On December 3, 2017 it was announced that CVS pharmacy would purchase Aetna for an estimated $69 billion. This could become a move that changes the way healthcare is delivered in the United States. First, let me say that we must distinguish the difference between health insurance and health care. The two are often used synonymously. Health care is the treatment you receive when you see a doctor, health insurance helps you pay for those services. We have seen health care cost rising in this country and with that so has the cost of health insurance. This could be a way to bring those costs down.
Places like CVS and Walgreens have begun offering on site medical care in their locations. This is sometimes known as a “quick clinic”. This care is often easier to get in see the doctor or physician’s assistant or nurse practitioner than seeing your family physician. It often times cost less than seeing your doctor as well. It is also quicker in so much as the attending provider at the quick clinic is right there to prescribe your medication and then you have to walk less than 100 feet to pick up your medications. Very convenient!
Kaiser Permanente Insurance company has been using a similar model for years, They operate in California, Colorado, Georgia, Oregon, Washington and the Washington, D.C. area. Their objective is to get multiple services under one roof. You have Kaiser Permanente Insurance, you go to their facility see their doctors, often times they have specialist on site, so there is no need for a referral. Their primary care doctors and specialist work together to improve health care outcomes.
United Health Care has experimented with this as well with their subsidiary, Harken Health. They did the same thing and had Harken Health Centers. Similar concept with also utilizing the network of doctors outside their centers when needed. One of the problems with both Kaiser and Harken is infrastructure. You need to invest in building the facilities and then staffing the facilities. CVS has the infrastructure already in place with about 70% of Americans living within three miles of one of their locations. Nearly Five million people visit a CVS location every day.
Aetna can now have their policyholders get care at a CVS clinic, which is less expensive that a traditional health care setting, which in theory will bring down the cost of care, which again in theory would bring down the cost of insurance. Also with pharmacy integration, that should offset some of the prescription drug price increases, which in turn should result in more cost savings to consumers.
CVS pharmacy has had a hand in the insurance business for a while with the Medicare part D. CVS owns a company called Silverscript, a large provider in the Medicare part D market. Under their plan they act as the insurance carrier and the administrator, however, you are not required to get your medications at CVS pharmacies. Typically on their plans they have preferred network pricing non- preferred network pricing and then out of network pricing. I could see the Aetna-CVS plan working in a similar manner, especially on the prescription side of the health plan.
One of the cost drivers of health care, is people running to see the doctor for everything. Because our insurance has traditionally had a only a “co-pay” to see a doctor, people do not realize the actual cost of care. Many Americans just see it as a $20 cost to see the doctor, when the insurance carrier might be paying $150 or $200 or more of that bill. If that were a service that people had to pay for, they would be more cost conscious. Going to the CVS clinic is a way to take a better interest in understanding your actual costs of care.
In some parts of the country, there has been a shift away from the traditional use of health insurance for doctor visits and a migration toward what is called direct primary care. These are doctors who do not take insurance and either accept cash only or more common a subscription type service where they may charge $100 per month for their services. With that package, you get an allotted amount of care. Maybe we end up seeing CVS being a direct primary care provider, where they only accept cash. With a lot of bronze plans being sold through the Affordable Care Act, many of them do not include doctor visits, so this could be a nice resource for those clients who would have to pay everything up to $6 or $7,000 before insurance kicks in. If the Affordable Care Act was modified, or repealed so you could have whatever kind of health insurance you wanted, you could have a plan that could be catastrophic only, then you could use a CVS clinic for your primary care, and if you need a prescription be able to get it filled on the spot, without your insurance being used. The doctor and pharmacy would not have to wait for payment from an insurance company. The doctor and pharmacist could communicate on the cost of the medication so everyone is aware of the cost of care.
Many insurance carriers already have some form of preferred pricing plan with insurance carriers on the Medicare Part D products. United Health Care, through AARP has a special Walgreens plan, where you must go to Walgreens for your medications. Humana has a similar plan with Walmart. They have plans were you can go other places as well, but it could make sense now we have seen Aetna and CVS merge, could we see something similar with Walmart or Walgreens. Amazon is talking about getting into the prescription drug mail order business, could they find a way to partner with a brick and mortar place?
If the Aetna-CVS concept does achieve better health care outcomes at a lower price, the consumer wins. In theory, if the cost of health care comes down, the cost of health insurance should come down with it. If the health care outcomes improve, and it is more convenient for the patient, it could become the model of the future.
While we do not know the total plans for the two companies at this time, it looks like a revolutionary way to change how health care is delivered.
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