While Washington Talks, Healthcare Changes
Healthcare
10.19.2009
Lost amid the confusing and confused arguments in Washington - death panels, socialism, villainous insurers and the "keep government out of my Medicare" crowd, is the fact that our healthcare system has already changed in significant ways.
No one tell Glenn Beck, but the majority of care is already paid for by the federal government - including Medicare, Medicaid, CHIPs and the COBRA subsidies in the stimulus bill. It's been 50 years since the U.S. healthcare system has been driven by the supply-and-demand forces that allocate resources in other sectors of our economy.
And that's how Americans have wanted it.
In the late eighties and early nineties, employee health costs became the largest overhead cost after salaries. Businesses turned to managed care organizations to proactively manage workers' health and negotiate better prices with doctors and hospitals. Healthcare costs actually did go down, briefly, for the first and possibly the last time in U.S. history. But patients rebelled against the bureaucratic aspects of managed care. Doctors joined the revolt to defend the doctor-patient relationship - and their own wallets and autonomy. In the end, most of the restrictive forms of managed care were regulated out of existence. Like a vestigial leg on a whale, only the flat copayment - the one aspect of managed care that Americans really loved - remains from that era.
Few Americans understand that what replaced managed care was not unfettered access to services, but the dubious privilege of paying a much greater share of a still-uncontrolled and inefficient system. This is true for virtually everyone, not just those with high-deductible plans linked to HSAs. (How much do you want to bet that your health coverage has copayment for hospital stays that could cost your family $5,000-$10,000 a year?)
Politicians gearing up for arguments for and against "reforming" healthcare don't seem to understand how much the system has changed already. Because consumers now have serious skin in the game, healthcare is actually flirting with something like a retail orientation. The system is moving slowly, clumsily and with much gnashing of teeth, but it is moving.
Here's a road map for navigating this brave new world:
1. Patients
Get used to spending more of your own money on healthcare. Baucus bill, public plan, doesn't matter - if you're covered now, your premiums will go up when coverage is made universal (or nearly so). Your taxes will go up, too. And there may be new taxes on your premiums. You simply must take advantage of tax-sheltered savings plans like HSAs.
Also, be responsible for making better decisions by asking questions about cost up front. Do I need this? Are there more conservative approaches? Where is the most cost-effective facility? Of course this can be difficult if you're dealing with a serious health condition. Go ahead and blame your insurer about this if you want (yes, you hate having to ask what things cost; no, there's no way around it). But put your energy into coaxing cost and value information out of a healthcare system that is still not very good at providing it.
2. Doctors
For decades, costs were a minor factor in your decision-making process. That approach is over, O-V-E-R. Comparisons to peers' performance in both effectiveness and cost will eventually become important. An announcement by a local insurer that Zagat patient evaluations would be available online was greeted by a letter to the Raleigh paper that said, in essence, How Dare Anyone Rate Me? Such harrumphing just won't prepare you for the emerging healthcare marketplace.
Imagine that you run a business that is in competition with other businesses providing similar services - because, well, you do. You can pine for the days of Marcus Welby if you want, but put resources into making your practice more efficient and your pricing more transparent.
Efforts to define and promote evidenced-based treatment will inevitably prompt many doctors to mount a spirited defense of physician autonomy. But resistance to quality standards won't guarantee a free hand for doctors - it's more likely to bring about a rigid rationing of care that no one wants. Don't fight quality standards, shape them.
One bright spot for primary care doctors: you will be more in demand than ever before. Be sure that you get paid for taking on the inevitable crush of new patients once everyone has insurance.
3. Hospitals
A tough business that will only get tougher as more people lose jobs and employer-based coverage. A possible bright spot is federal money aimed at improving health information technology. The government wants interoperable systems that can talk to each other; hospitals need to speed up their revenue stream and reduce administrative costs. Federal stimulus money could possibly float both boats. But be sure to get early input from staff and physicians so you don't create something that's worse than what you have now.
In the near future, you'll need to stop looking shocked when patients ask in advance of treatment how much a procedure will cost. If you can't provide rational estimates, it will eventually cost you business to competitors who can.
4. Insurers
And you thought you weren't beloved before? Americans blame you for giving them the less-managed healthcare they demanded. They also seem to think that healthcare costs are synonymous with premium rates. (That's why President Obama can shift from healthcare reform to health insurance reform, with no one noticing.) Forget about low-cost, thin-coverage products that will be the next cost-cutting tactic to be regulated out of existence. Invest instead in helping consumers evaluate cost and quality. Real price transparency will create big headaches for your network people (providers will likely seek the highest reimbursements paid anywhere in your system), but it's the only way to bring market forces into play.
Make it easier for your customers to get comparative quality information from credible third-party researchers or academic medical centers. Sorry, but no matter how good your information, many consumers dismiss you as bean counters. It's much more important that consumers get good quality information than that they get it from you. But be sure that consumers understand the role you play in negotiating lower fees. Consider calling provider discounts "the whopping bill you would have to pay if you weren't lucky enough to have our coverage." (Needs some editing before you print the t-shirts, but you get the idea.)
5. Government agencies
The stimulus bill funds research into the comparative quality of various treatment methods. In theory, that's a fabulous thing. If only such research had any impact on how care is actually delivered. For twenty-five years, the Dartmouth Atlas Studies (and many others) have extensively documented how huge variations in care persist despite research identifying better, cheaper approaches. This won't change until the government and third party payers actually base reimbursement on results - or at least on conforming to evidence-based approaches. Research is great - but if you continue to pay as much for mediocre care as optimal care, expect to get lots of it.
Arguably, insurers can and should pull an oar in the evidence-based race as well. The problem is anything they do to cut costs leads to screams that they're sacrificing quality on the altar of Wall Street profits. Though Big Government may scare some people even more than Big Insurance, government has the clout to inside on at least some pilot projects that link reimbursements to results rather than volume.
6. The news media
Who DO you put the black hat on these days? It is certainly fun vilifying insurers again, but more and more, the federal government is calling the shots. The Wall Street Journal reports that the government is changing how it pays for durable medical goods. Instead of being able to choose any supplier, Medicare plans to cut costs by paying only approved suppliers selected through competitive bidding. Maybe it's me, but that sure sounds like network discounts and managed care. Supplier and patient advocacy groups are already gearing up for a fight. Hope you saved all the old managed care stories.
