OP-ED

Will Business Force Reform Back To The Drawing Board?

Brian KlepperUntil now, non-health care business has been noticeably absent from the health care reform proceedings , and quiet about the bills’ impacts on their management of employee benefits, on cost, and on the larger issues of global competitiveness. Where have the voices been of the powerful business leaders who will pick up much of the tab?

They’ve finally surfaced, and now we’ll see whether they have the will to bring reform back on track. They certainly have the strength. The question is whether this salvo by the business mainstream could force Democrats to reconsider and revise the content and structure of their proposals.

On October 29th, a powerful collaborative of major employer organizations sent a letter to Speaker Pelosi and Republican Leader Boehner asserting that the House legislation “falls short of the bipartisan goal of controlling costs and jeopardizes employer-sponsored coverage which now serves more than 160 million Americans.” The same group sent a similar letter to Senate President Reid earlier that week.

It is important to note that the collaborative – the group includes the American Benefits Council, the Corporate Health Care Coalition, the ERISA Industry Committee, the U.S. Chamber of Commerce, the National Association of Manufacturers, the National Association of Wholesaler-Distributors, the National Coalition on Benefits, the National Retail Federation, the Retail Industry Leaders Association, the Business Roundtable and the National Business Group on Health – represents the mainstream of American business. In general, these associations’ member firms have sponsored employee health coverage for decades, and understand the linkages between health, productivity, cost and competitiveness. Their very real stake in the outcome, their long term sponsorship and their sheer collective clout enable them to enter and change the terms of the discussion.

Then, Tuesday, Employee Benefit News published a list of 10 specific items prepared by National Business Group on Health President Helen Darling, a longstanding progressive voice in health benefits, that “should concern plan sponsors that provide health care benefits to their workers.” The bill, she said:

  1. Lacks meaningful ways to control health care costs;
  2. Takes us down the road to even worse deficits and crushing national debt by not getting more savings from the health system and making the coverage more affordable;
  3. Does not support strong evidence-based medicine or a way to make certain that we don’t pay for treatments that are not effective;
  4. Does not establish a strong independent Commission that could help Congress make the politically hard, but obvious, good decisions to eliminate wasteful and harmful treatments and spending;
  5. Does nothing to correct medical liability problems and related costly defensive medical practices;
  6. Doesn’t expand employers’ ability to help employees to actively engage in wellness activities or achieve health goals;
  7. Undermines ERISA and opens ERISA plans to unacceptable burdens;
  8. Raises serious questions about the public plan and how it would operate;
  9. Could require an employer who provides comprehensive benefits to still be subject to an 8% payroll tax if employees decline employer coverage because it costs more 12% of the employee’s income; and
  10. Contains an outrageous requirement that would require employers still offering retiree medical coverage to continue it indefinitely, thereby hurting employers who have maintained retiree benefits in good faith.

Non-health care businesses comprise about six-sevenths of the economy – meaning they have six times the heft and influence of the health care industry – and financially sponsor coverage for more than half of Americans. Year after year, employers have borne the lion’s share of onerous health care cost increases, 4 times general inflation over the last decade. Endless reports have described how health care, business’ largest and most unpredictable benefit cost, has sapped America’s global competitiveness and placed its employers at a severe disadvantage. An equal torrent of words has been spent on health care’s excessive waste, at least 30% of our $2.6 trillion expenditure, or north of $800 billion annually. Even so, most business leaders are loathe to simply give up the health system they currently sponsor, its flaws notwithstanding, unless they can be confident the alternative can result in lower cost, improved quality, and an equally or more productive workforce.

Keep in mind that, at this point, health care reform has been a series of power plays between Congress and the health care industry (meaning the professionals, firms and associations representing health care’s four major sectors: the supply chain, HIT, care delivery and insurance/finance).

Until now, the health care industry – those who seek dollars – has dominated, lobbying Congress and contributing enormous sums to election campaign coffers to make sure that the legislation doesn’t impede health care profiteering and sends new funds their way. Meanwhile it has held its breath, apparently hoping that other interests with clout won’t notice. As the bills come down to the wire, the air waves have NOT burned with cautionary and righteously indignant health care industry messages opposing them. That’s because organizations in the health industry are reasonably certain they’ve won. They have been sitting tight until the deals are done.

And with good reason. As they stand now, the reform bills are very generous to the health care industry, facilitating, through mandate and/or subsidy, millions of new customers but, as we’ve recently pointed out, doing pathetically little to rectify the health care crisis’ structural drivers. For example, the health plan sector can raise rates without restraint, and a significant chunk of Medicare dollars will be transferred to private sector control. The biotech industry gets a 12 year moratorium on generic competition. With only token progress away from fee-for-service reimbursement and toward primary care re-empowerment, the system will continue to make specialist excesses lucrative. The American Medical Association (AMA) and Medical Group Management Association (MGMA) couldn’t be more enthusiastic, though both are now campaigning for H.R. 3961, which would eliminate the 21.2% drop in Medicare physician reimbursements scheduled to go into effect January 1, 2010. There are many more examples.

Commercial purchasers have waited to see how all this would play out. But now they’re stirring, and not a moment too soon. Non-health care business leaders finally appear to be mobilizing against the weak cost control provisions of the current proposals.

What is needed now is an orchestrated, mobilized, highly visible campaign effort that features the faces and voices of well-known American CEOs, and that leverages the full force of business’ leadership across industries, not just for their own interests, but for those of all Americans. The places to start are in the structural areas we and others have recently discussed: primary care, fee-for-service reimbursement and cost/quality performance transparency. Properly implemented, reforms in these approaches throughout health care could have profoundly positive impacts on both cost and quality, empowering the market to make health care far more affordable for businesses and working families.

It is possible that the entire health care reform process just changed tone and direction. If it did not, then we’re no worse off than before. But if it did, then the ramifications for how American policy works – not just for health care but for all our issues – could have just entered a new and profoundly important paradigm.

Brian Klepper and David C. Kibbe write together on health care market dynamics, health IT, innovation and policy.

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Bradley Piressewa mobilDan Smithjared bennettGary Lampman Recent comment authors
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Bradley Pires
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AHJ is seeking for partner sites in the medical genre. American Health Journal is a medical content site with 3000+ of high quality health videos. We are seeking writers who are interested in submitting guest articles to our brand. . Contact us at our contact page on our web site.

sewa mobil
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Nice article, thanks for the information.

Dan Smith
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Dan Smith

A journey of a thousand miles begins with one step. Let’s talk about the first step. This first step should address healthcare cost which is pushing us over the edge. Why has the concept of state Medical Public Service Commissions (PSC’s) not surfaced? We have seen in areas where there is a competition problem that PSC’s can do a good job. Let’s turn the problem of healthcare costs over to state PSC’s. In so doing there are numerous hidden benefits that you would not expect at first blush as follows: 1. PSC’s will determine the basic cost of each Medical… Read more »

Gary Lampman
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Gary Lampman

Employers provide insurance in a effort to recruit New Employees and compete with other Business’s. They select policies based on Premium Dollars and functionality. Recently my insurance company raised premiums 30 %. The choice for the employer was either accept the increase in premiums or increase from $500.per person to $1,000.00 per person deductibles and the cost of emergency room Visits from $100.00 to $250.00 among other changes. This is a Business decision based on the law of averages. Business decisions often clash with personal Needs. I have read some of the post above and I can tell you that… Read more »

jared bennett
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jared bennett

we all know we need more Competition. nobody is making this point. lets try the free stuff first. its free. if it doesnt work then we can change our stratagy as needed. my idea is to get the consumer in the game. lets say i need an mri and the insurance companys and the goverment will pay 1200 dollars. if we offered the consumer a rebate of half the amount we can save back to the consumer they will call around and find the best price. people will all the sudden care what it cost and try to find the… Read more »

Gary Lampman
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Gary Lampman

Hospital Cost shifting is what targets patients and leaves them vulnerable for unsubstantiated Expenses that are intended to make up for the uninsured. The Facts are that Health Care has priced themselves out of a fair Market value. Ever increasingly setting themselves up for failure or Non- Payment for services.They are just Too expensive and Health Insurance contracts are not paying there fair share.Insurance Manipulates and inflates the Cost of Services and often leave not only the individual but the institutions saddled with excessive Debt. Its unbelievable that Providers would allow Insurance to dictate to their Members. Its embarrassing that… Read more »

notmd
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notmd

I am amazed that we don’t see costs being contained through these reforms. The federal and state governments will lower their rates,patients will continue to have free care in the emergency room,insurers will not give hospital higher rates. Cost shifting has stopped at the door of hospitals. They will close,merge or more likely change into primary care centers,wellness centers,free standing asu,medical homes,retail clinics. This radical change was the intent of health care reform.Insurers and pharmaceutical companies will pay a little bit more into the system but will survive and grow. Hospitals have attempted to push back on how health care… Read more »

David K. Cundiff, MD
Guest

I commend this excellent review of the failure of HR 3962 and the Senate plan to be economically sustainable. Nancy Sebelius’ optimistic estimate of the cost of health care in 2020 is 23.3% of the GNP versus 23.2% with the status quo. Helen Darling’s 10 salient cost issues are well taken. Klepper and Kibbe are right that the place to begin is “primary care, fee-for-service reimbursement and cost/quality performance transparency.” Consider “Physician Managed Care”, an imperfect health care reform plan but better than the Democrats’ efforts: http://doctormanagedcare.com/PMC/Book.pdf Physician Managed Care will describe a new comprehensive plan that promises to shift… Read more »

TZ
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TZ

Everyone is so damn afraid to chip in a little more so that the rest of the country can be healthier. It’s not socialism. It’s democracy. It’s called sharing. We learned it when we were in preschool. It’s time we put our basic rules of morality into practice. This may not be a perfect bill, but it’s an improvement. If you’ve got something better, naysayers, let’s see it.

Margalit Gur-Arie
Guest
Margalit Gur-Arie

Barry, The problem with health care costs is that there are objective factors outside the control of either government or private industry that push costs up. I am not at all convinced that the main reason for cost escalation is the fact that government is involved in regulation. I do agree that good intentions are never enough and should be tempered by reality, but I also believe that good intentions should be the starting point in all endeavors. I think almost everything you listed up there is fairly common sense. I do take exception with high deductible plans, since the… Read more »

Barry Carol
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Barry Carol

Margalit, I would like to address the issue of lack of trust in government as it relates to healthcare. Nate, in past posts, spoke of the history of Medicare, Medicaid, public housing, public education and other government programs that either did not live up to their promise or cost far more than initially projected or both. Historically, when the left proposes programs like these, they tell us that their motive is a fairer and more just society and they claim the moral high ground based primarily on their noble intentions and supposed concern for the less fortunate. The problem, from… Read more »

108DAYS
Guest

The human race isn’t on the verge of extinction. Society doesn’t benefit if I pay for your IVF.

LisaLindell
Guest

Margalit, basic education is a social need and crucial to the evolution of all of society. I have no problem contributing to your 12 children’s primary education. You can buy whatever you want with your food stamps, they don’t go that far if you want to blow it all on Russian caviar that’s up to you. In your examples, there are LIMITS. If Yellowstone blows their entire budget covering one lodge in 24k gold plating, but the rest of the park becomes a polluted cesspool, society would make some changes. I’d rathar pay for executions than pay to feed and… Read more »

Margalit Gur-Arie
Guest
Margalit Gur-Arie

Lisa, Is it shortsightedness or deliberate obfuscation when people ask about paying for other people’s health care? Are you OK paying for my 12 children’s education even if you have no kids? Are you OK paying for my food stamps? Should you pay for Russian caviar as part of my food stamps? How about fresh salmon steaks? Are you OK paying for maintenance of Yellowstone park even though you never go camping? Are you OK paying beef subsidies while being vegan? Are you OK paying for my Medicaid care? How about foster care for all those 12 children when I… Read more »

LisaLindell
Guest

Margalit, what do you define as illness? Health care should be a social service, indeed, but who is going to define health care? Needs or wants? Should I be taxed to pay for your invitro fertilzation? We can’t provide all things to all people, we can’t afford to. Already there’s a backlash to the evidence mammographies are over-used.