A look at five historical assumptions ...

1. June 13, 2014
by Tim Schauer
Health Care in Texas
Assumptions, Structure
And Change

2. Historical Assumptions
1. People get sick and hurt
2. Health care is not a “Free Market”
3. We strive to be a civilized society
4. Complexity makes health care a
difficult political issue
5. Health care is evolving

3. #5 - Evolution of Health Care
• Change drivers:
– Cost of care – Health care inflation rolls on…
– Innovations – Science, R&D, Business models…
– Expectations – Patients, Providers, Public…
– Governance – Who is accountable???
– Laws – Major changes to the rules of the game:
• M/M in 1965
• ERISA in 1974
• SSRA (PPS) in 1983
• COBRA in 1985
• EMTALA in 1986
• HIPAA in 1996
• BBA in 1997
• ACA in 2010

4. The People of Texas (74% Insured, 26% Uninsured)
County Government
State of Texas
US Government
Hospitals
(Public)
MDs
Clinics
Ancillary
Services
Taxes
Hospitals
(Private)
Hospital District, CIHCP
Med Schools
HHSC
Medicaid/CHIP DSHS, DADS,
DARS, DFPS
DSH and 1115 Waiver
CMSDHHS
Traditional Medicaid
FMAP
Match
Star and Star+Plus
ESI via small business
ESI via big business (ERISA)
Premiums
Medicare (plus Advantage)
DOL
TDI
Individual Insurance (FFE)
*** All boxes of this color pay for health
services via patient claims processing with
some level of managed care strategies

5. #1 - Sick and Hurt
• All humans will get sick and/or hurt
at some point in their lifetimes.
• Risk management can be approached
in fundamentally two ways:
• Wait for something to happen, respond;
then figure out how to pay for it afterwards.
• Plan for it, insure it (share the risk), and
manage the response when it happens.

6. #2 - Not a “Free Market”
• No resale market
• No power to repossess for lack of payment
• Poorly informed consumer choices
– Little to no input on disease, ailment or injury
– Who wants cheap health care?
– Personal relationship with MDs
– Price transparency challenges

7. #3 - Civilized Society
• We want to live healthy, happy and safe
• We love children, the elderly and people
with disabilities (somewhat)
• We want to cure disease and ease suffering
• It is uncivilized to let people die in the
streets

8. #4 - Complexity
• Difficult for individuals and families when
they need care – rely on the experts (MDs)
• Uncompensated care – the uninsured – cause
financial contortions for the system
• R&D in medicine makes it difficult to keep up
• Public health and wellness help prevention
but do not eliminate #1
• Sound-bites are rarely correct or helpful in
health policy discussions