Health Care Legislation: Possible Macro Trends

It is very difficult to gauge the ultimate outcome of proposed health care legislation, but several common themes do allow one to make educated guesses on trends.

The trends:

1. A shift from exclusion to cost controls
2. Rising health care costs
3. More dialogue between payer intermediaries and decisions at the point of care
4. More capitation and risk relationships with providers
5. More dynamic provider networks based on a variant of social networks and preferences
6. A shift in the delivery of health care services from physician-based practices to networks of clinicians with varying skills practicing in a wider range of accessible settings
   
7. A shift in "ROI" from short-term return to long-term value
8. A shifting responsibility from intermediaries to individuals
9. Administrative simplification
10. Pricing and quality transparency

Trend: A shift from exclusion to a shift to cost controls.

• It appears that exclusions for pre-existing conditions will not be common. This is heartening to those of us who have family members with such conditions. What will be the consequences of this? In a September 22, 2006 NY Times Op-Ed article (subscription required), Paul Krugman cites a September 17 Lisa Girion article in Los Angeles Times article entitled " Sick but Insured? Think Again" and, carrying that theme, argues that the current incentive structures pit parties against the best medical interests of the individual. He states "cruelty and injustice are the inevitable result of the current rules of the game."

• Krugman makes the following claims without reference:

Between 2000 and 2005, the number of Americans with private health insurance coverage fell by 1 percent. But over the same period, employment at health insurance companies rose a remarkable 32 percent.

• These positions will be eliminated or transformed into efforts that apply actuarial skills to care management.

Trend: Rising health care costs

• Health care costs in general are expected to increase. One could elaborate at length on this, but it seems redundant.
  

Trend: More dialogue between payer intermediaries and decisions at the point of care

• Since intermediaries cannot exclude the sick and costs will continue to rise, an increasing emphasis on cost controls through real-time dialogue seems inevitable. EMR technology "clinical decision support" will include dialogue with intermediaries on test ordering behavior. Much as formulary requirements and prior-authorization are drivers for prescription writing, similar metrics will be applied to the use of diagnostic testing and procedures. (Think of "prior authorization" on steroids). Technology makes this possible. Those who don't adopt will see claims denied post hoc for lack of authorization or assertions that a test was unnecessary or redundant.

Trend: More capitation and risk relationships with providers

• An inability to control costs through exclusion of pre-existing conditions will lead to a growth in service agreements between plan intermediaries and providers or coalitions. Provider coalitions - whether capitated or not - will have to increase their investments in information technology that helps them understand the quality and cost of care across providers. The focus will be on the longitudinal care of an individual rather than the service delivered for any one discrete event.

Trend: More dynamic provider networks based on a variant of social networks and preferences

• Since care will be more patient-centered, collaboration technologies more available, and (I argue) administrative mechanisms more uniform, one can imagine an evolution from static provider networks to more dynamic relationships based on community preferences and patient needs. One may see an evolution of the notion of competition from competition among static provider networks to more dynamic and fluid competition aimed at increasing quality and cost metrics for populations.
  

Trend: A shift in the delivery of health care services from physician-based practices to networks of clinicians with varying skills practicing in a wider range of accessible settings

• The experiences of states with expanded coverage has shown that the traditional primary care based physician model is insufficient to meet demand. Accordingly, pharmacists, nurse practitioners, and many other health care professionals and individuals will play an expanded role in care delivery delivered through networks sharing clinical and administrative data. Settings will also change. Retail services - including pharmacies and retail clinics delivering a limited set of services - will complement a broader range of clinical services offered in traditional settings. Care coordination services enabled by health care technology will be essential for effective and efficient care delivery.

Trend: A shift in "ROI" from short-term return to long-term value

• An elimination of pre-existing illness barriers will eliminate the current illogical tendency to withhold short-term expenses (e.g., medication expenses) at the expense of long term costs towards the realization that within communities, shifting of consumers from one plan intermediary to another is a zero-sum game. All benefit if health care issues are addressed immediately. But this notion is at risk because of lower adherence due to consumer price sensitivity and short term incentives to optimize local costs despite legislative change. If government is a safety net, one can imagine scenarios in which care is limited because long-term sequelae will be paid for by "the government." Hypertensives, for example, need control, but if their control is poor and they ultimately require dialysis, intermediaries are off the hook and Medicare (i.e. all of us) pays dearly for earlier inattention.

Trend: A shifting responsibility from intermediaries to individuals

• Health care costs will not be reined in until the individual has a better sense of what they are getting for what portion they pay. Until "everyone pays something," the moral dilemma argument is sound. Individual payment of at least a fraction of a known total cost seems essential. Regina Herzlinger's views on consumer-focused health care seem very applicable.

Trend: Administrative simplification

• Plans have "differentiated" on the basis of minor differences in procedures and plans. For example, this writer believes the number of formularies in the United States is in excess of 3,500 and the number of prior authorization variants for some drugs and procedures range in the hundereds. (Any better data would be greatly appreciated!). The unnecessary complexity of this number of formularies or prior authorization rules has been passed on to the larger "system." As margins in plan intermediaries are squeezed and greater cost-related administrative dialogues engage providers, a more simple, uniform approach will be a technical and business necessity.

Trend: Pricing and quality transparency

• Pricing and quality transparency - cornerstones on the last Administration, will become central as a by-product of health care reform because of the pricing pressures and care decisions that individuals and the public will be forced to make. "Rationing" will take place at the level of individual consumer decisions as well as at the level of plan intermediaries, states, and the federal government. Such "rationing" takes place now and can only be more dominant as price pressures grow. It might be "invisible" to the public rhetoric, but it will be there. The only way out of this is to make prices and value more transparent to all. Administrative simplification and greater consumer involvement will accelerate this trend (at present, it is very difficult to know exactly what the full cost of a retail prescription is, for example).