Payor insights

Articles

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).

Reports

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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US health insurers: An endangered species?

Converging trends are disrupting the US healthcare industry. Health insurers are not likely to disappear, however, despite predictions to the contrary. Insurers that can take advantage of these trends are likely to find that their best years are ahead.

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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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Distributed sites of care: At the tipping point?

Increasingly, consumers are seeking services at sites of care outside of the traditional health system infrastructure. This shift has important implications for how health systems think about their asset base and scale.

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Where to compete in today’s healthcare market

To select which markets to focus on—both within health insurance and in adjacent businesses—payors must have strong market insights, the fortitude to make tough decisions, and the agility to alter course rapidly.

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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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Growing employer interest in innovative ways to control healthcare costs

Employers are showing increasing interest in new payment, delivery, and funding models. To capture the opportunity, payors must be able to target appropriate employers; educate employers, employees, and brokers; and demonstrate savings.

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Enabling healthcare consumerism

Companies that can learn to understand, guide, and engage healthcare consumers, while inspiring their loyalty, have a significant opportunity to change the healthcare landscape.

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Winning in private health insurance through technical excellence

In private health insurance, a focus on technical excellence in product development, pricing, underwriting, and claims handling can improve insurers’ bottom line—while easing their dependence on investment returns.

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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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Next-generation contracting: Managed Medicaid for individuals with special or supportive care needs

This new framework can help states improve their ability to design and contract for managed Medicaid programs for these individuals—and maximize the programs’ likelihood of success.

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Global private payors: A trillion-euro growth industry

Four fundamental forces (risk, technology, regulation, and consumerism) are disrupting the overall trillion-euros-in-revenue global private health insurance market—a market experiencing substantial growth. Private payors must act on the imperatives resulting from these forces if they are to capitalize on the opportunities and avoid obsolescence.

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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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Improving care delivery to individuals with special or supportive care needs

What states, private payors, providers, and technology companies are doing to control costs and improve outcomes for individuals with behavioral health conditions or in need of long-term services and support, including those with intellectual or developmental needs.

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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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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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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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Why digital transformation should be a strategic priority for health insurers

Digital technologies and applications have the potential to markedly enhance a payor’s profits. Leadership from the top is necessary to overcome the organizational resistance to change that can make a digital transformation difficult.

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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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Great customer experience: A win-win for consumers and health insurers

Our research suggests that improving customer experience could lead to significant financial gain, and that an approach beginning with a deep understanding of the consumer's journey could be the key to success.

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Improving acquisition and retention in Medicare

When people get to the age of 75, chances are they’ll stay put—with their health plans at least. According to our Annual Enrollment Period (AEP) survey of 2,208 senior consumers, the Medicare population is a loyal bunch, and loyalty increases with age.

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Breaking down the gender challenge

To make meaningful progress on gender diversity, companies must move beyond the averages and focus on the biggest pain points.

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Women in healthcare: Of leaky pipes and sluggish middles

Last year, in partnership with LeanIn.Org, we conducted the first annual comprehensive study of the state of women in corporate America. The findings reveal challenges – but also optimistic notes – for women in healthcare.

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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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How healthcare systems can become digital-health leaders

The potential of digitization is well understood, yet healthcare systems are struggling to convert ambition into reality. Here’s what we recommend.

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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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Assessing the 2016 Medicare Advantage Star ratings

We analyzed CMS’s data covering 642 MA plans and prescription drug plans across the 50 states to develop a perspective on the payor industry’s Stars performance.

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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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Capturing returns in healthcare

New research finds that the healthcare sector has been very good to private equity, especially payor and pharmaceutical services. And specialist firms seem to have an edge over generalists.

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How Discovery keeps innovating

CEO Adrian Gore describes how the South African company has been shaking up its industry through business-model innovation and explains what helps to catalyze new ideas.

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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.

Reports

Medicaid & CHIP enrollment update

Observations based on analysis of Medicaid/CHIP enrollment estimates through December 2014.

Articles

Risk adjustment for retrospective episode-based payment

This article suggests guiding principles and proposed methodologies for risk adjusted episode-based payment.

Articles

Provider-led health plans: The next frontier—or the 1990s all over again?

By offering its own health plan, a hospital system may be able to gain a variety of advantages -- but the move is not without risks.

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Exchanges year 2: New findings and ongoing trends

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

Reports

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.

Articles

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.

Multimedia

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

Will private exchanges reach a tipping point by 2018?

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One-on-one with Richard Gitomer

Following the decision to become a value-based provider, how did the Emory Healthcare Network look to make transformation real?

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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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Healthcare’s digital future

Insights from our international survey can help healthcare organizations plan their next moves in the journey toward full digitization.

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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.

Reports

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.

Reports

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.

Articles

Understanding and engaging a new era of Medicaid consumers

A new McKinsey survey offers payors, providers, and state governments a way to understand key differences among Medicaid consumers— differences that have important implications for how to engage current and potential enrollees effectively.

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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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Navigating the coming changes in the commercial group market

While recent attention has focused on public exchanges, the commercial group market will be a hotbed of change over the next five years. Unmanaged, the segment faces profitability pressure, but payors who take proactive measures to redesign their health benefits product portfolio and optimize their pricing approaches will find revenue and earnings growth.

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Health-focused redesign: Creating a payor organization for the future

Restructuring can help a payor become more nimble and innovative—but only if the redesign is rigorously planned to help deliver on the company’s most pressing strategic imperatives and is carried out in combination with improvements to organizational health.

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Medicare Advantage: Dispelling market misconceptions

Five misconceptions are limiting payors’ ability to take advantage of the opportunities in the MA market—but those opportunities are considerable. To succeed in this market, payors must balance tailored investments in local-market planning and care-delivery effectiveness with greater administrative efficiency.

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Thriving under disruption: How to succeed in the years ahead

The healthcare industry is on the brink of sweeping change. The experience of other industries that have faced disruption suggests that a new set of winners and losers will emerge. Our research into these other industries reveals three approaches incumbents can use to thrive during and after a disruption.

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The payor industry in an era of discontinuous change

We believe the payor industry has entered a period of discontinuous change. Traditionally steeped in slow cycles of annual group sales and multiyear product development, payors in today's market must significantly transform themselves in order to thrive.

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Where to compete in a post-reform world

Payors today must carefully select which markets to focus on—both within health insurance and in adjacent businesses. To determine this, they need insights into where growth and margin can be earned, the foresight to determine when market inflection points might happen, a clear view of their competitive advantages and capabilities, the fortitude to make tough resource allocation decisions, and the agility to alter course as the market shifts.

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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.

Reports

The trillion-dollar prize: Using outcomes-based payment to address the US healthcare financing crisis

There is growing consensus that transitioning to outcomes-based payment is fundamental to driving cost-reducing innovation among healthcare providers and achieving a financially sustainable healthcare system.

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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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Riding the next wave of payor M&A

Regulatory changes and the economic recession have disrupted the U.S. healthcare industry, threatening to erode the advantages of market leaders. As many payors turn to M&A strategy, its imperative for them to understand the inherent risks and the factors that guide M&A success.

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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 with consumers: What payors can learn from 'consumer' companies

This document discusses five strategies adopted by leading consumer companies to engage customers: customer experience and branding, channel excellence, risk management, consumer value management, and product design and innovation.

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The ‘big data’ revolution in US healthcare

Big data could transform the healthcare sector, but the industry must undergo fundamental changes before stakeholders can capture its full value.

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Integrated care 2012

Articles in this publication are designed to help payors, providers, and health systems overcome the challenges ahead and leverage integrated care effectively to deliver better patient care at a lower cost.

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Accounting for the cost of U.S. healthcare: Pre-reform trends and the impact of the recession (2011)

This report analyzes US healthcare spending trends overall and by category of care, and compares US healthcare expenditures with other developed countries.

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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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The new IT landscape for health insurers

A volatile new healthcare environment is emerging in the United States. These are times of trouble—and opportunity—for the payors’ CIOs.

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The next wave of change for US healthcare payments

The development of an automated payment network would reduce bad debt, cut administrative costs, and save billions of dollars.

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Revisiting healthcare payments: An industry still in need of overhaul

While pilots are underway and some progress is being made to restructure US healthcare payments, there is still much more to be done.

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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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The role of emotions in buying health insurance

As consumers face more choice, complexity, and financial exposure for their healthcare in an increasingly uncertain world, what they are really seeking is peace of mind.

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US healthcare payments: Remedies for an ailing system

As American consumers shoulder more of the burden of healthcare costs, new models are needed to facilitate payment flows, combat growing bad debt, and improve efficiency across the value chain.

Reports

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.

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The missed opportunity for US health insurers

Most healthcare payors convert less than 10 percent of the customers who move to a new product class. There is substantial room for improvement.

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What consumers want in healthcare

Consumers are confused, concerned, and uncertain about their health insurance and financing needs. Companies should listen to them.

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Overhauling the US healthcare payment system

A hugely inefficient payment system is ripe for transformation. The inefficiency is concentrated in the $250B that consumers pay doctors and hospitals, and the $1.3T that insurers send to these providers.