Why there is no “Next Big Idea” for health reform

This week, my editors at the Health Insurance Resource Center challenged me to write a letter to President Obama and suggest to him what he should do next to advance health reform. They wanted me, as a health policy expert, to throw some “big ideas” at the President.

Insurers and others in the blogosphere are promoting last-minute ideas for improving reform. And Conservatives still throw out their own ideas for making Obamacare better.

But here’s the thing: The President and Congressional reformers already have come up with a “big idea”: the Patient Protection and Affordable Care Act (PPACA). It proposes dozens of ways that we can lift the quality of healthcare while reducing the cost. Another “big idea” isn’t needed.

Big idea: single payer?

I’ve heard suggestions that NOW, we can move down the road toward single-payer. But there is no road to single-payer, at least not for many, many years – if at all. Reformers like Ezekiel Emanuel have described single-payer as a “conservative, nostalgic” idea.

Moreover, it leaves Americans at the mercy of whoever happens to be running Washington-without any alternatives. Think of what Margaret Thatcher did to the National Health Servicein the U.K.

Ultimately I would like to see patient-centered private insurers, such as Kaiser and Geisinger, competing with “a public option.” But today, we don’t have enough votes to make a public option a reality. For now, what is important is that private insurers are regulated – as they will be under the PPACA).

Big idea: controlling costs?

Controlling costs is the next big step facing health reform, but President Obama doesn’t need new ideas here. A great many proposals are already in the law. For example, it authorizes Medicare and the Secretary of HHS to raise reimbursements for undervalued services and lower reimbursements for over-valued services. Medicare already has begun doing this – cutting reimbursements for imaging services, and raising reimbursements for primary care.

Reform legislation cuts total Medicare spending by $716 billion. (Anyone who says that the PPACA doesn’t rein in spending just hasn’t read the bill.) Fear mongers have suggested that reform achieves these savings by reducing the basket of benefits that seniors receive, and that soon, Medicare will slash payments to physicians, across the board, by some 27 percent.

There is no truth to these rumors. The $716 billion in savings come mainly from reducing over-payments to Medicare Advantage insurers and trimming increases in reimbursement to hospitals by 1 percent a year over ten years. Hospitals accepted this because they know that reform will bring them many newly insured customers who will be able to pay their bills.

Going forward, the biggest way the PPACA will be controlling costs is by changing how we pay for care. Rather than reimbursing fee-for-service, which encourages providers to Do More – reform legislation lets them share in savings if they manage to achieve better outcomes while charging Medicare (and other payors) less.

If they don’t do that, they’ll be penalized. As Atul Gawande points out, under this new system if his hospital “misses its cost-reduction and quality-improvement targets, it will lose tens of millions of dollars.”

These savings will require changes in the medical culture: this is not something the president can dictate.The health reform legislation that we have creates the carrots and sticks to encourage doctors and hospitals to do the right thing. Now we have to wait for them to respond to those incentives and disincentives. The revolution that will reduce waste must come from inside medicine.

The President had the “big ideas.”

Bottom line: The President doesn’t need to come up with new ideas. He just has to stand firm on implementing what we have.

Conservatives are still pledging to be “helpful” on reform. Right. The Republicans in the House are dead set against many of the provisions in the reform bill. But you can’t take out some provisions and leave others. They’re interrelated: remove some, and the whole thing falls apart.

Some conservatives do seem to understand they are not going to re-negotiate the PPACA. As House Majority Leader John Boehner has said, “It’s the law of the land.” But conservatives are going to try to renegotiate so-called “entitlements.” And they’ll use the deficit as their excuse. (It’s worth nothing that conservatives have wanted to cut Social Security, Medicare and Medicaid for 20 years – even when we were running a surplus. They simply don’t believe that Americans are “entitled” to the social safety nets that the citizens of every other developed country enjoy.)

The new “best ideas” for Obama and health reform?

1. DON’T BUDGE.

Much of what Obama has to do in these budget negotiations is going to be a matter of tone and attitude. He has to be absolutely firm – not conciliatory. He has the power, and the leverage. On the question of higher taxes for the wealthy, business leaders are behind him.

The New Majority is behind him. All the Republicans can do is posture and threaten that they won’t raise the debt ceiling. But that will never happen – not unless they want to be blamed for sabotaging the nation’s credit rating.

2. DIG IN.

This means “rule making.” As Timothy Jost said in his most recent Health Affairs column there are a great many technical details to be worked out: details tell the states more about the state health insurance exchanges, guidance for employers, rules for insurers. And as Jost says, “Rulemaking takes time.”

This is all pretty dry, technical stuff. But it’s what Obama’s team needs to focus on now – the boring, intricate, lawerly work of dotting the i’s and crossing the t’s so that the law is implemented. I’m sure he’ll do it. He’s a lawyer; he understands this kind of thing.

The PPACA contains so many “big ideas” – now we just need to roll it out, and see which ones work best. This will tell us what further changes we need to make.

---

Maggie Mahar is a financial journalist who has written extensively about the American health care system. Her book, Money-Driven Medicine: The Real Reason Health Care Costs So Much, was the inspiration for the documentary, Money Driven Medicine. She is a prolific blogger, and recently relaunched her HealthBeat Blog. Previous articles for the Health Insurance Resource Center include Future of health reform may turn on Senate races and The next step for ‘Obamacare.’ She also provides background on Congressional health care legislation for HealthReformVotes.org, a special project of the Health Insurance Resource Center.

Tags: aca, affordable care act, Health Insurance Exchange, obamacare, Patient Protection and Affordable Care Act, PPACA

---

Posted November 19, 2012

2 Responses to “Why there is no “Next Big Idea” for health reform”

1. julieanderson2912 says:

   November 28, 2012 at 5:25 am

   According to me controlling cost is the biggest reason!As every where it has a very prominent place!!
   http://www.medicaremaryland.com/
2. dkcundiff says:

   December 2, 2012 at 11:05 pm

   A Healthcare “Big Idea” –Accountable Care Cooperatives
    
   With the current polarization about healthcare reform, the Affordable Care Act (ACA) requires big new ideas to survive, let alone succeed. The ideas must simultaneously appeal to conservatives, liberals, insurance companies, healthcare workers, investors, and patients. The areas needing improvement are the same as ever—cost control, wider insurance coverage, provider payment reform, quality of care, healthcare outcomes, and waste elimination (i.e., > $800 billion in 2012). The “ACA big idea”, accountable care organizations (ACOs), as described in the 3,000+ page legislation is painfully similar to health maintenance organizations (HMOs), which critics say restrict access to care while saving little money. Health policy experts predict that health services consolidation will lead to a few corporations, owned by hospitals or physician groups, becoming the available ACOs, with possible adverse effects on quality of care and cost.
    
   Consider changing from ACOs to “accountable care cooperatives” (ACCs), each owned by the member patients and managed by professionals selected by representatives of the patient membership of that ACC. Managers of each ACC would select an insurance company to collect insurance premiums from patients and the government reimbursements for those insured by government programs (e.g., Medicare, Medicaid, Veterans Administration). Instead of insurance company executives deciding the health benefits packages (covered services, deductibles, co-pays, etc.), each ACC management team in conjunction with the healthcare workers and patients would determine what payments to allocate for hospitalization, healthcare providers, drugs, appliances, etc.  Insurance company payments for healthcare services and products would be dictated by the ACCs, making patients and healthcare providers happy. Insurance companies would no longer need to do product design, underwriting, and marketing (about $100 billion in 2008 according to Uwe Reinhardt) because the ACCs would assume the financial risks.  
    
   To eliminate $800+ billion/year of unnecessary tests and treatments, duplicative bureaucracy, and fraud, we have tried more and more clinical guidelines, quality measures, audits, sophisticated health services coding schemes, HHS regulations, and fraud prosecutions. Unless you argue that we would be wasting $1-$2 trillion without all these measures, you must concede that none of this has worked. Patients and the overall economy are the main victims. However, practicing doctors other healthcare workers too are victims. Out of fear, they become slavish followers of guidelines that they may or may not endorse. This leads to burnout for providers and a shift of healthcare resources from caring for patients to overpaying for technology and bureaucracy.
    
   Recognizing that controversy abounds about the efficacy and safety of many if not most medical interventions, consider the big idea that the authority and accountability for issuing all medical guidelines should be decentralized and vested with the local ACCs. It is expected and natural that competing ACCs will have different guidelines to suit preferences of their particular doctors and patients. Patient care would be improved by involving practicing physicians in determining clinical guidelines. Decentralizing guidelines and monitoring clinical outcomes is also a better way to find out what works to improve care than relying on more and more industry funded, small, biased randomized clinical trials designed by statisticians to accomplish the financial goals of the funders (i.e., FDA drug approvals, health services funding mandates, etc). Health outcomes of patients from different ACCs could be easily compared and clinical guidelines adjusted accordingly. Patients could change ACCs as they wish and providers as they are able, so competition would enhance quality of care and cost effectiveness.
    
   Opponents to this proposal might point out that the Kaiser Family Foundation and others have shown that competition in healthcare doesn’t necessarily improve care or control costs. This is true only so long as the competing healthcare providers all have to provide equivalent benefit packages, adhere to government-issue guidelines on tests and treatments, and comply with the same Byzantine government regulations that fuel administrative waste and even mandate unnecessary medical interventions. It is fine to have the U.S. Department of Health and Human Service continue to issue its suggestions for clinical guidelines for ACC physicians, healthcare corporation managers, and patients to consider. Just leave it up to each ACC about which government guidelines it adopts and which ones it changes. For instance, some ACCs may continue to fund prostate specific antigen screening tests for men and mammogram screening tests for women and other may use the money elsewhere.
    
   The creative destruction of healthcare jobs by rooting out waste, fraud, and unnecessary bureaucracy would lead to many more not fewer healthcare workers. A healthcare system with market-based reforms, including the decentralization of treatment guidelines, could cost the same as we pay now ($2.9 trillion projected for 2013) while providing more healthcare and preventive services. Local ACC control of health resources would lead to employing millions more people in satisfying and productive healthcare jobs, distributing healthcare money much more equitably (e.g., long-term care funds to family and friend providers rather than nursing homes), and providing more and better care for patients.  Preventive services would be especially incentivized since competition would be over health outcomes rather than amount of services provided.
    
   One strategy to provide universal health insurance coverage through competing ACCs without an individual mandate is to shift federal, state, and local government welfare funds ( >$800+ billion in 2012 for food stamps, subsidized housing, unemployment, senior services, subsidized childcare, job training, workers’ compensation, disability, etc.) to the ACCs. For each unemployed, disabled, or low income patient enrolled by an ACC, the ACC would receive welfare funds from the government commiserate with the welfare entitlement of the patient (averaging > $2,500 per patient—$800 billion/310 million = $2,580/person). Linking health insurance with welfare through the chosen ACC would enable all to be covered efficiently with affordable insurance.
    
   Premiums could range from about $150 per month for children and young adults to about $600 per month for seniors. Long term care (now averaging over $10,000 per year per senior with nursing home costs added to the value of home caregivers) would be covered in addition to the other health benefits per the chosen ACC. ACCs could be creative in finding payment options for those unable to pay the premiums. The favored option would be jobs (e.g., elder care, childcare, mentoring school children, and health promotion/disease prevention projects).
    
   While the big idea of competing ACCs might not appeal to some of the millions of people now profiting from the $800+ billion in waste in health services, liberals, conservatives, insurance companies, providers, investors, and patients would like it. This set of big healthcare reform ideas is detailed in my free online book The Health Economy.

Editor's Note: Opinions expressed on these pages are those of the individual author(s) and do not necessarily reflect the views of the management or ownership of healthinsurance.org™.

Other Resources |  Medicare |  Free Health Insurance Quotes |  Contact Us |  About Us |  Privacy Policy