THCB

The Devil We Know

Once again, the Supreme Court was unsurprisingly surprising. The conventional wisdom was that at least part of the health reform law would be overturned, but in practice the court blessed the status quo we have known for two years: The reform law will continue to be implemented.

It’s the devil we’ve known. Washington will issue more regulations. Insurers will be buried in requirements on coverage and benefits, driving up costs. Physicians will have more oversight and report to the government. Hospitals will see Medicare cuts. Millions of individuals will either get a new federal subsidy for insurance or be enrolled in Medicaid.

States will have more interference from Washington. While the Supreme Court gave them some flexibility on whether to expand their Medicaid programs, states will still be forced to either build a new insurance exchange, like Expedia for health insurance, or have the federal government build it for them.

By upholding the law, the court also left untouched two huge problems looming on the horizon. First, as the law expands coverage there will be a tremendous increase in demand for medical services, but there will not be an increase in the number of doctors, nurses and other providers to deliver care.

Millions of people may have very generous coverage, but they will struggle to find providers to deliver it.

Second, as businesses face requirements in 2014 to offer federally approved health insurance or pay a fine, many companies will do the math and see that paying the penalty is far less expensive than continuing to provide coverage.

Knowing that many of their employees can find insurance with a federal subsidy or enroll in Medicaid, many businesses will stop offering coverage. This will shift costs onto the government, exploding federal budgets and exacerbating our long-term fiscal crisis.

But there are health care trends that will be unaffected by the court’s ruling.

Costs will continue to be pushed onto consumers. Health care costs have continued their perpetual rise, leaving businesses with few options other than cutting benefits and shifting costs to their employees.

As a result, out-of-pocket spending is growing across the board. Consumers are paying higher premiums, co-pays and deductibles.

Since 2005, we’ve seen a significant increase in consumers managing more of their own health care dollars through high-deductible health plans with Health Savings Accounts. These consumer trends show no signs of abating.

How doctors are paid will change. Doctors and other care providers are currently paid for delivering specific, individual medical services regardless of whether they worked or were necessary.

Public benefit programs such as Medicare and private insurers are introducing new approaches that tie payment to performance and outcomes.

For example, WellPoint is leading 12 initiatives in eight states around a new payment and care model called Patient-Centered Medical Home. These types of programs reward doctors for improving patient care and lowering overall costs.

Silos of care will be replaced by coordinated care. How many times have you filled out the same medical forms over and over? That’s because very few doctors and hospitals share information or coordinate with each other on a patient’s treatment.

New partnerships among doctors, hospitals and community providers are popping up across the country that will better coordinate care from one provider to the next.

Health care will finally enter the 21st century with information technology. It often feels as if we walk back in time technologically when we see a doctor. But the writing is on the wall for patients being handed a clipboard and a pen.

Technologies such as electronic health records are key components for care providers to coordinate, and there are financial incentives to adopt and use them. New payment models for providers and the general march of technological progress will finally pull health care out of the dark ages and into the information age.

No Supreme Court decision could deter these changes, though some argue that upholding the health reform law will actually accelerate these trends.

David Merritt is the former CEO of the Center for Health Transformation and the Gingrich Group and currently a senior adviser at Leavitt Partners.

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www.youtube.comRSPeter1Jonathan HMaggie Mahar Recent comment authors
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Guest

Hi, I think your blog could be having web browser compatibility issues.

Whenever I take a look at your website in Safari, it looks fine however, if
opening in IE, it has some overlapping issues.
I just wanted to give you a quick heads up!
Besides that, great website!

Maggie Mahar
Guest

Jonathan H.– First, you’re entirely right: the community heath centers won’t solve the problem in poor rural areas., But the greatly increased funding in the Affordable Care ACt for med students willing to sign up for the National Health Service Corp. and “go whrere no one else will go” will help.This is funding that we haven’t seen since the 1970s. (If you remeber the TV show “Nothern Exposure,” the doctor was part of the NHS Corp. A great many of these physicans wind up staying in the place where they were initially assigned ,for a great many years. I wrote… Read more »

Jonathan H
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Jonathan H

David makes a point I have heard before, but that doesn’t add up: “…many companies will do the math and see that paying the penalty is far less expensive than continuing to provide coverage.” The existence of the penalty does not make dropping coverage more attractive for the bottom line for any firm. The penalty could only decrease the number of companies who do not offer coverage. “Knowing that many of their employees can find insurance with a federal subsidy or enroll in Medicaid, many businesses will stop offering coverage. This will shift costs onto the government, exploding federal budgets… Read more »

Maggie Mahar
Guest

David– Re — will there be enough providers? First, the Affordable Care Act provides enough funding to double the capacity of Community Heath Centers, which are generally open “after hours” (eary morning, late at night). This is where many of the new Medicaid patietns as well many young people (who often live in low-income neighborhoods and like the convenience of being able to drop in before going to work) will be getting their care. For low-income famiies, this will provide better care than an ER— they will be seeing doctors and nurses who know them and their famiiies, providing continuity… Read more »

Jonathan H
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Jonathan H

Good responses Maggie. I should have read yours before responding myself. Two caveats: 1) the community health center funding doesn’t solve the issue with poor coverage in rural communities. 2) how much nurse practitioners will expand their role is a very politicized issue and I expect to see a lot of interest group pressure on this. I am not yet confident that the nurse practitioner role will change all that much in the next 2-3 years.

Anonymous
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as businesses face requirements in 2014 to offer federally approved health insurance or pay a fine, many companies will do the math and see that paying the penalty is far less expensive than continuing to provide coverage.

John Ballard
Guest

No politician from either party has the nerve to say so, but one of the policy drivers of the enterprise it to uncouple employment from health care. Group insurance was a great blessing when it was introduced after WW2 but over the years it has morphed into a surrogate health care source instead of insurance. Health care is provided by health care professionals, not insurance companies. The mission of insurance companies is NOT health care but financial and risk management. American companies are saddled with the expense of subsidizing health care in a global marketplace. The rest of the world… Read more »

John Ballard
Guest

So here is the AEI link mentioned above. http://www.aei.org/article/society-and-culture/poverty/tax-reform-and-health-insurance/ The special tax treatment of employer-based health insurance substantially advantaged this type of insurance over policies sold to individuals. An individual insurance policy must be purchased with after-tax dollars; but, if you get your health insurance through your employer, you do not have to pay taxes on the premiums your employer pays on your behalf. This means that tax policy ends up giving a discount on your insurance coverage that is approximately equal to your marginal tax rate. For most workers who pay both income and payroll taxes, this ranges from… Read more »

M2012
Guest

Huge points about lack of physicians to provide care. Already seeing this issue in small to mid size communities throughout the country. Anyone who thinks doctors are irrelevant and that mid-levels can fill all needs will find out what that means for wait times.

Then, not only will many businesses choose to pay a fine instead of providing
Care, but it is exactly correct that minimal has happened to bend the cost curve. Yes, care will be more integrated and that is a good thing, but there are many fundamental issues nowhere close to being addressed.

Jonathan H
Guest
Jonathan H

David and M2012, physician shortage is a regional issue that is in large part lifestyle related, not income related or even physician pipeline related. The example M2012 gives make my point: physicians strongly prefer to practice in or near major cities. They do not want to go out to small towns, even though they can earn nearly as much and their cost of living is dramatically lower (meaning they can save far more rapidly and splurge more on luxury goods). There is a good deal of evidence behind this, including results from attempts to induce physicians to practice in smaller… Read more »

Peter1
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Peter1

“physicians strongly prefer to practice in or near major cities. They do not want to go out to small towns,”

Their wives don’t want to live in small towns.

RS
Guest

I’ve always found the whole ‘physicians prefer to practice in or near major cities’ argument a fascinating one. Much like their ‘desire to splurge more on luxury goods’. I am sure that health plan and insurance executives, like their pharmaceutical and financial colleagues, all love to live in small towns and live in frugality. This is one of the most annoying arguments, typically from people who like their expensive toys and near-city living as much as anyone else but have no problem passing judgement on extravagant physicians. As far as foreign physicians go, just ask anyone who’s tried to get… Read more »

Jonathan H
Guest
Jonathan H

Who passed judgment? These are facts that shape the scope of the physician “shortage” problem.