Problem With Payment Structures In Health Care 2

Identify a significant problem with one of the three payment structures used in the health care industry across the care continuum (from DQ 1) and propose a solution from one of the other two payment structures. 1 page, 2 sources. APA.

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MY FIRST PATIENT AS A MEDICAL STUDENT was a victim of the United States health care system. A fifty-year-old man who died of a heart attack shortly upon arriving at the hospital, this particular gentleman had been experiencing chest pain for over a year. But he had forgone a doctor’s visit because he had let his health insurance lapse due to its high cost. He is by no means alone. Sadly, the United States manages to leave 47 million Americans—about 17.7 per- cent of the country’s nonelderly population—uninsured.1 Of these uninsured Americans, 61 percent stated they either could not afford the cost of insurance or lost coverage after being laid off.2

Yet, remarkably, 55 percent of Americans do not approve of the Affordable Care Act (ACA).3 In 2010, the Demo- cratic Congress passed the ACA—better known as Obamacare—in an effort to increase coverage for those individuals without health insurance. The Republican House of Representatives has voted numerous times to repeal the law, and the GOP has made the legislation the central target of its partisan attacks. At first glance, this concerted opposition would appear to be the result of a lack of understanding on the part of the public, or merely political theatrics. Indeed, a Pew Research poll has indicated that, despite the displeasure with the ACA, 75 percent of Americans do not know how the law would impact them personally.4

However, is there, in fact, any real cause—beyond blind partisanship—to be dissatisfied with the ACA? Such an essential policy cannot be analyzed within the proverbial political echo chamber; policy makers and ordinary Ameri-

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cans alike must objectively examine the merits and shortcomings of the law, several years after its passage. Without this more nuanced analy- sis, Americans resign themselves to blindly take sides in a partisan war that threatens the future of our health care system, our economy, and the well-being of American citizens. To adequately understand the suc- cesses and failures of the law, we need to return to the bill’s origins: Massachusetts, circa 2006. Problem With Payment Structures In Health Care 2

This journey back in time reveals a truth that conforms to neither of the carefully cultivated liberal or conservative talking points: the ACA, modeled on Massachusetts health reform and facing similar political and practical constraints, largely addresses access to health care and quality improvements but does not sufficiently confront the out-of-con- trol growth of health care costs.

Under then-Governor Mitt Romney, Massachusetts discovered a successful recipe for universal cover-

age that would also satisfy important industry stakeholders.5 It is not sur- prising, then, that these same policy ingredients would reappear years later in the ACA. However, these policy choices do not necessarily rep- resent the best, most affordable solu- tion to providing increased health coverage; instead, they represent the policies that could both achieve expanded health coverage and also survive the Massachusetts political process. The ACA has many complex parts, including Medicaid expansion, Medicare reform, and incentives for

changing the current fee-for-service reimbursement method, but the legis- lation contains no direct measure to decrease the per-unit cost of medical services—unjustifiably higher in the United States than anywhere in the world.6

The ACA, like Massachusetts reform, accomplishes its primary objective: expand health care access in a politically constrained environ- ment. At the time, cost control was, by necessity, an ancillary concern. Yet the inability of the ACA to sufficient- ly address cost control will ultimately erode our health care system un- less future reforms are made. What, therefore, should be our focus? We must shift the conversation away from repealing the ACA and toward tackling the equally massive problem of excessive costs.

MASSACHUSETTS HEALTH CARE REFORM During the 2006 health care fight, Governor Romney had one primary goal: to ensure the passage of health care legislation that would effectively expand health coverage, even if that meant not addressing every aspect of the health care conundrum, particu- larly cost control. He and his allies in the legislature capitalized on a win- dow of opportunity to pass reform, utilizing valuable lessons from their predecessors who failed at the same task. Massachusetts’s health reform would ultimately prove a success because the politicos behind the bill provided a policy framework that managed to both expand coverage and also garner the support of key stakeholders, such as businesses and health care industries that had previ- ously opposed reform.

But it was precisely this push to satisfy key stakeholders that, while pivotal to the legislation’s passage, would also leave skyrocketing costs unsolved.

Romney’s interest in health care reform was driven by necessity. In

TO ADEQUATELY UNDERSTAND . . . THE LAW WE NEED TO RETURN TO THE BILL’S ORIGINS: MASSACHUSETTS, CIRCA 2006.

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2004, a federal waiver for a Mas- sachusetts Medicaid program was up for renewal. This waiver provided $385 million annually to fund safety net hospitals and was to be renewed every five years by the U.S. Depart- ment of Health and Human Services (DHHS). Contrary to expectations, in the wake of President George W. Bush’s reelection, the DHHS denied renewal. The result was disastrous; the state would lose $1 billion in federal funding over the next three years.

Governor Romney and mem- bers of the Massachusetts legislature scrambled to find a solution. They eventually proposed to the DHHS that rather than use the waiver to support safety net hospitals, they cover 600,000 uninsured with the available funds. Essentially, they would create universal health care in Massachusetts with the aid of government subsidies. The DHHS, excited at the prospect, accepted their proposal.7 Problem With Payment Structures In Health Care 2

In the words of Dr. John Mc- Donough, former cochair of the Massachusetts Joint Committee on Health Care and former Senior Advisor on National Health Reform to the U.S. Senate Committee on Health, Education, Labor and Pen- sions: “Massachusetts put a financial gun to its head that made passage

of universal coverage legislation a policy, political, and financial neces- sity and the Bush administration provided the bullets.”8

Romney, who had shown little interest in universal coverage pre- viously, needed to find a path for covering Massachusetts’s uninsured, and he needed to do it quickly. The majority of the uninsured were between the ages of eighteen and sixty-four, comprising healthy young adults, individuals who could not afford coverage, and the poor, who were Medicaid-eligible but had not enrolled.9

Romney needed to target these uninsured groups through a com- bination of private marketplace re- forms and government assistance. He was not the first to attempt this bal- ancing act. In 1988, Massachusetts Governor Michael Dukakis tried but failed to pass a bill that would have dramatically expanded health coverage in the state. He attempted this partly through a policy called pay-to-play, in which employers with six or more employees would be mandated to provide health insur- ance, and infuriated business owners in the process.

Many of the individuals who had worked on the Dukakis health care reform still carried scars from the 1988 defeat. They did not want

to face a repeat experience. Nancy Turnbull, a professor at the Harvard School of Public Health, recounts the key lesson from the Dukakis health care push: without the support of business and other health care industries, reform efforts were bound to fail.10 Consequently, Romney’s health bill would need to cover Mas- sachusetts’ uninsured, be financially feasible, and also manage to gain the support of businesses. Additionally, he needed to achieve all of this with- out upsetting the national Republi- can Party and his future presidential aspirations.11

The lessons of previous attempts, and the incentives facing the health care industry, led the legislature to craft a bill standing on three main policy legs (see Figure 1). Each proved essential to the success of the plan—and would later appear in the ACA as well.12

The first leg involved systemic reform of health insurance in Mas- sachusetts. This had two major elements. One was guaranteed issue, which eliminated insurers’ ability to deny coverage based on preexisting conditions. The other element was the development of a marketplace— the Commonwealth Connector— where employers and individuals could buy coverage. The idea of an exchange was particularly popular among Republicans, who favored private competition in the health market.13

The second policy leg was an in- dividual mandate to purchase health coverage or pay a fine. Originally, the Heritage Foundation (a conservative think tank) and other Republicans had proposed the mandate as an alternative to President Bill Clinton’s failed health care bill in 1993.14 Romney worried that the mandate would be too radically conservative. However, the Urban Institute (a non- partisan economic and social policy research group) and other groups emphasized to him the perceived fi- nancial importance of the mandate.15 Problem With Payment Structures In Health Care 2