One thing I've learned from working in the IT sector over the past couple of decades is that the government can be the biggest driver of IT spending. Some are convinced that the Sarbanes-Oxley Act single-handedly lifted the IT sector out of its post-dot-com, post-Y2K doldrums of the early 2000s by driving new spending on compliance, risk management, analytics and data management software.
Likewise, we're seeing a spurt of IT spending related to last year's passage and implementation of the federal health reform law. A number of states, in fact, are now building the information technology infrastructure necessary to implement health insurance exchanges required by the law.
Mary Mosquera, writing in Government Health IT, notes that Kansas, Maryland and California are beginning to assemble the information technology building blocks needed to create their health insurance exchanges.
Kansas is ahead of the pack, and the state's insurance commissioner is even suggesting that Kansas may offer its health insurance exchange capabilities as a cloud offering to other states. The exchanges are expected to up and running by 2014, serving as a single destination where consumers and small businesses will be able to shop for, compare and enroll in health insurance plans.
Mosquera reports that the U.S. Department of Health and Human Services has made more than $296 million in grants to states to plan their exchanges, “including for innovative models for the exchanges’ IT systems and to research and design exchange governance and operations.” There will be lots of integration work—the exchange systems will need to be compatible with Medicaid eligibility systems, as well as across federal IT systems, including those of Homeland Security, the IRS, and Social Security Administration.
There's no question that the health insurance and health care sector is an area ripe for technology restructuring. As observed last year, at the root of health care cost problems is a titanic struggle for cost-containment between insurers and providers. As a result of this emphasis, more innovative solutions are not coming to the fore. In addition, as any payer can testify, cost-containment has been an abysmal failure. And love it or hate it, the new federal health care initiative relies heavily on digitization to achieve cost containment goals.
Joe McKendrick is an author, consultant, blogger and frequent INN contributor specializing in information technology.
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