Friday, October 8, 2010

What’s At Stake in Health Reform

For the last year or so, I’ve been working on a book Health Reform in Perspective. Amidst all the political strafing and posturing, perspectives on what reform is all about and where it is likely to lead have been lost. I have completed 20 chapters. It seems to me a little perspective can go a long way towards clearing the air.

Saving Medicare

Medicare is a financial train wreck headed towards bankruptcy. Saving Medicare will probably require raising the age of entry into the program, means testing of Medicare recipients, rationing of care , and limiting payments to hospitals and doctors. These are politically explosive issues. The Democratic approach is government dominance of the process with more entitlement programs; more focus on purging the system of fraud and abuse, and more electronic monitoring of physician performance. The Republican approach is more market-based, with patients having more “skin in the game,” more health savings accounts, more choice, and more competition. Although never the Twain may meet, at least, they haven’t so far, both sides agree some sort of reform is needed.

•Saving the Obama Presidency

The success or failure of health reform over the next two years may well decide whether Obama gets re-elected in 2012. If the Republicans win big in 2010 and succeed in defunding the Accountable Care Act and if health expenses for 270 million currently insured Americans skyrocket, if the these Americans have to switch to government-qualified policies they cannot afford, and if the health bill disapproval rating remains at 60%, President Obama may be in deep trouble.

Paying for the Cost of Expanded Coverage

Much hinges on the cost of expanded coverage. Everybody, including the American public, knows you cannot add "free" entitlements to 32 million more Americans without it costing more. You simply can't cover everybody in America at less cost. You can't extend coverage form 85% to 100% of Americans and save money. You can't graft the current reform bill on the old system of Medicare, Medicaid, and employer coverage without costing a bundle. You can, of course, say you're going to cut $575 billion out of Medicare, end fraud and abuse, and make the system more efficient by spending $27 billion on computerization of medical records, but who will believe you? The government has never cut entitlement costs or shown much of a penchant for efficiency.

Homogenizing and Standardizing Care and Ending Variation

Reform is about a federal effort to homogenize and standardize care, and to eliminate variations in care and its costs across Medicare regions. Why, ask the feds, should Medicare costs more in New York City or Miami than in Jackson, Mississippi or Grand Junction, Colorado. The answer, say critics, lies in socioeconomic differences and culture differences and expectations in different sections of this vast, diverse, continental nation. One size federal health system does not fit all regions, the suburbs and inner cities, urban and rural areas, the young and the old, the sick and the well..

Paying Doctors and Ending Fee-For- Service

The success of reform may depend on how you pay doctors. Critics say costs are too high because doctors abuse fee-for-service. The more they do, the more they make. Fee-for-service, in other words, leads to greed and unnecessary tests and procedures. Nothing is said about defensive medicine, about protecting yourself against the malpractice lawyer who will ask, "Why didn't you order such and such a test, doctor?" The solution, collectivists assert, is to herd doctors into large groups, integrated systems, and virtual organizations, to pay them on salary, to reward them for cooperating with each otther, to bundle hospital and physician bills, and to oay them on a budget.

Paying for the Newly Insured on Government Programs

Who will care and pay for the 32 million more newly insured, the 16 million new Medicaid recipients, the 56 million baby boomers becoming Medicare eligible, and the 50 million to 100 million switching to government-qualified plans or being unable to afford these plans. This is a legitimate question since a growing and looming physician shortage exists and physician surveys indicate 30% to 50% of physicians say they will not accept new Medicare or Medicaid patients given their understanding of government reimbursement rates and regulations required to treat patients in government programs. It is also a legitimate question for the states who budgets are nearly bankrupt from paying for the current load of Medicaid patients.

Lowering Costs by Raising Quality and Improving Outsomes

Reform is said to be about lowering costs by raising quality and improving outcomes. This may be aham. How do you raise quality and lower costs simultaneously? How do you improve outcomes, when these outcomes depend on patient life-style factors and socioeconomic status as well as physician behavior? It depends on how you define "quality." on a personal level, 89% of Americans say they are satisfied with the "quality" of their care. Most say they like their doctors. To say you can elevate quality by monitoring physician performance, weeding out unnecessary tests and procedures, and trusting bureaucrats rather than doctors, makes sense to payers, but it may not sell well to the public,

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