Health Plans: Disrupt and Prosper

By David Duncan, Steve Wunker

While the health care policy debate in Washington continues to center largely on who is provided insurance coverage, managed care organizations know that the primary business issue confronting health care is distinct: Cost increases have become completely unsustainable, particularly in a recession.

From 2000 to 2007, U.S. health care premiums rose 98 percent, while wages rose only 23 percent. Per capita U.S. health care spending is twice the average of the industrial world, and yet the country ranks on 37^th in life expectancy. Listening to the politicians, it would be tempting to think that payers are raking in profits from this growth in spending, and yet business people know this is anything but true. The traditional payer business model has come under increasing pressure in recent years, and this pressure has threatened its very viability.

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