Two panels will oversee comparative effectiveness research, and there will be numerous health insurance exchanges. The responsibility for saving money will rest with far more stakeholders than have been considered before.
There is a lot of speculation about how health care reform will affect health care costs. Some think it will reduce them, others fear it will increase them, and still others see little or no effect at all. The Health Care Cost Monitor invited several of its contributors to give their views in answers to some questions. This is the fourth in a series of responses.– The Editors
In terms of curbing health care costs, is the health care reform legislation a win, a loss, or neutral?
The Patient Protection Act greatly expands access and it has the potential to increase quality. However, perhaps due to the effort required to create a law that could survive the turbulent political process leading to enactment, it does not create a centralized role for any single administrator, which is what is probably necessary to ensure that all of its potential cost savings are realized.
A fascinating, and heretofore unremarked, aspect of the act is that, while it takes many of the first steps toward cost control, it then leaves responsibility for actually generating the savings in the hands of many different groups, most of which are outside of government.
For example, two different government panels will be intimately involved in generating comparative effectiveness research. This research is essential for both improving quality and, more importantly for this discussion, ensuring that money is spent in the most cost effective manner. However, neither of these panels has the power to use CER findings to generate policies that maximize cost effectiveness. Instead, patients, third-party payers, doctors, and other stakeholders will have to make individual, value-enhancing choices or the benefit is lost.
Another example is the mandate for buying insurance. A single national health-insurance pool would clearly be the best method for efficiently spreading risk as broadly as possible and would allow savings generated by innovative programs to be put right back into the same pool. Under the new law, at least initially, the number of pools seems likely to expand, which could frustrate the system’s ability to fully benefit from cost saving programs.
At the same time, the new forms of insurance should lead to more uniformity in cost, coverage, and the types of people enrolled. If the pools are similar and people are able to remain in them indefinitely, the new system could generate the same savings possible with a single national pool. As with CER, the responsibility for realizing possible cost savings will rest with a far wider group of stakeholders than most models have historically contemplated. It is unclear whether this experiment will work.
Proponents of the reform legislation say that it is just the beginning. What other cost control measures should the president and Congress pursue?
What is risky and new is expanding access while placing so much of the ultimate responsibility for cost control in nongovernmental, decentralized hands. In terms of requirements for the future, additional focus should be placed on what is necessary to ensure that the newly empowered stakeholders recognize their powers and societal obligations to control the cost of the health care system.
How likely is it that Congress or future presidents will undo or modify the cost control provisions in the legislation, particularly since some of them will not be politically popular?
Recent history would lead us to conclude that Congress will not follow through on scheduled reductions in Medicare reimbursement rates for physicians. This failure has been the norm for some time, and is not unique to this legislation. A scheduled 21% reduction in some reimbursement rates, set to go into effect on April 1, was recently delayed until June 1, with robust bipartisan support. As the vote on this delay showed, this is not a partisan issue, but rather springs from a reaction to a cost-saving proposal that is genuinely unpopular among voters.
However, the new law ties many Medicare and Medicaid reimbursement rates together in the future, which may change the political dynamic. This country has historically tolerated very low Medicaid reimbursement rates, even as it is protective of the Medicare program, and so the question becomes whether tying the two together will raise Medicaid reimbursements, lower Medicare reimbursements, or do a little of both. It is difficult to predict which way it will go.
As to other provisions in the law, future public and political responses will depend on the regulations written to implement them, as well as the behavior and responses of health insurance companies. Health insurers have already signaled that they will aggressively interpret the law as narrowly as possible, which has triggered an equally aggressive stance from the Secretary of Health and Human Services defending what she claims is the clear intent of Congress.
The first example of this has been the public disagreement between the insurance industry and Secretary Sebelius as to whether the law will immediately prohibit insurers from considering pre-existing conditions of children when making coverage decisions. In a debate that appeared to be conducted almost entirely in the press, the insurance industry declared it would not be prohibited, the Secretary assured them it would be, sabers were rattled on both sides, and the Secretary prevailed, for now. A public, aggressive stance taken by the insurance industry is most likely unwise, and will serve to increase political support for wide-reaching regulatory control over it.
Right now, it is almost impossible to predict where political and public pressure will be felt, except in obvious cases such as Medicare reimbursement reductions. As the new regulatory structures are implemented, there should be changes to historic political alliances and the formation of new public groups with new interests that require political protection. People are waking up to the extraordinary importance of the rulemaking that will occur during the next three years, and how they respond to the proposed regulations in the short term may give some hint as to the new forms of interest groups that will emerge.
Jacqueline R. Fox, J.D., is an assistant professor at the University of South Carolina School of Law. Her scholarship interests are in health law, primarily the relationship between justice, ethics, regulatory structures, and markets. foxjr@law.sc.edu; 803-777-8192.
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Cost Control in Many Hands
Two panels will oversee comparative effectiveness research, and there will be numerous health insurance exchanges. The responsibility for saving money will rest with far more stakeholders than have been considered before.
There is a lot of speculation about how health care reform will affect health care costs. Some think it will reduce them, others fear it will increase them, and still others see little or no effect at all. The Health Care Cost Monitor invited several of its contributors to give their views in answers to some questions. This is the fourth in a series of responses.– The Editors
In terms of curbing health care costs, is the health care reform legislation a win, a loss, or neutral?
The Patient Protection Act greatly expands access and it has the potential to increase quality. However, perhaps due to the effort required to create a law that could survive the turbulent political process leading to enactment, it does not create a centralized role for any single administrator, which is what is probably necessary to ensure that all of its potential cost savings are realized.
A fascinating, and heretofore unremarked, aspect of the act is that, while it takes many of the first steps toward cost control, it then leaves responsibility for actually generating the savings in the hands of many different groups, most of which are outside of government.
For example, two different government panels will be intimately involved in generating comparative effectiveness research. This research is essential for both improving quality and, more importantly for this discussion, ensuring that money is spent in the most cost effective manner. However, neither of these panels has the power to use CER findings to generate policies that maximize cost effectiveness. Instead, patients, third-party payers, doctors, and other stakeholders will have to make individual, value-enhancing choices or the benefit is lost.
Another example is the mandate for buying insurance. A single national health-insurance pool would clearly be the best method for efficiently spreading risk as broadly as possible and would allow savings generated by innovative programs to be put right back into the same pool. Under the new law, at least initially, the number of pools seems likely to expand, which could frustrate the system’s ability to fully benefit from cost saving programs.
At the same time, the new forms of insurance should lead to more uniformity in cost, coverage, and the types of people enrolled. If the pools are similar and people are able to remain in them indefinitely, the new system could generate the same savings possible with a single national pool. As with CER, the responsibility for realizing possible cost savings will rest with a far wider group of stakeholders than most models have historically contemplated. It is unclear whether this experiment will work.
Proponents of the reform legislation say that it is just the beginning. What other cost control measures should the president and Congress pursue?
What is risky and new is expanding access while placing so much of the ultimate responsibility for cost control in nongovernmental, decentralized hands. In terms of requirements for the future, additional focus should be placed on what is necessary to ensure that the newly empowered stakeholders recognize their powers and societal obligations to control the cost of the health care system.
How likely is it that Congress or future presidents will undo or modify the cost control provisions in the legislation, particularly since some of them will not be politically popular?
Recent history would lead us to conclude that Congress will not follow through on scheduled reductions in Medicare reimbursement rates for physicians. This failure has been the norm for some time, and is not unique to this legislation. A scheduled 21% reduction in some reimbursement rates, set to go into effect on April 1, was recently delayed until June 1, with robust bipartisan support. As the vote on this delay showed, this is not a partisan issue, but rather springs from a reaction to a cost-saving proposal that is genuinely unpopular among voters.
However, the new law ties many Medicare and Medicaid reimbursement rates together in the future, which may change the political dynamic. This country has historically tolerated very low Medicaid reimbursement rates, even as it is protective of the Medicare program, and so the question becomes whether tying the two together will raise Medicaid reimbursements, lower Medicare reimbursements, or do a little of both. It is difficult to predict which way it will go.
As to other provisions in the law, future public and political responses will depend on the regulations written to implement them, as well as the behavior and responses of health insurance companies. Health insurers have already signaled that they will aggressively interpret the law as narrowly as possible, which has triggered an equally aggressive stance from the Secretary of Health and Human Services defending what she claims is the clear intent of Congress.
The first example of this has been the public disagreement between the insurance industry and Secretary Sebelius as to whether the law will immediately prohibit insurers from considering pre-existing conditions of children when making coverage decisions. In a debate that appeared to be conducted almost entirely in the press, the insurance industry declared it would not be prohibited, the Secretary assured them it would be, sabers were rattled on both sides, and the Secretary prevailed, for now. A public, aggressive stance taken by the insurance industry is most likely unwise, and will serve to increase political support for wide-reaching regulatory control over it.
Right now, it is almost impossible to predict where political and public pressure will be felt, except in obvious cases such as Medicare reimbursement reductions. As the new regulatory structures are implemented, there should be changes to historic political alliances and the formation of new public groups with new interests that require political protection. People are waking up to the extraordinary importance of the rulemaking that will occur during the next three years, and how they respond to the proposed regulations in the short term may give some hint as to the new forms of interest groups that will emerge.
Jacqueline R. Fox, J.D., is an assistant professor at the University of South Carolina School of Law. Her scholarship interests are in health law, primarily the relationship between justice, ethics, regulatory structures, and markets. foxjr@law.sc.edu; 803-777-8192.