Health care's "churn" problem

After spending a few days this week at another star-studded health care conference - in this case, Fortune Brainstorm Health - I walked away totally convinced about the root problem underlying our health care system. If I had to summarize that in a single word it would be this: Churn.

Simply put, we cannot do true prevention at scale if no one is incentivized to keep the patient healthy in the long-term. If individuals are changing health plans every year at open enrollment, then payers are thinking about the next 365 days — and nothing more. What can even be done in 365 days? Well the short answer is: Not a whole heck of a lot.

There may be some bright spots in, say, Medicare Advantage, where it’s possible to keep an individual in the same plan for longer — but even then there’s churn as members have become accustomed to “shopping” for what they perceived as the best benefits. In the employer world, these problems persist also and are only getting worse as more people opt to change jobs every two to three years. Separately, it continues to be mind-boggling to me that we continue to make our employers responsible for health care. This was an accident of history dating back to the immediate aftermath of WW2, when employers were fighting for talent. For all sorts of reasons, ranging from churn we now see in employment and the rise of independent contractors, it makes zero sense today. We also know, based on plenty of health policy reports, that all this churn and instability most impacts vulnerable, lower-income individuals who often go for periods with gaps in their coverage. This kind of churn is often related to difficulties navigating state renewal and determination policies.

Beyond all that, these one-year enrollment cycles creates a dynamic where health plans are aggressively marketing to members the kind of benefits they know will appeal to them in the immediate term, but no one is paying attention to long-term health. Very little funding is being deployed today to take care of children, or help young people entering into the workplace to engage in healthy habits. There’s very few incentives around promoting healthy eating and lifestyle; and we continue to see rising rates of chronic disease as a result. All of this is contributing to the system of “sick care” rather than health care that we are saddled with today.

Why is this so problematic?

I can’t stress enough how much our system is not incentivized to prevent disease versus treat it when people are already sick. That was the big takeaway of the chronic disease panel at Fortune, where Included Health’s Owen Tripp and Omada Health’s Sean Duffy. Both acknowledged that the dollars are there in treating more advanced Type 2 diabetes, and not in diet, sleep, and other interventions that could prevent that individual from getting chronically sick in the first place.

One person who’s been fighting the good fight on this for years is SCAN President & CEO Sachin Jain, who also spoke at Fortune. He’s shared in a number of public forums why he’s so concerned about annual enrollment, which gives health plans only 12 months to show ROI. Here’s how he put it in an interview:

“I think about the healthcare innovation ecosystem and the challenges that many of the leading vendors face in getting contracts, which is that they've got to show actuarial returns within 12 months. But a lot of things that are going to improve long-term health outcomes have nothing to do with 12 months. If I invest in efforts to reduce your weight by 50 pounds this year, and I avoid the cost of heart attack and diabetes five years later, I'm not necessarily incentivized to do that, because you may not be my member in five years.”

This is the biggest reason, by the way, that I see digital health companies struggling.

Most of the vendors I meet with are focused on prevention. That’s an incredibly worthy cause, which deserves our time, attention and investment dollars, but there’s no real business model that makes any sense outside of Medicare Advantage, consumer/cash pay and employers in our current system. We can talk about innovation and preventing disease until we’re blue in the face, but we’re going nowhere fast unless we can figure out how to make money in prevention.

Let’s say it like it is. If there are no financial incentives in place, we cannot expect our system to do the right thing. That is why value-based care, on the face of it, is so promising. And yet, the devil in the details. We rarely talk about the details when it comes to value-based care, because the vast majority of panels are all about high-level ideas, with no grounding in specific examples.

In a Medicare context, Jain has talked about how these dynamics have pushed insurers to focus on “shiny objects.” Right around open enrollment, as marketing goes into overdrive to enroll patients in plans, there’s a lot of talk about benefits that will hook members in the immediate-term. That might be a dental care benefit or a rebate, which could appeal to people who need dental work or are strapped for cash.

What that also means is that solutions that we know work over a five-year period (or longer) fall by the wayside.

What are the downsides to doing it differently?

When I asked Jain this question on our panel, he pointed to the biggest downside: If a health plan is not a good fit for a patient, they’d need to wait longer to enroll in another one. That could make people feel that they have less choice (and Americans do like to be able to choose).

I totally understand the point - and yet, I still don’t think it justifies keeping the status quo how it is today. Payers are not incentivized to do the right thing - and offering a consumer the opportunity to switch plans doesn’t fix that problem. Patients deserve a great plan that is doing the right thing — and not just the opportunity to bounce around. Countless studies have shown consumers are not particularly satisfied with their health insurance as it stands today.

How about a proposal?

If I have convinced you that U.S. health care has a churn problem, what can we do about it?

Well, Jain’s idea has a lot of merit (he shared it via Forbes and on LinkedIn). Why not enroll people for longer periods, starting with a three-year cycle? As he points out, measurement systems could also be adapted so that plans are tracked on health improvements over those three-year cycles rather than a “check the box” exercise. And plans could build longer-term relationships with patients, rather than offering gimmicky benefits to catch their attention and get them to enroll for 365 days.

I’m all for it. So what it would take to get us? Well, we’d need buy in from the federal government, the payers and the patients, amongst other stakeholders. Consumers would need to be educated and informed around the benefits, as we’ve become accustomed to annual enrollment over the years.

My hunch is that if we got the word out, then we could build some momentum around this idea.

As I skimmed some of the comments on Jain’s LinkedIn post outlining this proposal, I noticed that most folks were on board. In fact, many people didn’t believe his proposal was ambitious enough. Those in the cancer screening community, for instance, would suggest five or even ten years. Three, to them, still felt overly short.

I totally understand this perspective, but also recognize that we need to take baby steps, experiment and report back. So how about it? Why not try for three and see how it goes?

As always I’d love to hear from you! How did this post resonate and land with you?

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