A lot has changed since a former chairman of General Motors Corp. once declared, "What's good for GM is good for America." These days it might be more accurate to say, "What ails GM, ails America." And what's ailing GM, CEO G. Richard Wagoner Jr. recently told the Senate Special Committee on Aging, is the skyrocketing cost to employers to provide employees and retirees with healthcare.
But while that's a familiar tune to Congress and the nation at this point, Wagoner took the unusual step in his recent testimony of endorsing a possible course of action that emphasizes fitness, wellness and disease prevention programs. While acknowledging that there is no single solution for reducing costs and improving quality and outcomes, the GM chief executive outlined an approach that essentially would divide the problem for policymakers into potentially easier-to-address segments: First, there needs to be a plan for managing and cutting costs for the 1% of the population with chronic and serious illnesses that accounts for some 30% of total healthcare spending, and then second, there needs to be an approach to health policy for the remaining 99% that would essentially keep them healthier and less likely to tumble into the abyss in which the other 1% operates.
To be sure, the lens through which GM views healthcare is heavily tinted with the unique issues that a unionized workforce environment creates, and the notion, proposed by Wagoner, to create a reinsurance pool for the unhealthiest 1% is an idea not widely embraced by others in Corporate America. Even so, GM's effort to force Congress to grapple with a broader programmatic solution could elevate the healthcare policy debate and encourage companies to become more instrumental in developing a viable national policy, rather than lobbying for small tweaks in tax or insurance policy. "Any time that GM promotes anything, it becomes an important factor," says Michael J. Armstrong, a principal in PricewaterhouseCoopers' healthcare practice.
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That said, the nation still has a very long debate ahead of it given that some corporate health experts don't buy the reinsurance pool approach. "Ironically, it could make things worse," says Helen Darling, president of the National Business Group on Health, which represents the nation's largest employers. She argues that placing that 1% of the population into a separate reinsurance pool could remove the few constraints left in the system.
There could be a problem with a part of the solution Wagoner embraced for the rest of the population as well. In his testimony, Wagoner espoused programs that allow patients to make better, more informed decisions on health care through greater transparency on the part of healthcare providers on price and quality. He also pointed to the high-deductible health plans (HDHPs) with health savings accounts (HSAs) as a way of empowering consumers and giving them greater control over healthcare dollars.
But some of the most recent academic research suggests that such high-deductible plans are not the silver bullet many had supposed. In a recent study by Dahlia Remler of Baruch College and Sherry Glied of Columbia University, the authors argue that HSAs and HDHPs provide no guarantee that increased cost-sharing will actually lead to controlling healthcare inflation over the long run–and the experience of some companies has already indicated the contrary. "Most of the money in health care is in the expensive cases–people who are fairly ill," says Remler, an associate professor at Baruch's School of Public Affairs. "HSAs are not going to get at that spending."
In fact, the study's authors found that while HDHPs worked to increase cost sharing for those in the middle of the spending distribution, they actually decreased cost sharing for those at the high end of the spending curve–the group most responsible for the sector's expenditures and inflation. Still, many executives have been willing to believe the rhetoric so far. "Frankly, companies are desperate," notes Glied, a professor and chair of the Department of Health Policy and Management at Columbia's Joseph L. Mailman School of Public Health.
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