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Health Reform Clears Big Hurdle, but Faces an Even Bigger One

Posted Aug 27 2009 11:36pm

Expensive prescription drugs. Health care reform is moving again, but many experts still question whether in the end, it will be real reform that encourages higher quality care and lowers overall costs.

The House Energy and Commerce Committee finally voted and approved the health care reform bill that had been stalled as moderate democrats objected to some of it’s provisions, according to The Wall Street Journal.  The bill passed the Committee after moderate Democrats won a key amendment that will exempt more small businesses from having to provide coverage.

In the meantime, however, debate about the bill has “devolved” into the usual political battle about “villainous insurance companies versus inept government control of health care,” as Bob Laszewski describes it in a recent blog post.

He goes on to say that both Democrats and Republicans have been suggesting that we can do a big health care fix WITHOUT anyone making a big sacrifice, if we do it their way. But that’s not possible.  As a result, both sides are vulnerable to the same old criticisms they’ve been throwing at each others’ ideas for years.

What’s needed is a fresh and “apolitical” approach to health care reform.  Both Republicans and Democrats have good ideas about health care reform.  The system needs a radical shake up, not to be remodeled according to some political party’s agenda.

Many point to Massachusetts as the model for health reform, because the state has managed to get so many of its residents insured.  In Massachusetts, insurance companies cannot deny anyone coverage and every resident is expected to have insurance, either buying it for themselves or through state subsidies.  The idea behind these dual mandates, was that if everyone was insured, the cost of treating the uninsured would go down, because they would have proper care.  Unfortunately, health care costs have kept rising in Massachusetts, and are threatening to bankrupt the system.

Now, in a surprising move, a special commission has suggested that to keep the health care system afloat, the state needs to abandon the traditional “fee-for-service” method of paying doctors, hospitals, and other providers.  Instead, they would switch to “a system of global payments that combines the approaches of risk-adjusted capitation and pay for performance with a strong focus on primary care.”

Why is this such a critical change? Because “…fee-for-service medicine can be lucrative for providers because of financial incentives to deliver more (and more costly) services, it typically does not offer incentives to improve quality or efficiency or to deliver care that has a low profit margin, such as preventive services or patient education.”

It’s an age-old problem.  Primary care doctors are poorly rewarded, and not rewarded at all, for much of their work, but they are the ones who in the best position to help control costs. Meanwhile, specialists are rewarded for doing more and more, and not penalized for poor quality care.

Republicans and Democrats both know this. They also know that patients too must take more responsibility. The incentives also need to be in place for patients to care about their health and make wise health decisions.  Some employers are already seeing how this works.  Patients who participate in wellness programs can have their co-pays waived.  Hence, they get healthier and don’t have to pay for it.  Patients who smoke may have to pay higher insurance premiums. After all, smokers have a much higher risk of many conditions.

Democrats need to stop worrying about how to make healthcare “fair.”  Giving people free health care with no strings attached doesn’t make them healthier, it just means they get care.  Republicans need to stop worrying so much about market forces.  The health care market is a mess.  The incentives for everyone involved are twisted.  It’s unlikely that overnight we could turn this into a system that responds to market forces.

As Laszewski says in the comments section of his post, “[it] isn’t health care reform if we don’t use reform to actually decrease the deficit and stop the trajectory toward 22% of GDP.’”

Rep. John Dingell (D., Mich.) leaves a meeting of the House Energy and Commerce Committee on Friday.

The broader bill calls for a new public insurance plan that would compete with private insurers, in an effort to expand insurance coverage. The bill requires all but the smallest companies to provide workers with coverage or contribute as much as 8% of their payroll toward helping them buy it. The Energy and Commerce Committee doesn’t have jurisdiction over taxes, but companion House legislation would raise more than $500 billion by levying a new surtax on the wealthy.

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