Health Reform: Just Getting Started

Like it or loathe it, the health care reform package signed into law by President Obama is historic. Many who study health policy conclude that, while certainly not perfect, the legislation is a major step in the right direction:

• Millions of Americans who were previously uninsured will get access to health care coverage. Plus none of us can be denied coverage for pre-existing conditions, face lifetime caps or be dropped from coverage when we get sick.
• We’ve mandated coverage. Lots of people hate this, but any insurance scheme won’t work without it. The healthy have to be in the pool to balance out the unhealthy, which most everyone will be at some point in their lives.
• We’ve provided tax credits to small businesses to purchase coverage, required new plans to cover preventive and immunization services without cost-sharing, and started the process of eliminating the prescription drug donut hole for Medicare recipients.
• We’ve raised the cut-off for young adults on their parents’ policy to 27, set the stage for state health insurance exchanges in 2014, and increased screening and transparency to help eliminate health insurance fraud and waste.
• We’ve taken steps to focus on effectiveness and quality of medical treatments, provide incentives for primary care physicians, and experiment with new models of care delivery and payment.

And so on. These are all good things. Still, it’s not hard to find fault with much of this, and many people do.

Certainly it comes with a steep price tag and at the worst possible time for debt-ridden states like Arizona, which will have to spend close to $12 billion in general fund monies over the next ten years to cover its portion of expanded coverage in the Medicaid population. The claim that the legislation actually will reduce the federal deficit over the long term may be so much wishful thinking, given Congress’s record on controlling costs in public programs like Medicare. Even the Congressional Budget Office is hedging its bets, saying the chances its estimates are accurate are about 50/50.

Personally, while I wholeheartedly support the goal of health care reform – access to affordable, high-quality care for all Americans – I believe that this legislation simply extends a broken model and is potentially, as Pink Floyd put it several decades ago, just “another brick in the wall.”

The wall, in this case, is an employer-based insurance model that is unfair, inefficient and shields consumers from the true costs of care. Until we sever the ties between employment and insurance coverage, we will see no significant progress in addressing the critical issues of cost and quality.

But if this legislation is another brick in the wall, what would real reform look like?

Many believe that if we let free market forces work between informed buyers and competitive sellers, we will increase access, lower costs and improve quality over time. This might be true if health care were a commodity like bread or bicycles, but much of it is not. A classic paper by the economist Kenneth Arrow, Uncertainty and the Welfare Economics of Health Care, explained almost 50 years ago why free market forces alone don’t work in health care. That’s not to say we don’t need greater transparency and more information on cost and quality for both buyers and sellers, with fewer middlemen and less expensive and inefficient administration and regulation. We do. The fact remains, however, that much of health care is extremely expensive and complex, and patients are not going to comparison shop for it. That’s why doctors are far different from car mechanics, despite our best efforts to treat health care as if it were nothing more than another business.

Two other general approaches to health care reform are a single-payer system or a multi-payer system. The operational term here is ‘system’: an explicit set of interacting elements forming a complex whole that is designed for maximum effectiveness and efficiency. This doesn’t need to imply greater government involvement and control. It can just as easily be about harnessing the innovative potential of dynamic markets to leverage cross sector collaboration and system design, both at the community level (provider networks) and at the national level (interoperable health information exchanges, coding standards, etc.). In a word, we must collaborate to compete.

The devil is in the details, of course. The current “non-system” of sick care has this going for it: it generates upwards of $2.5 trillion dollars in annual revenue that creates jobs and is distributed among powerful interests groups. Everyone wants to reduce health care costs, so long as their own revenue does not suffer. That is the central problem the new legislation doesn’t address.

It remains to be seen where all this will go. Regardless, we should continue to cultivate community resources and partnerships, and find ways to provide care and comfort to those who need it the most.

Stay connected, stay healthy. We’re not done with health care reform. We’re just getting started.

Feedback? Send it my way: Roger.Hughes@slhi.org.

*The Drift reflects the views of the author, and does not represent the official view of SLHI’s Board of Trustees and staff.