The Beginning of the Next Healthcare

What a cliffhanger! It is an historic decision, found on the narrowest possible grounds, with a majority agreeing on the result, but not broadly on the reasoning.

Effects: The principal effects of the finding, from the point of view of the system: They have just avoided enormous chaos over the coming years. The system is chaotic enough already, at a tipping point into an unclear future, with the huge shift in underlying economic factors. These factors include especially the various ways of shifting some economic risk from the payers and employers to the providers and the patients/customers.

Stabilizing: The Supreme Court finding stabilizes the future of the system. The affirmation, combined with the fact that a gridlocked polity in Washington is unlikely to come up with any major change or repeal of the law, and that the major parts of the law are self-funding, means that everyone now knows at least the general outline of what the rules are for the foreseeable future.

Permanent: The law is now likely permanent. To overturn it, you would need President Romney with a filibuster-proof majority in the Senate and a majority in the House. The major parts of the law are self-funding and not dependent on Congressional outlays. By 2016, most people will have experienced the results of the law, and found its benefits far outweigh its costs. Business owners will find that it is not as burdensome as some have feared. It will have become obvious that the experience of the actual law is far different and more benign than the fears that have been drummed up about it politically. Once people experience its benefits for themselves, it will be very hard to gin up a campaign to take it away from them.

Paying customers: The biggest effect of the law, from the system’s point of view, is not so much millions of new customers, as it is millions of new paying customers. The overall costs of the high users among the formerly uninsured will actually drop once they have insurance. This can be seen as a “save the hospitals” bill as much as anything else.

Major cost savings still to come: But the major cost-saving provision of the bill lies in the provision to reward “accountable care organizations” (ACOs) that in one way or another take on financial risk for the health of whole populations, rather than be paid strictly fee-for-service. The support for ACAs is actually small, only a small percentage of proven savings getting kicked back to the providers, and under very tight rules. That would not by itself have had much effect if it were not something that providers were willing to do anyway. But the concept — that savings and better care result when providers take on some financial risk for outcomes and overall health — is revolutionary. Many healthcare providers have been plunging ahead with versions of this idea well in advance of today’s finding, betting the future of their systems on the idea that, one way or another, being at risk for outcomes shapes the future of healthcare.

Healthcare beyond reform: The ACA reform law is not the change we need, it will not by itself bring us better and cheaper healthcare. But it is a catalyst and an underpinning to the deep changes gathering force, the forces I describe in Healthcare Beyond Reform: Doing It Right For Half The Cost. We may well look on today’s ruling as the tipping point toward the Next Healthcare, the moment that the pins were finally knocked out from under the deepest resistance to change, and things really began to move.

With nearly 30 years’ experience, Joe Flower has emerged as a premier observer on the deep forces changing healthcare in the United States and around the world. As a healthcare speaker, writer, and consultant, he has explored the future of healthcare with clients ranging from the World Health Organization, the Global Business Network, and the U.K. National Health Service, to the majority of state hospital associations in the U.S. You can find more of Joe’s work at his website, imaginewhatif.

10 replies »

  1. BobbyG, is this all you do? Prop up Joe’s Book?
    I’ve seen you do this several times…

  2. I wish I had a crystal ball to predict the future of American health care system. It’s not surprising that every hospital and health institute in the US is facing a substantial degree on uncertainty concerning the future of health care in our country. As a reference point contrast with this our actual federal spending in 2009 equals to $3.5 trillion resulting in a budget deficit of $1.5 trillion. According to WHO rankings, US stand at 37th position in world heath systems. And the most stunning figure is US spends the highest of its GDP% on health care among the world. We have to think to bring a change. We need to have a new vision. Our rapidly increasing fee for service system need to give way to prevention, eliminating wasting services and reducing costly admissions. As a nation we will not only survive, we will thrive as the best health care system in the world.

  3. thanks Joe, as always you have an intelligent contribution

    two points:

    1. I was under the impression that a business could not take advantage of the health care exchanges for its employees.

    By that I mean that a business could not use tax-free dollars for employee health insurance in the exchanges.

    Let me know if I am wrong.

    2. I see a big gulf between the small business that offers no benefits because it is just small, thoogh it wants to offer benefits ( I work for such a firm myself)…………

    vs the business which is an absolute predator on the labor markets, looking to hire the cheapest employees and gleefyully making a profit on high turnouver.

    If you have ever been in Minneapolis and Dinkytown by the U of M, it is the difference between Al’s Breakfast and McDonald’s.

    I for one do not find it scandalous if McDonald’s workers get Medicaid. They also get public schools and no one finds that scandalous.

    i also favor sales taxes for health care, so that the customers who benefit from cheap restaurant labor are paying for the benefits.

    Thanks, Bob Hertz , The Health Care Crusade

  4. > there is one kind of business that might not flourish under universal health care — namely, the business that depends on cheap labor.

    Let me challenge that. I hear some small business owners complaining loudly, even predicting that when the ACA goes into effect, tens of thousands of small businesses will simply close their doors, and unemployment will skyrocket.

    I think they are imagining that the law will simply force them to do what they have not wanted to do: Buy health insurance for their employees in today’s expensive, difficult individual/small group market. What they are not imagining is buying it through standardized, low-cost exchanges, partially subsidized — and that all their competition has the same costs as they do.

    What we have found since the law was passed and the first round of restrictions on the insurance companies put in place is an actual increase in small-business uptake.

    Businesses of whatever type have concerns about absenteeism for illness, absenteeism for illness of family members, “presenteeism” of sick people who really should have stayed home, inconvenience, the “herd immunity” of everyone getting their flu shots (or not), the lost productivity of people not working up to par because of untreated chronic disease. A business, even one dependent on cheap labor, thrives when its work force is healthy.

  5. Izzy, there is one kind of business that might not flourish under universal health care —

    namely, the business that depends on cheap labor.

    Alnost all the probems of current health insurance — slow payments, claim denials, recissions, sudden premium hikes — show their ugly face in the individual and small group market.

    John Kerry had a proposal that anyone in this market could join the federal employess health plan.

    Most of the regulatory problems would disappea overnite. Let’s go back to this. If federal employees have to pay a little more, that is fine — they are the most privileged group of all.

  6. I agree with your report.

    I’ve been observing, cogitating, listening, and thinking some more.

    This is where I’m at so far:

    How many of the 15% of Americans without health insurance could get good health care with some of the millions going to overpaid health insurance executives? Oh, right… not many since many of them probably have “pre-existing” conditions and of course it costs too much (http://money.cnn.com/2012/06/08/pf/health-care-young-adults/index.htm).

    Really sad. (click on the numbers/hyperlinks to references)

    Thirty-two of the thirty-three developed nations have universal health care, with the United States being the lone exception. (http://truecostblog.com/2009/08/09/countries-with-universal-healthcare-by-date/)

    The U.S. stands almost entirely alone among developed nations that lack universal health care.

    But wait… America is like 50+ countries rolled into one. So which states are doing health care the best and why not adopt some best practices? Okay, maybe at least consider adopting some? Come on… (http://abcnews.go.com/Health/Politics/vermont-tops-mississippi-health-care-scorecard/story?id=8777030#.T-48r7XbCUQ)

    Obviously, America is not the same as other developed nations and all 50 of our united states have different issues to address. But it’s not quite apples and oranges. It’s more of a matter of real… human… lives and there is cause for awareness on the topic of universal health care.

    Not saying I’m for or against any candidates at this point but at least something is being done to raise awareness and move forward. It’s a vast improvement compared to what Clinton did back in 2001 with the “Patients Bill of Rights”. Anyone remember this? Go check it out it’s almost comical in how vague and ineffective it was. But we shouldn’t be laughing. What else was there until more recent years? (http://en.wikipedia.org/wiki/U.S._Patients%27_Bill_of_Rights) . Bush also made important changes to allow seniors affordable medicine and to promote health insurance for those with low income (http://www.webmd.com/medicare/features/george-w-bushs-health-care-plans). But uninsured rates continued to stay around 15% so the issues still remain.

    As a veteran I’ve learned to appreciate that even POWs deserve health care based on triage. If I recall correctly, POW medical treatment is derivative of the Hippocratic Oath which health care providers are supposed to live by (http://en.wikipedia.org/wiki/Hippocratic_Oath) and surely falls in line with… dare I say it… constitutional beliefs of American people.
    Some notable excerpts of the Hippocratic Oath:
    I will remember that I do not treat a fever chart, a cancerous growth, but a sick human being, whose illness may affect the person’s family and economic stability. My responsibility includes these related problems, if I am to care adequately for the sick.
    I will prevent disease whenever I can, for prevention is preferable to cure.
    I will remember that I remain a member of society with special obligations to all my fellow human beings, those sound of mind and body as well as the infirm.
    If I do not violate this oath, may I enjoy life and art, be respected while I live and remembered with affection thereafter. May I always act so as to preserve the finest traditions of my calling and may I long experience the joy of healing those who seek my help.

    There is no mention of preexisting conditions or anything along the lines of compliance with profitable health insurance companies. If anything, oppression of the Hippocratic Oath should be considered unconstitutional and activities engaged in such oppression should be reevaluated and overhauled.

    But what should I care? I’m a veteran covered by the VA! Well, I can remember my times before such luxuries when I lived in fear wondering if the grocery store where I fell would pay for my X-rays and hospital visit. More importantly, I have loved ones that still live in fear of what will come next and if they’ll get good healthcare. I’m not satisfied. I’m surprised any of this is even an issue in this day and age.

    Universal health care can work. Universal health care sets an open environment in which best practices in medicine can be standardized far better than what could ever be achieved in the private sector. Doctors can be prosperous with performance incentives. Doctors and patients should enjoy the practice of medicine as a standard which should also reduce malpractice issues. Businesses can even flourish, albeit under legislation that will ensure protection of patients (sort of like the Patient’s Bill of Rights). Okay, we may not see so many CEOs getting vast sums of cash… but was that ever the intent of health care? The aim of health care should not be to profit. The aim of health care should be to oblige the Hippocratic Oath and for all to live long and prosper. (Thank you Mr. Spock).

    Okay, I did a web search for “health insurance companies that invest in research” and the first thing that came up was a story on insurance companies investing in fast food restaurants. Then I changed the search to “health insurance companies that invest in cancer research”. Should I really have expected to find much?

  7. Hey, Jeff! Good to see you.

    > Reconciliation

    There may be something in what you say.

    > Fail to appropriate

    It is far from clear that ACA will be full implemented as written. They have already backed off from the long-term care part of the bill as simply untenable. I think, though, that large parts of the bill have funding mechanisms built in, and could proceed without new appropriations.

    > ACOs won’t save money

    The ACOs themselves will not save money. As I said, by themselves, they would not have much affect. The support for them is weak, the rewards puny, and they are hemmed around with restrictions. However, the kinds of things an organization needs to do to become an ACO both in themselves save money (greater efficiencies, coordination of care, better tracking of patients, and so on) and more importantly re-shape the organization into one that can take on some titrated risk for outcomes, and for population health markers. I do believe that, over time, these re-shapings will have a far greater affect than the ACOs themselves — because this re-spreading of economic risk from being all in the payers’ lap to customer/patients and health providers is the most powerful way I see of actually reducing costs while providing better healthcare to a wider population.

  8. Joe- It’s not accurate to say that you’d need a veto proof majority and a Republican President to kill ACA. The law was brought in under reconciliation and could be taken out by reconciliation by exactly the same logic.

    Even if Obama were re-elected, a Republican Congress could simply fail to appropriate the funds required to implement the law and we’ be back to fiscal brinksmanship to save it. The law remains both really misunderstood and politically unpopular. Far from clear that ACA will be implemented as written. . .

    I don’t know ANYONE except the folks in the White House and CMS who believe ACO’s will save money.