A registered nurse checks Mildred Herman's medication during a home visit in Denver in 2012. Major insurance companies in the U.S. are looking for ways to lower costs while also improving care. John Moore/Getty Images

Patients and the nation’s major health insurers agree: Healthcare costs far too much. But while patients have little recourse to fix the problem, companies are investing in new programs and treatment models designed to provide better and cheaper care to their most expensive clients.

Just as patients can fend off the risk and cost of some diseases through proper diet and exercise, insurers can reduce their own costs by helping customers stay healthy. The hope is that they can reduce operational expenses and possibly lower premiums for patients, though it's not clear that they can accomplish either through cost-saving programs alone.

"I think they're knocking themselves out, trying to find something," says Mark Pauly, an expert in the economics of healthcare at the Wharton School of the University of Pennsylvania. "But it's not necessarily enough."

Shana Charles, a public policy expert at UCLA's Center for Health Policy Research who focuses on insurance companies, applauds the spurt of interest in innovative programs since the passage of the Affordable Care Act, but says companies should have been pursuing them all along.

“Historically, insurance companies have just been focused on their own bottom line and not really so much on how they get there,” she says. “We're slowly moving toward this place where insurance companies are promoting the idea that they're for the health of their customers.”

The health insurance industry has faced pressure to lower costs following ACA. An analysis by McKinsey & Co. showed that private insurers lost $2.5 billion in 2014 from the plans they sold to 8 million Americans through federal and state health insurance exchanges, or about $163 for every person they covered. UnitedHealth Group recently said it would consider pulling its insurance plans from those exchanges, blaming paltry earnings. The industry's ongoing shift from a fee-for-service payment model has further incentivized companies to do more, for less.

But overall, health insurers have flourished since President Barack Obama signed ACA into law in 2010. Average revenues increased by 43 percent from 2010 to 2014 at UnitedHealth Group, Anthem and Aetna. Companies have announced a flurry of mergers this year to reduce competition and drive those revenues higher still. Last month, shareholders at Aetna and Humana enthusiastically approved Aetna’s $37 billion purchase of Humana. The agreement is now on ice as the U.S. Justice Department tries to determine whether it violates antitrust laws. Separately, two other major insurers --Anthem and Cigna -- declared their intent to join forces earlier this year.

The companies claim that combining will help them negotiate with hospitals and pharmaceutical companies for cheaper care, and cut operational costs. But some critics expect heavy consolidation to reduce competition and create payer behemoths that can ultimately charge patients higher prices. Last week, the American Medical Association urged the Justice Department to block the mergers, citing a “near total collapse of competition” in the insurance market.

Jonathan Gruber, a health economist at the Massachusetts Institute of Technology who served as a consultant to the Obama administration for the Affordable Care Act, maintains that since ACA has brought new competition to the insurance market and sparked more investment into innovative, cost-saving solutions, patients can expect companies to pass on at least some of these savings to them.

“One of the major gains of the ACA and the new insurance environment is, it's putting selective pressure on insurers,” he says. “It’s a much more competitive environment now and they'd like to compete by having savings they can pass on.”

'Fundamentally Unsustainable'

In the case of Aetna and Humana, both companies have already begun pursuing strategies that they hope will achieve the "triple bottom line" of better patient and population health at a lower financial cost. And these programs are quietly proving their worth.

“The cost trajectory of medical care in the U.S. is just fundamentally unsustainable on any level that you care to analyze it, so it behooves all of us involved in this to try to understand and get a handle on that,” Dr. Greg Steinberg, Aetna’s head of clinical innovation, says.

Humana operates Humana At Home, which offers home care to about 1 million seniors the company manages on behalf of Medicare who have one or more chronic diseases and rank among the sickest and costliest for the company to serve. The program focuses on maintaining patients’ ability to function independently in their homes based on research that shows most people prefer to live at home for as long as possible, and other studies that suggest reduced functionality is often a predictor of costly hospitalizations and the need for long-term care.

From the company's perspective, a quarter of Humana's members drive 80 percent of the company's medical costs and the top 5 percent of members are responsible for about 38 percent of costs. Knowing this, Humana offers additional care to these members as a free service. Caregivers call or visit enrollees to help with everyday tasks. They organize medications, help them get groceries and coordinate volunteers to take clients to church.

"We believe functionality drives healthcare costs in the chronically ill because if you can't take care of yourself, you get into trouble," Dr. Eric Rackow, president of Humana At Home, said during an interview in August at the company’s New York City offices. His own career began in intensive care units, where he kept seeing patients who neglected their chronic diseases and wound up in the hospital from acute problems.

Humana says members enrolled in the service have 40 percent fewer hospitalizations and 30 percent fewer hospital re-admissions. To ensure that the company captures those who are most likely to drive up costs, but doesn't freely offer services to patients who don't really need them, Humana relies on software that predicts whether patients will be admitted to a hospital based on their medical history and a survey conducted with staff.

Rackow says the results translate to a 15 percent reduction a year in medical costs for the sickest patients who receive the most care. "I think basically we're seeing a paradigm shift in how care is provided," he says.

Employee Wellness

Many insurers have turned to chronic disease prevention and management programs to reduce both immediate and long-term costs. "There's an explosion of programs trying to deal with this," says Dr. Ann Lindsay, a physician at Stanford University who specializes in chronic diseases.

Four years ago, Aetna launched a small division wholly dedicated to finding innovative, cost-savings programs and treatment models to offer members. Steinberg runs the 10-person team that invents or hunts for these programs, with an eye for cutting the company’s costs. His group offers employees the chance to be guinea pigs in pilot tests. They’ve launched about 10 pilots or programs since the group was founded. A Tai Chi program that showed success in reducing falls among Medicare patients is now being rolled out as a benefit.

Recently, a group of 2,835 employees signed up for a program that aimed to reduce their risk for metabolic syndrome, which is the name for a group of health issues such as high blood pressure and cholesterol that makes people more likely to develop diabetes and heart disease. About a quarter of Americans have it, and these patients rack up healthcare costs that are about 60 percent higher than the average person, according to a news release. Patients who go on to develop diabetes cost at least twice as much to treat per year than those who do not.

Nancy Gallo is an Aetna employee who participated in a recent pilot program to manage metabolic syndrome and lost 83 pounds in the process. Nancy Gallo

In the new program, offered by a Toronto company called Newtopia, employees in the test group (who were already at risk for the syndrome) underwent a genetic analysis for three genes related to diet, exercise and compulsive behavior. They were assigned a personal coach and told to follow a customized plan based on their results to help trim their waistline, manage their cholesterol and lower their blood pressure.

After a year, three-fourths of those who remained in the Newtopia program lost an average of 10 pounds, or 4 percent of their body weight. The program reduced costs by $1,464 per person compared with a control group. Steinberg says most wellness programs don't show cost savings in the first two or three years. The companies recently published results in the Journal of Occupational and Environmental Medicine.

The Newtopia program does have limits: About 50 percent of participants dropped out in the first year and 24 percent of those who did participate saw no improvement. And although 10 pounds of weight loss may seem significant, enrollees weighed 220 pounds on average at the start of the trial, so many who did show progress had still not achieved a healthy weight.

Stretching Savings

Both Humana's and Aetna's programs have shown promise at improving health and lowering costs. Meanwhile, plenty of other insurers are also investing in these strategies. But Gruber says companies still prioritize negotiating for lower drug costs and limiting the size of the networks of policyholders over the search for cost-cutting solutions.

Pauly cautions regardless of how much companies are able to trim from their budgets, insurance rates may still rise. While these programs are useful at reducing costs to a degree, he says they can't be expected to reduce costs significantly for consumers or companies.

"The sweeping generalization is that sometimes [these programs] work to produce a return that's greater than their cost, but they're never Earth-shattering," he says. "They're sort of small pockets of inefficiency."

The American Medical Association says peer-reviewed literature suggests that consolidation among health insurance companies tends to drive prices higher. Still, UCLA's Charles thinks the same market forces that have led companies to consolidate have pushed them to search for cost savings, and doesn't expect that insurers can afford to turn back.

“I really think the private market has done a good job at encouraging people to have healthier behaviors to not only improve their own health but save costs down the road,” she says. “I think this is a shift that's going to stick around even with the consolidation. I think when we're in a world where you can't cherry-pick your enrollees, the way you can save money is to find ways to reduce healthcare expenditures in a positive way.”