average of 10-15 years for new

medical discoveries to be routinely used by frontline practices

Be cost-aware, not cost-driven

Government Health Benefits CompaniesEmployers Consumers Providers

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GovernmentEnable best practices and efficiencies throughout the system Partner with the private sector to solve the problem

of the uninsured Electronically connect the system under a uniform standard Base reimbursement on performance Release the Medicare claims database Give health insurers the option to compete nationally

Employers Consumers Providers Health Benefits Companies

Government

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Put the consumer first Standardize for industry-wide efficiency Compete on value creation Invest in capabilities to inform and guide

Health Benefit Companies

Employers Consumers Providers Government

Health Benefits

Companies

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Health care proposals are abundant Most are long-term, with little chance of being

adopted Centralized planning for 300 million Americans

is unrealistic– Doesn’t work anywhere else in the economy– Goes against the American grain

Programs for the elderly, children and indigent are needed

Combination of mandates likely required

The Big Picture

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Standardization

Consumer responsibility

Business leadership

Three-Pronged Approach

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Standardization can lead to value and efficiency

Encourage all payers to join Availity, a web-based information exchange system

Developed by Humana and BCBS of Florida in 2001 Designed to allow real-time administrative processing

– Eligibility, referrals,

authorizations and claims Adopted in Florida by 100% of hospitals and

93% of physicians Estimating more than 400 million transactions in 2007 Expanding into Texas, New Mexico and Illinois

Standardization

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Evolving from administrative efficiency to consumer value Ongoing payer impact

– Reduced transaction costs– Call center savings– Medical cost savings

Growing consumer benefit– Transferability of comprehensive medical history– Real-time claims processing

HSA administration

Standardization

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Become a passionate self-advocate– 45% of Americans get the wrong care –

don’t be one of them– Be skeptical, question everyone

Use a Family Health Budget tool– Gain control by knowing how much you spend

on health-related expenses (checkups, vaccinations, routine prescriptions etc.) Humana’s Family Health Budget tool is a

simple seven-step process

Guidance for Becoming a Better Health Care Consumer

Consumer Responsibility

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Find health information online– Become proficient on a Website that can answer most

of your health questions

Take a Health Assessment– Analysis of your daily habits and family history

can provide you with clearer understanding of your health status

– Tool available to general population summer, 2007

Guidance for Becoming a Better Health Care Consumer

Consumer Responsibility

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Leadership leads to value-creation Reward consumer engagement Insist on transparency and accountability Facilitate reform through business partnerships

and alliances

Business Leadership

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Business Health Care Group of Southeast Wisconsin– Formed in response to Milwaukee’s health care

costs averaging 25% higher than comparable Midwest cities

– Includes 200-plus companies of all sizes and 75,000 members

– Exclusive use of Humana Preferred “high-performance” network

– ASO clients saw health costs decline by 15% in 2006 versus 2005

Business Leadership