“When you walk around Las Vegas, what you see most is money changing hands for no apparent reason. You could say the same thing about health care.”

That’s how Jay Gellert, president and CEO at Health Net, opened his presentation to other insurance executives at AHIP 2013 in Las Vegas. But he added that the Affordable Care Act will fundamentally redesign the nation’s health care system. “The core question of the law is: Will we fix the system to provide access to all people or will we not? We will answer that question in the next decade.”

Data, analysis and execution will be what most fuels the change in the health system, Gellert predicted. “Unless you’re involved in that trifecta, you’re doing nothing.” The trifecta is necessary to emphasize and understand new health populations, particularly chronically ill and at-risk consumers, that haven’t previously been widely targeted for improved outcomes at lower costs. “Unit cost is a massive problem; our services are so much higher than other nations,” he bemoaned. For instance, the average cost of a hospital day in the U.S. is $4,782 compared to $853 in France. And costs within the U.S., indeed within states and regions, vary to an unacceptable degree. “The cost per day in Sacramento is 60 percent higher than in Los Angeles. This will no longer be tolerated.”

With health insurance exchanges expected to open for business in October amid doubts that they will be ready in time or work, Gellert praised California’s exchange while taking a jab at other states that have not cooperated in building the exchanges. California will succeed because it has more insurance competition than many other states and a strong managed care infrastructure, will draw large numbers of consumers which will balance the risk, and will consequently change commercial insurance business in the state, he said. “If we succeed in California, the uncovered in Texas and Florida will ask, ‘Why them but not me?'”

Gellert warned fellow insurers that insurance exchanges will fundamentally change their business--noting that California has the lowest cost Medicaid program in the nation--and used struggling Hewlett-Packard as an example of what happens to companies too slow to make changes. “If we don’t do something about this, someone will come in and we’ll be the next HP.  If you don’t view yourselves in this revolution, just make sure you’re ready to retire in three years happily.”

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