The Register-Herald, Beckley, West Virginia

August 30, 2013

Insurance CEO says spending for health care ‘unsustainable’

CHAMBER OF COMMERCE BUSINESS SUMMIT

By Tina Alvey
Register-Herald Reporter

WHITE SULPHUR SPRINGS — With close to 18 percent of the U.S. economy devoted to health care spending, the CEO of one of the region’s largest insurers believes his industry needs to take a harder look at what drives those costs in order to come up with solutions to the problem.

At its current level, health care spending is “unsustainable,” Highmark CEO and President Dr. William Winkenwerder Jr. told an assemblage of business leaders attending the West Virginia Chamber of Commerce’s annual meeting at The Greenbrier Thursday morning.

“We’re not getting the bang for the buck that we should for our health care dollars,” he emphasized, pointing to such cost drivers as unhealthy lifestyles, “perverse incentives” in the insurance system, an aging population and technological advances.

Focusing on the issue of Americans’ unhealthy lifestyles, Winkenwerder noted that the Centers for Disease Control and Prevention in Atlanta have studied the data and concluded that as much as 75 percent of U.S. health care spending is linked to those individual poor choices. Smoking, alcohol and drug consumption, overeating or making poor food choices — all of these contribute to health problems like diabetes, obesity, addiction, even cancer.

His company, Winkenwerder said, is working on several fronts to stem the tide of health care spending through such programs as an in-house wellness and prevention initiative that lowers health insurance premiums for Highmark employees who take steps like quitting smoking, losing weight and adopting a regular exercise regimen.

The company believes those lifestyle changes are worth the investment, because as the employees’ health improves, their need for health care services drops. Winkenwerder said Highmark figures show the firm is seeing a $1.65 return on every dollar spent on this initiative, while each participant is saving around $330 per year in premiums and out-of-pocket health-related expenses.

Another Highmark initiative seeks to boost “cost/quality transparency,” a needed service, according to Winkenwerder, because nobody appears to know how much each item in health care costs.

“We need to get that information out to people,” Winkenwerder said.

In an effort to do just that, Highmark has developed an online resource that allows its policy holders to compare costs and quality for various health care services and procedures, which can vary widely from provider to provider.

“There are enormous challenges in the health care system,” Winkenwerder said. “We (at Highmark) have specific ideas and plans and programs.”

Likewise, Winkenwerder said, Highmark has an entire team of experts now striving to analyze and understand the “very complicated” string of new regulations coming down the ’pike when the next phase of the Affordable Care Act (ACA) kicks in Oct. 1.

“We want to be part of the solution and not be part of the problem,” Winkenwerder said.

Asked by a member of the audience whether the ACA will have an impact on Highmark’s profitability, he responded, “We don’t see it having an impact in the next year or two.”

Beyond that point, however, Winkenwerder said, it is hard to predict the impact, given the potential for “significant changes” in the regulations associated with the controversial law. He said it promises to be a decade-long transition, at the very least.

A follow-up questioner asked who will benefit from the ACA.

“There will be more covered people,” Winkenwerder said, reiterating an earlier statement in which he cited estimates that 30 million more Americans will have insurance coverage — half of them new Medicaid enrollees — when the ACA is fully implemented.

He also predicted that the increase in regulations on the health care industry and the insurance industry will result in a continuation of the current trend of consolidation of hospitals and insurance providers.

— E-mail: talvey@register-herald.com