Change Health Care Now

Change Health Care Now Mike McCallister President and Chief Executive Officer Humana Inc. We Are Spending Inefficiently U.S. ($5,267, 14.6%) Percent of GDP “ $1 Japan ($2,077, 7.8%) Within a decade, out of every $5 spent in the U.S. economy will go for health care USA Today 2/22/06 ” Spending per capita 2 Adapted from Anderson, GF et al. (2005) Health Affairs It’s Hurting The American Economy  Employers’ number-one priority is to control health care costs 51% Control health care costs 16% 14% 10% 7% 3 BRT Fourth Quarter December 2006 CEO Economic Outlook Survey We Must Align New Roles 4 All The Participants Must Transform Employers Consumers Providers Government Health Benefits Companies 5 Employers 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 Companies 6 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 Employers Providers Consumers Government Health Benefits Companies 7 Providers Abandon 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 Employers Consumers Providers Government Health Benefits Companies 8 Government Enable 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 Government Benefits Companies 9 Health Benefit Companies Put the consumer first  Standardize for industry-wide efficiency  Compete on value creation  Invest in capabilities to inform and guide Employers Consumers Providers Government Health Benefits Companies 10 The Big Picture  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 11 Three-Pronged Approach  Standardization  Consumer responsibility  Business leadership 12 Standardization 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 13 Standardization 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 14 Consumer Responsibility Guidance for Becoming a Better Health Care Consumer  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 15 Consumer Responsibility Guidance for Becoming a Better Health Care Consumer  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 16 Business Leadership Leadership leads to value-creation  Reward consumer engagement  Insist on transparency and accountability  Facilitate reform through business partnerships and alliances 17 Business Leadership 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 18