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After the Failure of Reform

Brian-klepper

The stalemate in the bi-partisan health care summit was cast the moment it was announced. Republicans demanded that the reform process start anew, and Mr. Obama insisted on the Senate bill as the framework going forward. The President may now offer a more modest reform bill that can demonstrate some progress on the health care crisis, but that remains to be seen.

We hoped the White House would seize the opportunity presented by Massachusetts’ election of Scott Brown to begin again, huddling away from the lobbyists to develop a new set of provisions that would include reasonable Republican elements, like medical liability reform, as well as other meaningful cost reduction provisions excluded from the first round of bills: pricing/quality transparency, a move away from fee-for-service reimbursement, and the re-empowerment of primary care.

They took a different path. As Ezra Klein speculated in the Washington Post, Mr. Obama and his advisors may believe that, with the 2010 elections bearing down on Congress, there is too little time to begin again.

But this is a questionable political calculation. The reform process soured the American people and American business on the health care bills. A January 27 Towers Watson/National Business Group on Health (NBGH) survey found that 71% of employers believe the bills “will increase the overall cost of health care services in the United States.” A February 11 Rasmussen survey found that 61% of voters think the bills should have been scrapped and the process started over.

And no wonder. Over the past year, the legalized bribery that is special interest lobbying was fully on display, with members of both parties (but led by the Democrats) taking contributors’ money with a gusto unprecedented since the Republican feeding frenzy set off by Newt Gingrich’s K-Street Project. A new report from the Center for Public Integrity shows that “more than 1,750 companies and organizations hired about 4,525 lobbyists — eight for each member of Congress — to influence health reform bills in 2009.” Together, they spent $1.2 billion on health care, more than one-third of the $3.47 billion spent by special interests in 2009 to buy influence over policy.
And then there was the brazen political deal making. Mary Landrieu brought $300 million in federal aid home to Louisiana for voting with the Democratic Leadership, which the GOP promptly dubbed “the Louisiana Purchase.” Ben Nelson got the Feds to pay for most of Nebraska’s Medicaid expansion…in perpetuity. And, on the eve of the Massachusetts Senatorial election, the White House cut a deal that exempted unions from the tax on “Cadillac health plans” until 2018.

The resulting reform provisions – a cynical combination of expert advice, uncompromising ideology and donor quid pro quos – would have extended entitlements while rescuing the industry at the top of a financial bubble, exacerbating the cost growth problem during a recession by replacing dwindling private funding with public dollars. At the same time, the bills specifically avoided committing to approaches that could wring excessive cost from the system.

In truth, either passing or blocking such poor bills would have had little impact on the increasingly threatening crisis. Short of starting over, American health care will continue to face some very harsh realities. More individual and corporate purchasers, particularly small employers, will be priced out of coverage as health care costs explode. This erosion in mainstream coverage is translating to a reduction in total health plan premium – the engine of the health care economy – and to escalating uncompensated care cost loads throughout the system. A plummeting number of insured patients will find it harder and harder to pay for a rapidly growing number of uninsureds and under-insureds.

These are recipes for instability and disaster. And as health care – the nation’s largest economic sector, representing one dollar in six and one job in eleven – becomes increasingly unstable, so does the larger US economy.

Americans are increasingly aware that a government in which both parties are compromised by political ideologies and special interests will likely leave them to their own devices in dealing with health care. American business had, to a great extent, put health care benefits decisions on hold until reform was complete. Now it is resigned to continuing to cope with that burden, but with a renewed commitment to innovation. A February 22nd Towers Watson/NBGH survey found that “83% of companies have already revamped or expect to revamp their health care strategy within the next two years, up from 59% in 2009,” a clear sign that businesses now think they need to act on their own behalves. (Of course, most individual Americans don’t have that latitude.)

One thing is clear. Without reform as it was constituted and the subsidies it promised, the industry faces an onslaught of actions from the marketplace that will focus on its excesses, drive down reimbursement, and hold it more accountable. A long list of innovations – re-empowered primary care; data collaboratives that identify and then create incentives for making the best choices; new technologies like minimally invasive surgeries, point-of-care testing, and clinical decision support tools; medical tourism; clinical groupware; check lists; Health 2.0 business-to-business ventures that streamline health care processes – are now proving they can improve the quality of care while reducing cost.

The result is inescapable. No system this far out of balance can remain unchanged indefinitely. So long as it was influencing the policy process, the health care industry would never course correct in ways that are in our national interest. But as the environment continues to intensify, the market will be driven to embrace and integrate these solutions. One way or another, the health industry is in for real change over the next few years.

Meanwhile, until America meaningfully addresses cost and access through policy, proper health care will continue to be out of reach to many and will threaten many more with personal financial ruin. It will continue to sap the nation’s economic strength, and compromise our efforts to lead and compete internationally.

Which is why the President should begin again, and make achieving serious health care policy reform a dedicated goal. In the process, he could challenge special interest influence over policy, and work to refocus the political process on the common interest. We believe the American people can see how the current paradigm is corroding our nation, and would rally behind this approach. More to the point, this was the premise of Mr. Obama’s election. The American mainstream is waiting for him to assert his leadership in this way.

Health care reform has stalled and possibly failed for the moment. But the stakes are so great for America that failure cannot be an option.


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

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Top Ultrasound Tech SchoolsWendell Murraymaggie maharbev M.D.medinnovation Recent comment authors
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Guest

I would love to add if you do not currently have an insurance policy or perhaps you do not belong to any group insurance, you might well take advantage of seeking the aid of a health insurance professional. Self-employed or individuals with medical conditions normally seek the help of the health insurance broker. Thanks for your text. Thanks for your text. I would also love to say a health insurance brokerage also utilizes the benefit of the actual coordinators of the group insurance policies. The health insurance agent is given an index of benefits needed by an individual or a… Read more »

Wendell Murray
Guest

I fully agree, as usual, with Ms. Mahar’s add-on comment here. The seminal article by Prof. Arrow – a genius along the lines of Paul Samuelson – from around 1963 laid out all the relevant characteristics of the markets in any healthcare system. Those characteristics have changed a bit perhaps since then. But the analysis provided in that article still holds and it is an analysis well worth reading now. In addition there is an excellent book published sometime in the early 1990s that includes essays by knowledgeable scholars who address each of points raised by Prof. Arrow. The point… Read more »

maggie mahar
Guest

David– First, thank you for the kind words. I certainly didn’t mean to suggest that you should stick to Health IT. And I was referring to the fact that you are, in fact focusing on making Health IT simpler and more affordable. As you know, I’ve written about that work, and greatly respect what you’re doing in that area. I disagree, of course, about market solutions. Both my first book “Bull: A History of the Boom, 1982 to 2004” and my second book “Money-Driven Medicine” argue agains the market fundamentalism which suggests that markets are efficient and rational. Markets are… Read more »

Wendell Murray
Guest

“the current trajectory demands a “real” fresh start” Fruitless expectation at this stage, but there is potential for necessary improvement once a current weak, but still positive, reconciled bill is enacted. Personally I believe that once the bill is enacted, the impetus for all Republicans to lie and deceive for whatever political reason more or less disappears. I am still convinced that there is at least one Republican legislator in Congress with enough courage, brains and knowledge to try to enlist business support for a single payer/insurer scheme. That scheme, as I always note, is completely in the interest of… Read more »

David C. Kibbe, MD MBA
Guest
David C. Kibbe, MD MBA

Maggie: Great to have your comment here. First, we’re going to have to agree to disagree about the best course of events with respect to the current bills, Pres. Obama’s leadership, and whether or not change can occur without structural reforms. I respect your opinion, and I do hope it works out for the best. Secondly, I think your comment about K2 focusing on how to “make health IT simpler and more affordable” is both poorly informed, and insulting. Anyone who knows my work knows that I am already doing a considerable amount to make health IT simpler and more… Read more »

maggie mahar
Guest

This post seems oddly out-dated. Two weeks ago, it would have been more persuasive. Today, it seems clear that passage of health care reform is much more likely than it seemed a few weeks ago. It seems that Pelosi is very, very clsoe to having the votes she needs. (See http://www.healthbeatblog.org and Joanne Kenen on The New American Foundation’s blog today–she reported this first.) Obama has finally begun to make his determination clear. The letter to the Congressinal leadership today should make it easier for moderate Democrats to vote for reform. During the Summit last Thursday, I think the Republicans… Read more »

Peter
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Peter

“One, conducting undercover investigations of Medicare and Medicaid providers to search for waste, fraud and abuse” Isn’t the FBI already doing this? “Two, experimenting with specialized health courts as an alternative to jury trials in medical malpractice cases to cut down on defensive medicine.” If you’ve been reading doctor responses here on THCB they don’t want to be forced to show up in court – any court, any time. Their idea of malpractice reform is not being held accountable to anyone. “Three, Obama also will agree that health savings accounts might be offered in new markets his plan sets up… Read more »

bev M.D.
Guest
bev M.D.

medinnovation;
You appear to be quoting from a press release, since one almost identical just appeared in the Washington Post. What gives; did you write it or something?

bev M.D.
Guest
bev M.D.

Brian; Your comment does a good job of explaining why you think starting over is better and would achieve a better bill. However, since I know your cynicism about Congress exceeds even my own, I am surprised that you still think it is politically achievable. First, he can’t start over “independent of opposition demands.” The minute he does start over, that same opposition will declare victory and redouble its efforts to kill any bill. Second, although he is CAPABLE of communicating as well as you say, the fact that he has not done so indicates to me that he is… Read more »

medinnovation
Guest

I agree with the thrust of Brian’s and David’s blog, but no way is Obama going to start over again. He will simply give lip service to the four GOP ideas he finds tolerable. Here is my interpretatioh of what likely to happen. Four New Ideas to Jumpstart Reform On Wednesday. March 3, President Obama will announce he is open to these four GOP ideas. One, conducting undercover investigations of Medicare and Medicaid providers to search for waste, fraud and abuse, an idea put forth by Sen. Tom Coburn, R-Okla., at least week’s summit. Two, experimenting with specialized health courts… Read more »

David C. Kibbe, MD MBA
Guest
David C. Kibbe, MD MBA

Contrarian: Can you find someone to draw and annotate your wonderful image? It’s truly a wonderful exercise of the mind, which could be a great political cartoon.
Regards, DCK

Peter
Guest
Peter

But Contrarian, we have low taxes, isn’t that all Americans want?

Contrarian
Guest
Contrarian

Talking about America. I am looking at those things not seen or in the conscious lexicon of Americans. Let me give you an analogy. Imagine America is a muscular, somewhat younger, Arnold Schwarzenegger. He is decked out in a Giorgio Armani suit, Italian shoes, a Hugo Boss dress shirt, a Charles Tyrwhitt necktie and Brooks Brothers socks. Over his shoulder is a color coordinated leather 63 round ammunition belt. At his waist is a two gun holster holding 45 Magnum long barrel pistols. Cradled in his left arm is a massive anti-personnel machine gun. In his right hand is a… Read more »

Peter
Guest
Peter

“Without a new kind of leadership, the same forces that have dominated Congress will continue to dominate,”
A new kind of leadership will happen when a new kind of legislative reward for doing the right thing is achieved independent of corporate lobby money. But for now even the Supreme Court has given it’s blessing to the status quo.

Brian Klepper
Guest

Having the President start over, independent of opposition demands, would be far more than caving to a Republican obstructionist tactic. It would be the President demonstrating that he believes specific elements of health care reform are essential, in ways that he hasn’t until now, by offering a “straw man” set of provisions that are capable of actually addressing the issues that face us. He is quite capable of articulating the problems and how each solution addresses it in ways that are compelling. The President punted to the Democratic Congress the first time around, and received initial bills that were largely… Read more »