Loading and Unloading the Health Reform Wagon

When a fellow says it hain’t the money but the principle o’ th’ thing, it’s th’ money.

Frank McKinney Hubbard (1868-1930), Hoss Sense and Nonsense (1926)

The first birthday of the health reform law takes place tomorrow, March 23, 2011.

Brace yourself. To either celebrate it or denigrate it, you will hear a lot of talk about the principle of health reform, not the money involved.

Supporters will say we need the Law to cover everybody and protect everybody at costs everybody can afford. It is the only morally imperative thing to do for our fellow human beings. It is the principle of the thing, not the costs it takes to do it.

Detractors will say the Law does the opposite. It is raising costs and driving us into national bankruptcy while punishing those who drive our economic engines and who provide the care. It is the cost of the thing, not the principles behind it.

Either way, we simply can’t afford open-ended entitlements which are the principal cause of our mounting national debt. The trouble is, of course, that cutting Medicare is the third rail of American politics. Seniors, the most reliable voting bloc, are not fooled. They do not believe you can slash Medicare costs by $575 billion while cutting hospital and doctor pay and still maintain quality and access.

Health reform comes down to a matter of economics. “Economics, “ the late Jack Kemp (1935-2009), the Republican Congressman from Buffalo, said, “ is simple. There are those who load the wagon, and those who unload it. “ When more are unloading the wagon than loading it, the economy is in trouble.

The current talk about health reform, continuing resolutions to keep the government going, and even shutting down government is about too many people unloading the wagon. It is now estimated that 35% of Americans totally depend on government. In other words, for every two of us loading the wagon, one is unloading it.

The political trick is to balance the costs of those loading the wagon against those unloading it. Many regard total health costs of $2.5 trillion as unloading the wagon, but at the same time, the health care sector loads the wagon by creating jobs and being the principal wagon-loading engine of many communities and entire regions.

The AMA just released a report showing office-based physicians in 2009 loaded $1.4 trillion onto the economic wagon and supported 4 million jobs nationwide. In the average state, this translated into $10.3 billion in economic activity and 46,400 jobs.Physicians are not idle bystanders in this balancing act.

Yet the health reform law’s various provisions over the next ten years are aimed at decreasing physician “unloading” by:

• decreasing physician pay by 30% or more to Medicare and Medicaid levels

• making EHRs a requirement for staying in businesses,, so that physician practices can be tracked and made “accountable”

• forming Accountable Care Organizations that compel doctors and hospitals to work together under fixed budgets to “save” money by decreasing the income of both and discourage waste and duplication

• creating new business models (medical homes, bundled billings, new hospital relationships , hospital employment, and concierge practices) to survive

• implementing physician “measurements” through Physician Quality Reporting Initiatives (PQRI) that reward or punish doctors for “quality performance”

All of this while operating costs and expenses of running a practice, meeting new federal regulations , installing information infrastructures, and recruiting new physicians and other health care professionals to cope with new consumer demands, are relentlessly increasing.

No matter. It’s the principle of decreasing the cost of unloading, not the money involved in doing it, or the money generated by those loading the wagon.