The Alan Katz Health Care Reform Blog

Health Care Reform From One Person's Perspective

Addressing Medical Costs

Posted by Alan on October 26, 2010

The Patient Protection and Affordable Care Act has lots of what can objectively be called “patient protections” – at least if one defines “health insurance policyholders” as patients. There’s restrictions on rescissions, increased policy transparency, improved preventive coverage, etc. And there are provisions aimed at addressing the cost of coverage: the medical loss ratio requirement and a host of pilot projects (I’ve promised a list of these and I’ll deliver a post on these cost containment items when I have the time to dig into the deeper crevices of the legislation).  But most objective observers – and quite a few of the more biased ones – will agree that the PPACA focuses more on health insurance reform than health care reform.

Yet making health care (not just health insurance, but medical services) more affordable was a major impetus for reform. The failure to boldly and visibly address this issue is one reason so many Americans are disappointed with the new health care reform law. Not surprising then that the itch, having failed to be scratched, is gaining increased attention. Alex MacGillis, in an opinion piece in the Washington Post, discusses the perceived failure of the PPACA to address “the price problem. He describes how the law focused on reducing the amount of unnecessary care that is delivered as opposed to directly dealing with the price of medical services.  And ends with the thought that “there may be support for tougher action on high prices once the principle of universal health coverage is established.”

Meanwhile, at the Brookings Institute’s Engelberg Center for Health Reform, a report entitled “Bending the Curve Through Health Reform Implementation” has been released. The report was written by a bi-partisan group that includes former WellPoint CEO Leonard Schaeffer. They offered three opportunities created by the PPACA:

  1. Speed payment reforms away from tradition volume-based payment system to better align them with quality and efficiency.
  2. Implement the insurance reforms in the PPACA, including the exchanges, to reward Americans when they choose higher quality care at lower premiums
  3. Reform coverage to empower Americans to save money and obtain other benefits when they make decisions that improve their health and reduce costs.

The report analyzes which of the numerous actions they call for can be done administratively under the new health care reform law and which would require additional legislation. The recommendations contained in the report are important and useful. Even more important than the specifics, however, is the non-partisan context they create on the issue of restraining skyrocketing medical costs.

When a new Congress reconvenes there’s going to be an initial flurry of political maneuvering to repeal, refine and/or gut the Patient Protection and Affordable Care Act. As I wrote in my last post, this is both a necessary and inevitable process. The news shows, like moths, will be drawn to where the most light and heat exists. And there will be plenty of heat. Hopefully, while the partisan battle rages, a few lawmakers will find the space to focus on meaningful public policy to move forward with initiatives that have the potential to meaningfully reduce the cost of medical care.

One can only hope.


4 Responses to “Addressing Medical Costs”

  1. vince phillips said

    I love American politics. Where else do you find that the law name is the objective, not necessarily the content? The Affordable Care Act means expanded benefits ($$), virtual elimination of the grandfather because of the rules ($$), expanded ‘essential benefits’ ($$), vast new compliance responsibilities in both health insurance and not (nursing mothers, 1099s etc.) — ($$) Cost savings are supposedly eventual if the first-dollar preventive care services turns out to reduce catastrophic claims…something that is plausible but won’t be known for some years. If they just used truth in title and called it the Expanded Benefits Cost Act of 2010, there would be less to be cynical about.

  2. I have agreed with the cost argument all along. I also know that 90 percent of healthcare expenditures are incurred by 5% of the population. The general public is not taking responsiblity for their own health. As we always say in the self funded market, claims are the claims are the claims. There needs to be some self awareness and those that have it and take care of themselves should be rewarded.

    What the feds could have done to spur carrier competition is to setup a stop loss level that they would insure for those with qualifying coverage. This concept would bring more carriers to market as they would not need to worry about claims over $250k or $500K on an individual basis. These large claims would be covered by the Major Risk Pool that was paid for with taxes on soft drinks, liquor, tobacco, etc. Then, the carriers could provide incentives to those who participated in wellness programs and maintained their key health indicators within a certain range. Did this concept ever get discussed? What would it cost to have the feds pay for these large claims? It would probably cost less than the current health reform bill and it would bring competition and lower rates to the market.

    • Curt Cella said

      Gardner –
      “Did this concept ever get discussed? What would it cost to have the feds pay for these large claims? It would probably cost less than the current health reform bill and it would bring competition and lower rates to the market.”

      What was desperately needed here was for a careful, insightful approach to a problem as monumental as the skyrocketing cost of health care in this country (NOT health insurance mind you. Blaming health insurance in this equation is like pitching a fit that it cost more to insure your Rolls Royce than your Toyota.)

      The Admin and every single member of the majority – if they are willing to admit it – slapped this all together ASAP and threw it out there to be voted through based STRICTLY on party lines. As Alan as noted – and as the President as recently copped to – this was all done on the quick because they had the “numbers”. Apparently there are two things you don’t want to see being made: Sausage and health reform legislation.

      With the Affordable Care Act this country got an ill-conceived, broken on arrival, fractious mess that each state will bastardize to suit the narrow political agendas of that state’s controlling party. As I’ve said here before but will say again: I firmly believe this was the intent of the Bill: To create the mechanism that would allow democratic states to play to their constituents as these states march towards the Mass. model…or worse. As the federal level – i.e. – Congress – continues to whither and die in terms of being an effective legislative body, the answer lies more and more at the state level where certain states will emerge as an oasis amidst the madness (See Texas.) that threatens to envelop this country.

      • Curt Cella said

        Another “victory” for The Affordable Care Act:

        I am still – STILL! – waiting to see any positive impact The Affordable Care Act has had. It wiped out the child only market and the PCIP is an utter joke. So all this to get health insurance coverage for more “kids” in their early 20’s when health insurance costs are at their lowest and the choices at their greatest? Also: A GREAT time to be enrolled in an HSA where you’re probably not spending the HSA funds and they will build tax free…

        A free preventive care exam? Great – that’s hardly a radical concept – many plans had this feature already and any bit of “strong arming by the government” would have likely ensured that this would have been extended to all plans as a goodwill gesture by the industry.

        Closing the senior ‘donut hole’ – very welcome and could have simply been done by what they did do: Go after the drug companies.

        What’s left? Did I miss anything? You gotta hand it to the President and Congress: They saw people drowning and shouted out to them: We’ll circle back to you with a life preserver………in FOUR YEARS!!!….be sure to tread water in the meantime…

        Why the 6 month rule for PCIP? As it turns out the federal government is apparently as “heartless” as the evil insurance industry they have sworn to ‘fix’….

        Why not create a special class for folks 50 and over who need insurance – The Early Retiree Reinsurance Program? Yeah uhh good luck with that – invariably whenever you see these stories it’s in this market segment. Here again – had the President and Congress really thought this out they could have actually HELPED to fix some of the things that are broken about the indiv market. Instead they concocted the Affordable Care Act which fixes nothing of note and has actually broken more than it fixed. Your tax dollars at work, folks…

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