Attitude is important in Health Reform too
Monday, June 17, 2013 - 10:21
Providence Business News
June 4, 2013
Guest Column by Ted Almon
It was Henry Ford who said, “Whether you think you can or you think you can’t, you’re right.” His wisdom has an amazing array of applications I can think of and our current effort to overhaul the #healthcare
system is certainly one.
Back in the 90’s the Clinton administration attempted sweeping reform of a system that was even then escalating in cost at an alarming rate. The Clinton plan was called Managed Competition, or unofficially-- Hillarycare. I didn’t think it would work and I actively advocated against it in much the same way many critics of the ACA or Obamacare are so vehemently resisting today. What I didn’t realize then, was that our victory over #Hillarycare
would sentence us to 20 more years of the dysfunctional status quo. Two decades more of health premiums rising at twice the rate of inflation, and a healthcare system growing ever further from meeting the needs of patients. Grudgingly over time I came to realize that in our well-meaning zeal to get reform right, we had shot ourselves in the foot. The same is true now I’m afraid. It is Obamacare or the status quo. There is no Plan B.
detractors favor a more market based, less government controlled system. So did I back in the 90’s. So what happened to the omnipotent but invisible hand of the markets in which we all had such faith? Over time I slowly came to realize that healthcare is a social program that simply can’t be made to heel to normal consumerism. For one thing we have a federal law in this country requiring all hospitals to treat anyone who shows up in their Emergency department regardless of their ability to pay. That law was signed by the patron saint of the Republican Party, Ronald Reagan. A system that says we are going to treat everyone but not make everyone pay is just not a business. I’m sorry.
The Affordable Care Act isn’t perfect either, there are plenty of things to question in its copious pages, but it does have several powerful elements of reform. Health Insurance Exchanges are one. You see, today’s Republicans insist on preserving commercial insurance as the financing mechanism for healthcare. With the expansion of coverage to near universal scope, it is a terribly clumsy tool for the job. Health insurers can only compete on their margin, administrative costs and profits which make up only about 20% of premiums. The rest is medical costs they pay to healthcare providers, but the system is so fragmented that no insurer has the leverage to drive reform back down through the delivery system by changing the way we pay providers. Nor do they really have much incentive to do so. As essentially a cost plus business, they actually benefit from rising costs. The health insurance exchanges set up by Obamacare serve to consolidate the financing of care through a single channel so as to create the market leverage necessary to effect real payment reform. Healthcare professionals know that will transform the delivery system quickly and in a most meaningful way. It simply won’t happen any other way, as the past twenty years should have taught us.
So let’s get back to Henry Ford’s insight. Last week the nascent California insurance exchange announced its first round of premium bids from the dozens of insurers there. To many the rates were surprisingly low in light of the gothic predictions from some insurers and their actuaries. ACA supporters were jubilant and the New York Times ran several positive columns celebrating what appeared as an early success. It didn’t take long for opponents to react. Forbes ran several angry columns denouncing the low rates as misleading and even an “apples and oranges” comparison to existing premiums there, saying the Obamacare exchange rates were far higher, just as they had predicted. The truth is the rates will be higher for some, but they will also be lower for others as the ACA compresses the existing rate bands insurers can use to set premiums. And the comparison IS apples and oranges because the existing rates aren’t available to everyone, but the ACA/Obamacare rates are. It is easy to offer low rates if you can select only healthy customers.
But my point is this. What are we doing? Reform is difficult even if everyone is on the same side. The ACA will surely need to be tweaked as implementation moves along. It won’t be able to overcome such obstinate resistance at every stage of its roll out. So if you are hell bent on defeating Obamacare, you could well be successful. But your reward will be another twenty years of costs spiraling out of control. Can we afford that? I think we should decide we CAN make it work.