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October 6, 2014 Editorial

Inefficiencies still plague CT's healthcare system

If you're looking for a brief window into what's wrong with the healthcare system, and how consumers and employers end up footing the bill, look no further than recent events in Connecticut.

First, as Hartford Business Journal News Editor Gregory Seay reports in this week's issue, you have Connecticut nursing home owners crying foul over dismal reimbursement rates from the state that is causing the industry to lose $25 a day per Medicaid patient. The lackluster pay to care for Connecticut's sickest and neediest patients has forced many nursing homes to their financial sick beds in recent years.

Connecticut hospitals are continuing to raise red flags about state funding cuts, complaining they aren't seeing the financial windfall promised to them as a result of more people in the state gaining insurance coverage through the Affordable Care Act.

The Connecticut Hospital Association said any financial gains that come from more people having health insurance in the state will be offset by reductions in state aid and Medicare funding.

Meantime, Anthem Blue Cross and Blue Shield was in contentious contract negotiations with Hartford Healthcare, as the two sides fought over reimbursement rates. At first, Anthem claimed Hartford Healthcare was asking for a double-digit rate increase for the procedures and services provided by its medical staff. Hartford Healthcare said it was asking for a lower increase. The two sides blew past their contract renewal deadline last week, creating mass confusion and potentially higher, out-of-pocket costs for tens of thousands of patients. The two sides finally reached a new contract agreement, but only after they were publicly chastised by government officials and healthcare advocates.

While these three events may seem unrelated, they are inextricably linked. The chronic underfunding of government-subsidized health insurance programs — particularly Medicaid — ultimately costs individuals and employers who are paying for private, commercial insurance.

Hospitals, physicians, and even nursing homes often recoup money lost by treating Medicaid patients, or the uninsured, by demanding that private insurers pay more. Needing to maintain their profit margins, insurers pass those costs onto their members through higher premiums.

It's a vicious cycle that has contributed to employers' increasing healthcare costs over the years.

What's the solution? There's no clear answer.

We aren't advocating for the state to open its money spigot and substantially increase funding to healthcare providers. That won't be a cure-all because hospitals and doctors always will fight for more money and higher reimbursement rates. At some point, the state must draw a line in the sand, although it can be argued that raising Connecticut's Medicaid reimbursement rate just twice in the past seven years (which policymakers have chosen to do in the face of budget deficits) is inadequate.

Instead, the larger focus must be a joint effort — among medical providers, insurers, policymakers and even employers — to rein in medical costs and inefficiencies in the healthcare system. And all parties must be held accountable.

Employers, for example, must demand greater value for the health care they provide their workers, including evidence that medical providers are being incentivized and paid by insurers to keep people healthy, rather than simply provide sick care, which is the traditional way the U.S. healthcare system has worked.

Some progress has been made in this area in recent years, but Connecticut remains behind other states in adopting such performance-based payment models. They must become more widespread to have any meaningful impact.

Employers must do more to encourage healthy behaviors among their workforce, while the state needs better define its spending priorities and adequately fund programs it creates to help the poor and needy.

The healthcare system remains disjointed, with no easy fixes, but the state, employers, providers, and insurance companies all need to move in a much more cohesive direction. If they don't we'll all end up paying the price.

Editor's Note: This editorial originally appeared in HBJ's Oct. 6 print edition. The online version has been edited to reflect that Hartford Healthcare and Anthem have reached a new provider-contract agreement. When the editorial went to print Oct. 2, Hartford Healthcare and Anthem had not reached an agreement yet and blew past their contract deadline. 

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