Center for U.S. Health System Reform

The Center for US Health System Reform is McKinsey’s in-house source on health policies related to reform. Launched in 2010 to advance knowledge and insights critical to reform-related strategy, organization, and operations, we have deepened our expertise beyond the ACA to other new policies to help stakeholders continue to thrive in an inherently regulated market. The Center's goal is to help our public, private, and social sector clients address the implications of the ACA-related marketplace activity and other transformative health policies, while also sharing knowledge and research with the broader public. Read more on McKinsey.com

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2016 individual market losses are in the high single digits—a slight improvement from 2015

A new McKinsey analysis suggests that overall carrier losses in the individual market were probably smaller in 2016 than in 2015 (7% to 9% of premiums, versus 10.1% of premiums).

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Against the odds: How payors can succeed under persistent uncertainty

The US health insurance industry continues to be defined by uncertainty. The 25 articles in this compendium can help health insurers navigate the changes ahead.

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Hospital networks: Perspective from four years of the individual market exchanges

An analysis of the individual market health plans being offered across the U.S.reveals that the trends toward narrowed hospital networks and managed care continue.

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Why agility is imperative for healthcare organizations

A new concept, organizational agility, can help healthcare companies adapt more quickly to changing customer needs, competitor responses, and regulatory guidelines—without requiring a full-scale restructuring.

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Looking ahead in Medicaid: Options for states and the implications for payors and providers

This paper explores opportunities states could consider to improve their Medicaid programs, both to control spending and improve the program's performance.

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Why understanding medical risk is key to US health reform

In our healthcare system, those in the best position to control risks and costs often have inadequate incentive to do so. Refining healthcare financing and reimbursement requires a deep understanding of the nature of medical risk.

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What can states do to change key parameters of Medicaid?

In part I of this February 2017 conversation, Erica Coe and Stephanie Carlton of the McKinsey Center for US Health System Reform discuss this question with Thomas Barker, former General Counsel at the Department of Health and Human Services and the Centers for Medicare & Medicaid Services, and Ken Choe, a former Deputy General Counsel and Counselor to the Office of Health Reform at HHS. Mr. Barker is now a partner and co-chair of the Healthcare Practice at Foley Hoag. Mr. Choe is now a partner at Hogan Lovells.

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Potential impact of individual market reforms

A wide range of changes to stabilize the individual market have been proposed. This special report examines the impact some of the initiatives could have on claims costs and enrollment by the uninsured.

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Navigating the uncertainty of potential ACA ‘repeal and replace’: A preliminary analysis

The findings in this Intelligence Brief provide an introductory perspective on how the next US administration and Congressional Republicans may approach altering the ACA and related legislation. The information is based on publicly reported information released through December 8, 2016. Our Reform Center team is continuing to refresh this perspective on a real-time basis and is closely analyzing potential implications and economic impacts for each policy element under a full range of scenarios.

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The next imperatives for US healthcare

Two steps—increasing healthcare-sector productivity and improving healthcare-market functioning to better balance the supply of and demand for health services—would likely produce sufficient savings to lower medical cost inflation to the rate of GDP growth.

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Assessing the 2017 Medicare Advantage Star ratings

In October, CMS released the Medicare Advantage Star ratings for 2017. By analyzing CMS’s data, we uncovered trends indicating it will be critical for payors to continue to invest in their capabilities if they want to deliver quality programs that receive a Star bonus.

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2017 exchange market: Pricing trends

Analysis of exchange premiums indicates that overall prices will continue to increase in 2017. Despite this, some consumers will see their premiums decline given the effect of government subsidies.

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2017 exchange market: Plan type trends

Analysis of exchange plans indicates that a majority of carriers are continuing to shift toward managed offerings, and consumers will see less unmanaged plan designs available to them than in previous years.

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2017 exchange market: Carrier participation trends

Analysis of exchange carrier participation nationwide indicates that the overall number of carriers has dropped below 2014 levels. However, a majority of markets will continue to have more than one carrier participating.

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Understanding consumer preferences can help capture value in the individual market

As consumers gain experience purchasing health insurance in the individual market, their attitudes are evolving—and so is the market. McKinsey’s 2016 Individual Market Open Enrollment Period Consumer Survey reveals the changes.

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Transitions in coverage type are the norm for most consumers over time

New McKinsey research shows that changes in health insurance type are a common event for most Americans.

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Evolution of provider economics and identity

Changes in provider economics are requiring them to rethink their sustainable valuable propositions. Here’s how.

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The granularity of managed Medicaid growth

What’s the path to growth for MCOs?

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Exchange performance: Three years in

Three years in, the public exchange market is still in flux. Here’s a look at financial performance to-date.

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Employer interest in transformative healthcare

What insights from a large employer survey tell us about the current and future state of employer health benefits.

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Exchanges three years in: Market variations and factors affecting performance

While the individual market is still in flux, careful analysis of carriers’ performance reveals several factors are associated with better results.

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2016 OEP: Consumer survey findings

As the Affordable Care Act (ACA) third individual-market open enrollment period (OEP) came to a close in January, McKinsey’s Center for U.S. Health System Reform conducted its eighth national online survey to gather insights into how the individual-market and consumer behavior have evolved.

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The market evolution of provider-led health plans

Offering a health plan can give health systems an opportunity for growth, but it is not without financial risk. To benefit from this move, health systems should use a different lens to understand both consumers and risk, know where the best growth opportunities are, rethink their payor-provider interactions, and take advantage of integrated claims and clinical data.

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Hospital networks: Perspective from three years of exchanges

We analyzed every individual exchange hospital network across the U.S., and here’s what we learned.

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2014 individual market post-3R financial performance

2014 performance in the individual market varied among payors – most had negative margins, but ~30% of carriers' margins were positive.

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2016 Individual Exchange Rates

Based on nationwide 2016 individual exchange rates, here are overall and state-by-state insights on carrier participation, price leadership shifts, gross premium changes, and the impact of subsidies on 2016 rates.

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2016 exchange market remains in flux: Plan type trends

Facts on the shift toward HMOs on the public exchanges.

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Debunking common myths about healthcare consumerism

As consumers take an increasingly active role in healthcare decision making, payors and providers need an accurate understanding of how healthcare consumerism is playing out. Using data from surveys of thousands of people across the U.S., we debunk eight of the most common myths circulating in the industry.

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Health insurance enrollment and revenue shifts 2013-2014: An emerging story

Between 2013 and 2014 absolute enrollment and revenue grew by 17 million lives and $86 billion respectively.

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2016 exchange market remains in flux: Pricing trends

Despite higher increases in lowest-price plan gross premiums this year, a greater share of consumers are seeing less expensive lowest-price silver net premiums.

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2016 exchange market remains in flux: Evolution of carriers and offerings

The mix of carriers and plans is continuing to change, with nearly half of consumers seeing a new entrant, and plan types becoming more managed.

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Exchange-eligible consumers heading into OEP

As we near the 2016 OEP, outreach and retention efforts are ramping up. Understanding the different consumer segments is critical for driving uptake.

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The emerging story on new entrants to the individual health insurance exchanges

How the competitive landscape on the public exchanges is continuing to unfold

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Insights into Hispanics’ enrollment on the health insurance exchanges

New McKinsey research sheds light on why Hispanic enrollment rates continue to be low – and how these numbers could be improved.

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Hospital networks: Evolution of the configurations on the 2015 exchanges

Updated 2015 network data, including a comparison of networks offered on the 2014 and 2015 exchanges, insights into how networks’ pricing structures are evolving, and insurer and provider participation.

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2015 OEP: Insight into consumer behavior

As the Affordable Care Act’s (ACA’s) second individual market open enrollment period (OEP) came to a close in February, McKinsey’s Center for U.S. Health System Reform conducted our seventh national online survey to discern insights into how the individual market has evolved.

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Exchanges year 2: New findings and ongoing trends

This brief provides a full view into the 2015 exchange landscape.

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2015 Individual Exchange product information

State-by-state data and analysis on approved 2015 products offered on federal and state Individual exchanges

Infographic: On the Eve of Open Enrollment 2015

Survey findings shed light on how a variety of factors could affect the decisions consumers make about enrolling: eligibility for subsidies, penalties for not enrolling, satisfaction with 2014 plans, and increases in premium rates.

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2015 OEP: Emerging trends in the individual exchanges

An analysis of the 2015 exchange landscape, with a view to gaining a preliminary understanding of how the 2015 OEP will differ.

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Assessing the 2015 MA Stars ratings

On October 10, 2014, CMS released the Medicare Advantage (MA) Star ratings for 2015.

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One-on-one with Tom Betlach: Medicaid Sustainability

Eliminate fragmentation in the Medicaid delivery system, and you free up funds for other state spending priorities.

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One-on-one with Mark Keim: Sustainability of Private Exchanges

Will private exchanges reach a tipping point by 2018?

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Reform Center video series: Exchange network

A close look at the public exchange network in 2014.

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Reform Center video series: Public exchange landscape

With the first OEP concluded, this retrospective overview shows how the market landscape has evolved.

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Reform Center video series: Consumer engagement on the public exchanges

The first Open Enrollment Period (OEP) provided early insights into the new on-exchange, individual market consumer.

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Reform Center video series: Private exchanges

Private exchange enrollment is projected to nearly double in 2014 and could comprise 20% of the employer market by 2019.

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Reform Center video series: Medicare Advantage

ACA reimbursement changes are likely to bring shifts in growth and profitability across counties.

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Reform Center video series: Medicaid

From 2012 to 2019, Medicaid enrollment is projected to grow by 9-15M lives (16-26%), and by the end of the period managed Medicaid is expected to cover ~80% of enrollees.

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Hospital networks: Updated national view of configurations on the exchanges

This updated view of the network configurations being offered on public exchanges across the country suggests that consumer choice of health plan design is expanding.

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Individual market: Insights into consumer behavior at the end of open enrollment

This intelligence brief discusses the results of our April individual-market consumer survey, which confirm observations from the first open enrollment period and indicate possible future behavior.

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2015 Medicare Advantage rates: Perspectives for payors

This intelligence brief discusses the likely impact (on both reimbursement rates and MA margins) of the provisions contained in the the final 2015 Rate Announcement and Call Letter for Medicare Advantage and Part D programs.

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Individual market enrollment: Updated view

The latest round of our national survey of QHP-eligible consumers tells a story of deeper engagement than previous surveys.

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Exchange product benefit design: Consumer responsibility and value consciousness

This intel brief examines the benefit designs of the new exchange products and their potential impact on consumers, carriers, and providers.

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Individual market enrollment: Early assessments

Our fourth intelligence brief on exchange dynamics shares observations of the individual market through the mid-point of open enrollment.

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Hospital networks: Configurations on the exchanges and their impact on premiums

Our third intelligence brief on ACA exchange dynamics sets forth five observations based on analysis of new network configurations across 20 urban rating areas.

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Exchanges go live: Early trends in exchange dynamics

Our second brief on exchange dynamics is based on a comprehensive analysis of all exchange offerings across the entire US—more than 21,000 unique qualified health plans filed on the public exchanges in all rating areas.

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Emerging exchange dynamics: Temporary turbulence or sustainable market disruption?

This brief comprises an initial set of analyses regarding the structure, competitive dynamics, and pricing on the exchanges, and their implications.

Short take

Where to compete in a post-reform world

The power of where-to-compete decisions in the health insurance industry is enormous. How can organizations reap greatest benefit from these critical decision points?

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Strategy Matters: Insights in Healthcare (Video, Part 1)

This video discusses reform and the unprecedented change underway for payors.

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Strategy Matters: Insights in Healthcare (Video, Part 2)

This video highlights the variability of reform and the range of potential outcomes for payors.

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Maximizing value in high-performance networks

Many payors now have experience developing value networks, but they may not yet have optimized their network configuration or approach. Over the long term, payors must be able to maximize the value these networks deliver.

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Winning strategies for participating in narrow-network exchange offerings

In the post-reform era, payors will attempt to capture savings by creating limited networks with reduced reimbursement rates. To respond, health systems need a clear understanding—market by market—of their competitive advantages and of when, if, and how to trade price for volume.

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The impact of expanded coverage on hospital utilization

For most health systems, the one-time impact of expanded insurance coverage on utilization will be small but significant. Systems that can capture a substantial share of the increase in utilization may gain a competitive advantage.

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Hospital revenue cycle operations: Opportunities created by the ACA

Although the ACA may make revenue cycle operations more complex, it also presents an opportunity for providers to improve, excel, and differentiate. By adapting their RCM operations and acquiring new capabilities, providers could open up opportunities to win.

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Cross currents in the health economy

This paper outlines five broad changes in the U.S. healthcare system and the likely strategic responses across the value chain.

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Why understanding medical risk is key to US health reform

The United States has a great opportunity to restrain the cost of its healthcare system, improve medical outcomes, and ease the financial and psychological burden on US consumers.

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Accounting for the cost of US healthcare: A new look at why Americans spend more (2008)

At the time of publication, the United States spent $650 billion more on healthcare than expected, even when adjusting for the economy’s relative wealth. This report examines the underlying trends and key drivers of these higher costs.

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Why Americans pay more for healthcare

The United States spends more on healthcare than comparable countries do and more than its wealth would suggest. Here’s how—and why.

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Three imperatives for improving US healthcare

Making healthcare more affordable is the key to making the US system sustainable. Bringing the three largest sources of underlying costs and their growth under control is necessary.