Health Reform: Federalism Rears its Head

A lead article in the New York Times today reminds us that the national health reform debate has taken place without sufficient consideration of the role of state legislatures and insurance regulators. Congress and the President have preferred to ignore the uncomfortable fact that the insurance practices they associate with insurance company abuses are in fact sanctioned by state officals with the legal authority to do so. A significant part of the opposition to national health reform is coming from state officials who view mandated Medicaid expansion, a mandated individual requirement to purchase insurance, and the superceding of state authority to regulate insurance practices as legal, if not constitutional, challenges. Another reason to slow this process down.

Health Reform: A Return to Managed Care?

A New York Times op-ed today by Tyler Cowen argues that whether a health reform bill passes or not, whether health care is public or private, we face more managed care. The medical cost trend is unsustainable, and therefore the system will need to say no to more service requests, essentially rationing care. Managed care to Mr. Cowen means managing the over-use of services.

While this may be true for Medicare because it does little to address over-utilization, many commercial health plans actively manage the way services are used and do not view over-use as a key factor in the trend problem. Far more important is the insistence of purchasers and consumers on products that include every hospital and physician, the result of which has been a relentless increase in the price, not necessarily the use, of services.

Why? Consider: When limited hospital and physician networks were tolerated by buyers, a health plan could negotiate a reasonable price with even the largest, heavily branded hospital or physician group because it was understood that the plan might be able to live without them. Now the same hospitals and physician groups understand that the health plan cannot live without them or lose customers to a competitor. This realization alone is enough to unbalance negotiations, overly strengthen already strong brands, hasten provider market consolidation, and raise prices.

In addition to more managed care in our future we should expect efforts to control the unit price of services. These may take the form of a renewed willingness on the part of employers and individuals to live with limited provider networks, more aggressive enforcement of anti-trust laws, and/or government rate regulation

Health Reform: An economic engine?

I watched Charlie Rose interview Nancy Pelosi last night, and it was quite a sparring match. A few excerpts: When Rose asked why the legislative version of health reform does not do more to control costs, Speaker Pelosi responded "It's about a different system", and within a few seconds added "Everyone can keep their doctor". When Rose asked about the total cost of the bill, the Speaker responded "CBO just scores the impact on the federal budget.... The bill is about wellness, prevention, and innovation". When asked why passing health care now is so important, Speaker Pelosi said "The health care bill is a job creator and reducer of the federal deficit.... It is a pillar of economic growth." When asked whether or not health care should be deferred so that economic stimulus, climate change, and other legislation could be addressed, she replied "No. They are all connected. We must have leverage over the insurance industry. Health care is a jobs bill". Later: "The health reform bill is about history, progress, innovation, entrepreneurial discipline, families, and jobs."


I thought this exchange was interesting because, at least in the eyes of the Speaker, health reform is not really about health care but about controlling the costs of the health sector in order to spur economic growth. If so, the bill's new health care taxes and inability to stem the tide of rising medical costs will be big disappointments.

Is it a cultural thing?

Is our inability to provide Amercian citizens with basic, publicly available health care coverage cultural? Think about the differences between American health care and most other systems and what it might take for ours to be like theirs. Will American physicians (most of whom are for-profit) agree to work as government employees? Will American consumers be happy with a "basic" benefit package and agree to wait for elective (defined by government) procedures? Will those who are currently insured agree to pay more to cover the uninsured? Will Medicare and Medicaid agree to pay the same rates to providers as private insurers? Will the entire health care system operate within a global budget?

Perhaps these are the questions we should answer (about ourselves) first before engaging in ideological health reform warfare.

Greetings

Now a freelance blogger, after10+ years at Harvard Pilgrim Health Care and 10 years (1989-1999) as Massachusetts Medicaid Director, I have one goal here, which is to continue a discussion on national health care reform that began in the pages of Let's Talk Health Care, the Harvard Pilgrim corporate blog. I hope my perspectives range a bit farther afield and that I can draw liberally on both a public-private health insurance background and twenty-year involvement in health reform efforts in Massachusetts. I have seen this movie from both sides of the aisle and am consistently amazed at how loudly the sectors talk past one another at the national level and how thoroughly the debate ignores the need to strike the appropriate balance between the sectors. Striking this balance is a complicated, time-consuming task filled with a lot of troublesome detail and trade-offs. It is helped by patience and good will, not the scoring of short-term political points or ideological arrogance. I would like to see us move forward, but do not think this will happen until a measured conversation takes place. I hope to contribute.