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

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Health Care in Texas -- Assumptions, Structure & Change by Tim Schauer

  • 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