The New “80/20 Rule” in Government Health Programs

The New “80/20 Rule” in Government Programs

Everyone in health finance and policy knows the “80/20 Rule:” 20% of patients account for 80% of health expenditures. It’s also well-established that about one-third of health outcomes are determined by genetics and access to healthcare. That means two-thirds of outcomes are attributable to social determinants of health. For 2017, we need a new 80/20 rule for Medicare Advantage and Medicaid health plans and their delegates: 80% of the services we provide beneficiaries should address social determinants and make the health services we provide more effective.

Primary social determinants of health include a member’s access to healthcare, socio-economic conditions, and factors related to their living environment such as air or water quality, availability of food, and transportation. Among the all-time worst: social isolation, particularly among the elderly, where loneliness and lack of companionship drive prevalence of depression and its effects on chronic conditions. It’s said isolation carries the same health risk as smoking and double that of obesity. It’s largely because a senior with depression makes other chronic co-morbidities up to four times as expensive.

The challenge we face is few health plans and providers are equipped to identify members with social and environmental issues and even fewer are structured to coordinate both medical and social support needs. We need a holistic, person-centered system of care, and we need an incremental approach to get there.

Technology can be useful in addressing social determinants of health, but often the most-isolated populations in greatest need tend to be the least connected. The answers in the near-term are decidedly low-tech and high-touch. And you won’t find them in an electronic medical record or a care management platform.

Medicare’s annual wellness visit is a great place to start, by screening beneficiaries for social determinants, particularly high-risk patients who frequently face a higher percentage of social determinant challenges. Once your member universe has been assessed, a number of interventions have been proven successful under the “new 80/20 rule:”

  • Connection to, and increased investment in, select social services such as housing support and nutritional assistance. My favorite project of 2016 was working with Meals on Wheelsto expand access to food security benefits in Medicare Advantage and to improve their data collection on social determinants during their in-home meal drop-offs.
  • Partnerships between healthcare and social services like integrated healthcare and housing can result in substantial health improvements and reduced healthcare costs for targeted populations. Last year, Gorman Health Group launched a major effort to help health plans in government programs access the $14 billion in available social impact bonds to help fund these kinds of partnerships.

The 2017 political discourse on healthcare will be dominated by ObamaCare repeal and “you’re on your own.” Health plans serving government beneficiaries know “we’re all in this together” ‒ pooling is the essence of insurance. Our success will be driven by our ability to understand and serve the most vulnerable and expensive through a new 80/20 rule.



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John Gorman
John Gorman

Under John's leadership, Gorman Health Group has become the leading professional services and solutions firm for government-sponsored health care, providing thought leadership and expert strategic, operational, and technology-based solutions. Read more

  1. Right on! I think the paradigm shift to a model that is focused on optimizing health and minimizing the risk of adverse health events is where we are evolving. It started with Nixon and the HMO act and I think it is getting traction… I thing this piece about how we need to approach obesity and the associated health outcomes is another illustration of your point. Imagine a MA or Medicaid plan that got serious with their members about weight. Weight Watchers and Jenny Craig are cheaper than diabetes and CHF.

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