Government reform - Health Reform Revisited by Senator Clinton and Me

Clinton Proposals, Reece Reactions

“Senator Hillary Rodham Clinton outlined a plan yesterday to reduce health care costs, in a speech at George Washington University.

Senator Hillary Rodham Clinton, who endured a major political setback as first lady when she tried to promote universal health care, revived that crusade yesterday but in a more measured way, offering a plan to reduce costs, through programs like disease prevention, to make universal coverage affordable.”

Katherine Q. Seelye, “Clinton Revisits Health Care and Affordability,” New York Times, May 25, 2007

I see by The New Times that Senator Hillary Clinton is “revisiting” health reform. I wish her luck. She will need it. I trust she learned from her first visit in 1994-1995, when she organized a task force consisting mostly of think tank members and graduate students withoutincluding a single hospital administrator or a solitary practicing physicians, who together accounted for about 75% of health costs.

Now she proposes to lower costs, improve quality, and insure everyone at one fell swoop by,

• managing disease prevention
• coordinating treatment
• computerizing offices and hospitals
• substituting generic drugs for brand name drugs
• having Medicare negotiate drug prices with pharmaceutical companies.

Unfortunately, taken together, these sensible and laudable goals are unachievable all at once short of a worldwide depression, an international world war, a major political scandal (a Bush impeachment ), or a unprecedented natural disaster ( global warning with flooding of Florida and the East Coast.) Still I applaud her thoughts.

Her original intent back in 1994 was to micromanage the system through “managed competition” made up of interlocking managed care plans. She suffered an ignominious defeat at the hands of “Harry and Louise” and health industry lobbyists.

The notice of her “ revisiting reform” occasions me to revisit my book Voices of Health Reform, Interviews with Health Care Stakeholders, Options for Repackaging Health Care (Practice Support Resources, Inc, 2005). The book was based on 41 interviews with national health care leaders. From those interviews I made the following 11 conclusions, which I revisit now to see what has changed.

Eleven 2005 Conclusions about Health Reform Revisited


1) Fragmentation and conflicts among health care interest groups renders reform intractable, but collaboration is essential if we are to preserve the best of our present system.

The fragmented state of affairs hasn’t changed much. Some of the larger health plans have acquired smaller plans, some of America’s 5200 hospitals have consolidated into larger health systems, but perhaps 70% of America’s doctors remain in groups of 10 or less, and 40% of these are in groups of three or less. Vaunted collaboration efforts between health plans and doctors and hospitals and doctors have yet to materialize to any significant degree. Senator Clinton’s proposals contain little about consolidating the various industrial sectors or forcing them to collaborate. Consolidation is occurring, but collaboration remains in short supply. Collaboration with one’s competitors runs against the grain of human nature, which may be why RHIOs (Regional Health Information Organizations) have had such a slow start.


2)Single-payer backers, still committed, are seeing practical opportunities slip away.

The three major Democratic candidates – Clinton, Obama, and Edwards -- all preach the gospel of universal coverage at the national level, but for practical purposes, the only real action is occurring in the states. If you ask the public, “Would you like universal coverage,” at least 75% will say “yes.” But if you rephrase the question, “Would you like universal coverage if it raises your taxes, rations care, and causes you to wait for high tech cures, “ that 75% drops below 50%. I agree with Senator Clinton says insuring everybody must be accompanied by lower costs and improved quality. Unfortunately, the political hat trick – lower costs, better quality, and universal coverage – is an extremely difficult to pull off. The government can’t dictate costs and quality. Government cost control has never worked well, and quality control depends on measuring outcomes – still in its infancy.

3)Medicare, in its present form, is unsustainable.

Medicare, with social security, is the third rail of American politics. Right now the politicians are still trying to sort out what the elderly think the Medicare Drug bill, passed in late 2003, and what it will cost. So far 80% of seniors have signed on and most seem satisfied, and it is costing less than anticipated, which was in the neighborhood of $100 billion a year. Senator Clinton is foursquare for the government negotiating drug costs directly with pharmaceutical companies. But prospects for that are unlikely. Capitol Hill has more drug firm lobbyists than members of Congress. Drug companies contribute heavily to coffers of politicians on both sides if the political aisle. Medicare may be “unsustainable,” but Congress has bigger fish to fry – the Iraq War, Besides, 2017 when Medicare is scheduled out of funds should present trends continue, is still ten years away.

4)These days the consumer-driven movement occupies everybody’s minds.

When I wrote my book Voices of Health Reform in 2005, there were 1 million health savings accounts (HSA) holders. Today there are 4.5 million HSA holders, and the number is growing at roughly 40% per year. Project that out ten years, and the number would be 112 million. This HAS member hood , is unattainable, critics say, because HSAs punish the poor, the sick, and women. But HSA brokers can’t keep up with demand. Brokers say many firms are completely replacing HMOs and PPOs with High Deductible Plans linked to HSAs. A lot depends on how quickly baby boomers embrace HSAs, how effective Democrats are in criticizing and facilitating them, how motivated employers are in ditching present health costs, and how satisfied the current crop of holders are with them. Whether the free preventive care offered by most tax deductible plans and the tax-deferred income by not using them are sufficient incentives to grow them remain moot questions..

5)Regional ideological and geographic differences matter.

For the last 30 years, Doctor John Wennberg and associates at Dartmouth and now Harvard have been saying regional variation of health costs and practices are irrational, illogical, and untenable. Yet little has changed. More health care is still delivered at higher costs per episode or procedure, for example, in Miami, New York City, and Boston. Big multispecialty groups are still more common in the Midwest and Pacific Coast. Kaiser still thrives in California, the West Coast, and Denver, but languishes elsewhere. Hospitals and doctors still cater to their local constituencies, which may demand more specialists, centers of excellence, technologies, and specialists. Experimental universal coverage plans may be introduced in Blue States suffering from business stagnation or fast growing immigrant populations, but they are often anathema in most in fast growing, business-minded entrepreneurial Red States.. Nationalization of the system will not erase these regional and geographic differences. The U. S. is a huge continental nation, with marked regional differences and attitudes.

6)Hospital and physician collaboration is an “iffy” proposition.

You might think hospitals and doctors, both being in the “cure” business,” would be warm bedfellows in most health care undertakings. You would be wrong, As Regina Herzlinger points out her latest book Who Killed Health Care? America’s $2 Trillion Medical Problem – and the Consumer Driven Cure, hospitals , which make up roughly half of health costs, are intent on maintaining control and building their empires– through mergers, consolations of services, vertical integration, charging high prices for the uninsured, and stopping doctor-owned specialty hospitals from getting off the ground. Herzlinger claims hospitals will stop at nothing to quash or stop competition. Senator Clinton says coordinated therapy and computerized medical systems will help lower and rationalize costs. She is no doubt right on these counts, but most hospital systems spent their money on internal computer systems, not “coordination” with physician systems. Physician systems may not communicate with hospital systems and are still in short supply at most small physician practices. About 20% of physician practices now have EMRs.

7)The consumer movement means different things to different health care stakeholders and opens up enormous opportunities for other community institutions.

When I speak to hospital audiences about the consumer movement, I generally get a collective yawn. Appealing to individual consumers, changing their billing systems to make them more “consumer-friendly, creating bundled bills so consumer will know in advance what they would be charged, are partnering with doctors to build ambulatory care centers removed from the hospital campus simply don’t jib with plans to build a centralized empire where consumers come to them rather than the other way around.

Physicians are also slow to change. The idea that “patients” are “cost-conscious consumers” who respond to lower prices, evidence of value, convenience, and consumer control is hard for some doctors to swallow. Along with Senator Clinton, they may agree that computerization of the office will help attract patients (but a $30,000 a year, many are reluctant to pay), that coordinated care is great (but reorganizing , relocating the office, or joining a larger group is too daunting a task for most), that disease prevention would be a good thing appeals to most (but when are Medicare and health plans going to pay for prevention). One thing doctors are willing to do, is to prescribe generics rather than brand name drugs to relieve patients of the expense of brand name drugs.

8)Many American physicians increasingly consider themselves a disenfranchised minority.

There may be some basis for this complaint: Physician income growth is flat, Medicare and health plans systematically cut reimbursement for doctors, insurers reject 10 to 20% of submitted claims for minor errors, and the papers are filled with stories about doctors accepting free lunches, gifts, and rebates from well-healed pharmaceutical and medical device companies. As a physician interviewed in Voices of Health Reform, said to me, “Why would any intelligent person choose a profession where income is guaranteed to fall 30% over the next five years, where your every action is second-guessed by government or health plans, where malpractice suits are a constant worry, and where you are blamed at every turn for the exorbitant cost of care? Why would an rational, business-minded physicians accept Medicare or Medicaid payment below their costs of doing business? Why indeed” These are some of the reasons why a 50,000 physician shortfall is expected by 2010 and a 200,000 shortage by 2020.

9) Medicare and managed care organizations are placing their reform bets on the pay-for-performance movement.

This bet is based on the proposition that there are “good doctors”, i.e. high performing frugal doctors with good outcomes, and “bad doctors, i.e. marginally competent or incompetent doctors who charge excessively and have poor outcomes and that you can use data to sharply separate the two. I am dubious on pay-for-performance for a number of reasons: 1) most doctors to see enough of a given category of disease to be judged; 2) those making the judgments on performance have never been in a physicians’ office and have scant knowledge of how many clinical diseases can be based on “evidence;” 3) patient satisfaction surveys don’t really discriminate on the technical and knowledge base of good and bad doctors; 4) most outcomes result from patient behaviors outside the office. But, of course, I could be wrong. At the very least we need more effective patient-based education programs – probably online and personalized – that can teach patients using simple language, animated illustrations, the truth and consequences of their behavior and why they should comply with the doctors’ instructions.


10) Health systems are difficult to manage because they are composed of individuals and independent organizations acting in their own best interests at the boundaries of care.

As John Naisbitt, first in Megatrends and now in Mind Set!, so vividly points outs in his books, we live in a ”bottom-up” not a top-down society. We respond to the environment around us and to innovations that meet and satisfy the demands imposed upon us and effect our daily lives, not to mandate imposed from above by politicians. Americans are creatures of our culture. When asked what Americans believe, Garry Orren, a professor of political science at Brandeis, who polls of the New York Times and the Washington Post, “ A good place to start is to remember we are pro-democracy and anti-government. It comes down to ideas that are essentially anti-authority, and tend towards self-regulation. If there were an American creed, I think it might begin.

One: Government is best that governs least.

Two” Majority rule.

Three: Equality of Opportunity.

That seems about right to me. It explains why Americans prefer local health solutions, why they reject federal government-mandated coverage with rationing, why they feel capable of making their own health care solutions, why they seek equal opportunity access to high technologies, why they prefer pluralistic payment systems, why they allow market-based and public-based institutions to co-exist, why they are reluctant to heavily tax the “haves’ for the benefit of the “have-nots,” and why they believe in self-responsibility and individual choice and control.


11) Information technologies are often seen as the Holy Grail of health care, but these technologies will not work if they ignore the Elephant in the Room, the reluctant of small physician practices to install electronic medical records

In the long run, I think Senator Clinton is correct that computerized systems and information technologies will shape the system. Information technologies will glue together health care innovations, reduce costs, ease use, and improve care and outcomes – not in time to influence the 2008 Presidential elections --but in the next ten years.


The breakthrough in information technologies, already upon us, pivots on three developments:

1) government financial incentives (read that as Medicare) and from health plans paying doctors for adopting and using IT systems for episodes of care (pay for use);

2) the realization among doctors that the introduction of HSAs on a large scale and the widespread use of smart care(containing information the patient’s medical history and HAS credit status make payment at the point of care) will make their practices more efficient and profitable;

3) a growing demand among consumers to seek out only those physicians who are able to meet their demands for transparency, information, and convenience at the point of care.

That’s about it. Once again, reform is more likely to occur from innovations initiated from the bottom-up, rather than the top-down; universal coverage is not in the immediate future although pressures for it will grow in individual states; consumer-driven care remains a lively alternative; and what happens next may well depend on what takes place in the marketplace rather than the government space