Improving health care affordability

Achieving quality improvement while bending the cost curve

​​After years of escalating costs, US health care has become unaffordable for many. Industry stakeholders, including health plans, are pulling lots of levers to improve health care affordability—in fact, there are so many levers that selecting among them can be a challenge unto itself—but the path forward for individual organizations is not always clear. Health plans may require assistance to determine where else to focus their efforts and investments.​

Affordability is a hot-button issue

While cost pressures are increasing for all who pay for health care—health plans, governments, employers, and consumers—health plans are in a vulnerable position if industry actions do not meaningfully restructure the health care system to tame costs. There is a growing risk to the future viability of standalone health plan business due to a shift to less profitable lines of business and the potential disintermediation of the health plan value proposition.

As health care costs continue to rise, employers likely will continue to decrease or drop coverage; as a result, health plans' traditional books of business will shift toward less-profitable segments including Medicaid and health insurance exchanges. Additionally, as costs and the number of insured lives continue to increase, health systems and physicians have captured more of the health care industry's total profits at the expense of health plans.

Providers also are joining the race with health plans and vendors to control population health management capabilities. As providers start to choose health plan partners to manage the risk of certain populations, health plans will need to assume different roles across the payment model spectrum in the coming years.

If health plans cannot offer value-added services to enable collaboration and partnerships with providers across the payment model spectrum, they run the risk of potential disintermediation in the long term. Now is the time for health plans to pull the right levers to improve health care affordability. But how do they know which ones will benefit their business, their members, and the health care system as a whole?​

The right levers to improve health care affordability

Based on Deloitte's decades of experience across all health care sectors, we know that both health plans and risk-taking providers are pulling the same, limited number of levers to bend the cost curve while retaining and improving quality. These levers vary in terms of speed to impact (near-term vs. longer-term) and sustainability of impact (lower vs. higher) and include:

  • High-Performance Provider Networks
  • Payment Models
  • Care Management
  • Patient Engagement​


Affordability of health care has become a major issue for all constituencies. At the same time, margins are under significant pressure for both health plans and providers. There is plenty of opportunity to improve affordability as studies indicate up to a third of all health care spend is unnecessary. The challenge is in identifying specifically which services are unnecessary and the best approach to increase efficiency without sacrificing quality.

-Jim Whisler, principal, Deloitte Consulting LLP

What is the path forward for affordability?

Deloitte's six affordability platform offerings are constructed to help health plans pull all the right levers during an affordability transformation:

  • Opportunity assessment: Identify targeted opportunities for improvement and cost savings (e.g., medical, pharmacy, fraud detection).
    • Problem: Runaway medical and pharmacy costs eroding profitability.
    • Value generated: Identifies 5-15 percent of medical costs that are deemed to be achievable by health plans.
  • VBC transformation: Incentivize providers to shift from FFS to fee-for-value.
  • Provider/Health plan collaboration: Explore new collaboration models and ways to enable providers.
    • Problem: Need to converge plan and provider capabilities, assets, and resources.
    • Value generated: Enables better management of the delivery system by aligning the interests and capabilities of a provider and a health plan.
  • Care model redesign: Implement programs to target over-utilizers and optimize the patient's site of service.
    • Problem: Need for ecosystem cost and quality solutions for care models.
    • Value generated: Launches complex case and chronic condition programs supported by new CX tools and underlying data and analytics.
  • PBM relationship maximization: Manage performance and operations of PBM and evaluate potential partners.
    • Problem: Increasing drug prices, particularly for specialty and on- patent medications.
    • Value generated: Reduces cost of goods sold ranging from 8-20 percent over the life of the new contract.
  • Next-Gen product design: Enable consumer behavior to drive quality and cost-effective decisions.
    • Problem: Outdated plan designs which do not support future business model.
    • Value generated: Leads to optimized networks and more affordable product.

Deloitte’s affordability platform offerings are anchored by an opportunity assessment that focuses transformation activities on a health plan’s value proposition across the payment model spectrum.​

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