Health Care Reform: The Sweater is Beginning to Unravel

The Obama administration has already increased access to health care by expanding SCHIP (state program for uninsured children) and subsidizing COBRA. Health care reform is starting to appear to be a reality rather than rhetoric and the participants are starting to stop being nice and start getting real. Business coalitions, unions, hospitals, health plans, and pharmaceutical companies are starting to push their agendas as there is agreement on general principles of a more efficient, outcomes focused system. However, the tougher specific decisions around who pays, who plays, and what is required are causing friction. My metaphor for the growing discord is the unraveling of a sweater because of knitting. It sounds much better when Weezer sings it.

Health care blogs that I follow have began to recently chronicle the next step in reform and have their own terms for the infighting. The Health Care Blog called it "Fear and Loathing" while Maggie Mahar noted that schisms are appearing in Coalitions like "Divided we Fail". However, the New York Times is more optimistic with an article about stakeholder meetings with Senator Kennedy. Maybe it's because hanging out with Senator Kennedy is still a lot of fun. I really like his accent and he's got to have some great stories.

Overall, here are some positions that have emerged from key stakeholders and my thoughts:

1. Insurance companies want mandates for everyone to have insurance and will remove words like pre existing conditions from their vocabulary. This has all upside for the insurance companies as it will expand their customer base, reduce their administrative costs by removing underwriting and claims review, and maintain their role. Overall, this really won't change the health care system nor improve outcomes, delivery, or efficiency by itself. Having coverage is good, but we have seen from the Massachusetts health coverage plan is that it needs to come with health care. The insurance company is trying to keep their role as health care intermediaries and they are good at keeping enrollment systems, paying claims, and distributing the dollars.
   
2. Businesses want to reduce their health care costs. They seem to prefer that health care be run more like, well as business, allowing competition to reduce costs and produce a better product. I think that business believes a government take over of health insurance will result in higher taxes, fees, or some sort of pay or play for them. Therefore, they prefer that the industry itself lower the costs of delivering health care since they will be forced to pay for it in some way or another. However, I think that the government is good at setting costs and improving efficiency by setting limits on unit prices. Those who can't make money under the new prices, will exit, just like hospitals did when Medicare changed its payment in the early 80's to DRG's or paying a set amount for hospital treatments.
3. Unions want health care for all and seem to be willing to give up their role as protectors of health care for the working class. They are the only stakeholder that appers willing to give up their traditional role and power for the greater good. However, the greater good of health care for all nicely aligns with their goals so their membership will be happy.
4. American Medical Association or physicians have a seat at the table but I haven't seen a clear position. Given the diversity of their membership with primary care physicians, specialist, subspecialists, and the cat herding, it's probably difficult for them to find a common ground or common planet. I am sure that physicians don't like the financial barriers that their patients face and all of the complicated coding and billing. Reform would make their lives easier. Primary care physicians probably have the best reputation as efficient stewards of health care but specialists could see their income drop if the government imposed price limits or businesses refused to pay specialists' fee. I don't know how the AMA would handle that turf war.
5. Hospitals don't really seem to have a clear position. They will still be around regardless of health care so I don't know if they really have a stake in what happens with reform. I have pointed out in previous posts that their inability to defend the costs of their services could make them vulnerable. However, hospitals don't have to worry about disappearing like the insurance industry does. Therefore, they can probably sit the reform battle out until the specialists demand that they defend them. Specialists are hospitals main revenue vehicles so their future's will be intertwined.
6. Insurance agents who sell insurance aren't usually invited to the table but are very interested in this outcome. Some of the state reform proposals and Obama's include a provision on setting up a Health Care Exchange that helps select an insurance plan. This would eliminate the insurance agents' jobs. They have been very active proving how they can help clients pick an insurance plan much better than a government program and how they are worth the commissions that insurance companies pay them. I have to agree with the insurance agents and side with them as I have met enough of them who are good at keeping the insurance companies honest and really do help their clients navigate a complex system. At least I support those who work on the individual level or with the small groups. The agents that I have worked with on larger accounts tend to put some really byzantine RFP processes in place gathering irrelevant information that takes a lot of time to prepare. There is not a high value added to these RFP's.
7. Pharmaceutical and Medical Device Industry have been given a seat at Kennedy's table but as Bob Laszewski has pointed out, they have been effective at lobbying for provisions that do not hurt their position. Their new technology and drugs have changed health care delivery but has driven a lot of costs. Reform has pointed the barrel of cost effectiveness at this industry which they have continued to dodge. Their fight will play a key role in determining if reform will reduce health care costs. However, I think that they are driving force behind the health care bubble and their costs are unsustainable. This industry will fight long and hard, pull hair, and gouge eyes but I don't think there is the money to sustain their products.

Overall, every stakeholder is probably ready to fight for their business future. The stakes are high from a financial perspective let alone when we start to think of the human perspective. When patient advocate groups get more involved, that's when the brass knuckles will come out.