Does the legislation before Congress reform the healthcare system, or merely expand it?
The overhaul of our country’s healthcare system has two broad objectives: to provide for the health security of all Americans and to reduce the growth in national health spending to sustainable levels. It has become a common complaint that the legislation currently under consideration by Congress neglects to seriously confront the crisis of healthcare costs—and thus fails to meet the second objective—even if it makes significant headway on the first objective by expanding insurance coverage. I am more inclined to view the current legislative efforts as a necessary first phase in the pursuit of both of these complementary, intertwined goals.
Photo by stephanebenito.
But I also think that both the House bill (H.R. 3692) and the Senate bill (H.R. 3590) take appropriate and significant strides towards reform of the fee-for-service payment system widely considered responsible for the disproportionate inflation in the healthcare economy.
The health-security phase of reform is largely about insurance coverage. Both the House and Senate bills seek to ensure that everyone, or nearly everyone, has access to adequate and affordable health insurance, regardless of income or health status. As means to this end, the bills impose new federal regulations on insurers, expand Medicaid eligibility, create new infrastructure for the individual (non-group) insurance market, and offer subsidies to help low-income Americans purchase insurance. (NYT has a great comparison of details of the House and Senate bills.)
Much of the focus of the reform legislation is on the coverage issues, but that doesn’t mean that the cost problem is being ignored. In fact, both bills lay important groundwork for reforming the delivery system and “bending the cost curve.” In a very helpful review for Health Affairs, health law professor Tim Jost writes that the House bill contains:
a laundry list of virtually every idea for improving the delivery, enhancing the quality, or controlling the cost of medical care now current. It is like they read through the table of contents of every Health Affairs for the past five years. (See, for example, Bending The Cost Curve, The Crisis In Chronic Disease, and Overhauling The Delivery System.) Accountable care organizations, bundled payments for hospitals and physicians, medical homes, incentives to reduce hospital readmissions, increasing payments for primary care, quality and efficiency incentives for Medicare Advantage plans, comparative effectiveness research, promotion of shared decision-making, gainsharing, reporting on infections acquired in hospitals and ambulatory surgical centers, and more—it is all in there. While some of these programs are funded as demonstration projects, a number of them like accountable care organizations and medical homes are authorized as “pilot programs,” meaning that HHS can extend and expand them if they prove successful.
Health economist Jonathon Gruber, as related by Ronald Brownstein (in a piece reportedly circulated in the West Wing by the president), says the Senate bill also throws the kitchen sink at cost control and delivery reform. It also includes two important measures, not in the House bill, with the potential for even greater cost-curving effect: the Independent Medicare Advisory Board (aka, “Super-MedPAC”) and the excise tax on high-value insurance plans (aka, “Cadillac plans”). For more on these two provisions, see Peter Orszag’s OMB blog on the IMAB (back when it was called IMAC) and Ezra Klein on the excise tax.
I’ll explain why I think it’s a good idea to do coverage reform before cost reform in another post. The point here is that these bills do address the cost problem, and they make a promising start at moving us away from fee-for-service medicine.