Will Health Care be reformed?

By Jack Sizer, MD
Medical Director

Will there be health care legislation? At the time of this writing, there is a House bill and a Senate bill. The bills are lengthy; running approximately 2000 pages. Reading the entirety of the proposed bills is a chore, to say the least. Some of those charged with debating and enacting this legislation have not actually completed that chore.

Being that there are many unknowns, radically divergent views, and vested interests, it is difficult to predict the final outcome with any degree of certainty. Adding to the uncertainty is the reconciliation of the House and Senate bills. Since there are significant variations between the House and Senate versions, this becomes a major hurdle to achieving final legislation.

Webster's Dictionary defines “reform” as “to change into a new improved form or condition, to improve by change of form, removal of faults or abuses.” Whether any resultant legislation even approximates any of these definitions will depend on one’s point of view, which is influenced by such factors as age, gender, health insurance status, occupation, political views, and individual suspicions of government motives. So the real question is: Will there be “reform” of the United States health care system?

There are major concerns about several of the components of the proposed legislation. Providers and patients alike are concerned about “practice effectiveness panels” that would develop and approve care guidelines which will affect coverage and reimbursement decisions. The fear is that this will lead to rationing of care by withholding certain expensive treatments or drugs in order to meet the administration’s health care expenditure targets or to address cost over-runs. Critics have dubbed these “death panels.”

Another publicly-debated component that has received considerable media attention is the so-called government-run “public option” for the purchase of health insurance. There is strong sentiment for, as well as against, this option being part of any final legislation. Given the government’s record of managing considerably smaller enterprises, critics question Washington’s ability to direct and manage the United States’ health care system.
Physicians, hospitals, and insurers are concerned about President Obama’s and his Administration’s level of understanding of the health care system. The early rhetoric about physicians and insurers was woefully exaggerated and inaccurate, which resulted in multiple restatements and spins, all designed to support their point of view. The President’s examples, reflecting his perception of physician practice and behavior, clearly demonstrate that he and the Administration do not understand the delivery of health care.

Is mandating the purchase of health insurance constitutional? Does the current proposed legislation result in violation of the law prohibiting the use of federal funds to pay for abortions? These provisions raise concerns that may require legal review.

Cost is an issue for both those in favor of legislation to reform health care as well as those who oppose it. The concern is the cost of providing the mandated health insurance coverage for a significant percentage of the currently uninsured population and subsidies for low- and some middle-income groups.

The Administration asserts that the elimination of waste in the current system will result in a level of savings which will cover a major portion of the cost of insuring these groups. While there is waste in our health care system, the government has demonstrated neither the desire nor the ability to take the necessary steps to effectively address waste in the Medicare and Medicaid programs. The government’s approach to managing cost of care in those programs has been to reduce payments to physicians and hospitals by allowing fees and payments to rise, but at a rate slower than major financial indices.

It is a virtual certainty that the cost of the health insurance mandate will be greater than predicted. Likewise, the thought that it will be budget-neutral and maybe even reduce the deficit is a fairy tale at best. So is the notion of a planned reduction in Medicare expenditures by $440 billion over 10 years. It is difficult, nay impossible, to think of a government project or program that has not experienced cost overruns, let alone saved money.

Many commentaries and predictions regarding the effect of any final legislation are dire and pejorative. Labeling the “practice effectiveness panels” as “death panels” is a prime example. However, in the end, the sheer extremes of opinions and strident objections—with the attendant politicizing—may significantly reduce the likelihood of meaningful change.

In any event, legislation is looming just ahead although the effective date for compliance is further downstream. Likewise, once enacted, the legislation will almost certainly continue to evolve. While all this provides time to understand the implications, it should not lead one to be complacent because it will take some time to assess and implement changes and modifications to one’s business offerings and operations. The most important part of all of this is how we react and prepare ourselves.

Not only is prediction of the final form of the legislation or its long-term impact difficult, but adapting to and complying with any new law will be equally challenging. Based on some of the previously outlined concerns, what can we expect without knowing the final legislative reform? It is prudent to expect that not only will there not be more money in the pot for physicians, hospitals, and insurers, but less. The current economy already weighs heavily on funding for the Medicare and Medicaid programs. For Medicaid, which involves shared state and federal funding, the response choices are to reduce reimbursements, institute more stringent eligibility requirements, or both.

Regardless of the final legislation or our preconceived notions, cursing the darkness will not help in determining how to respond. Don’t wait for the final legislation or temporize in making adjustments and modifications to your business strategy, operations, and programs. Do what works in all situations—good times or bad, a stable or unstable environment, rain or shine—manage your expenses and health care resources. At the same time, keep a vigil on the legislation as it undergoes reconciliation. You will be that much better prepared if you begin to formulate specific action plans and communication plans as key aspects of the legislation are solidified. (Please see my colleague Jim Dean’s related article on page 26).

You should also manage expenses and staffing levels so that employee productivity is maximized. Evaluate operations and modify or change so as to achieve maximum efficiency. Give serious consideration to new and innovative approaches that may differentiate your services and provide a sustainable competitive advantage. This becomes more important as there is limited opportunity to gain competitive advantage since all proposed legislation requires a standard set of benefits, community-rated premiums, and prohibits declining coverage based on any pre-existing conditions.

Whether physician, hospital or insurer, it is critical to manage scarce health care resources effectively and efficiently so as to achieve optimal health care for patients. “Optimal care” is by definition cost-effective and is uniformly of high quality and results in better care for the patient. To achieve optimal care will require a degree of collaboration and integration of care delivery among physicians, hospitals, and insurers that we currently rarely see.