Rumor has it that SCOTUS might announce their decision on the PPACA today, so there’s no more appropriate time to continue our discussion of health care reform! Today, I’m bringing you a recap of Doug Hasting’s presentation during the ILN’s 24th Annual Meeting in Washington, DC.
Doug said he would touch a little bit on the context that the health reform law provides or relates to in connection with the way that the healthcare delivery system in the US is evolving. He said that there are interesting interconnections there that lead into implications for how the Supreme Court ruling, whichever way it comes down, might affect that system.
The healthcare delivery system – doctors, hospitals, long-term healthcare companies, laboratories – in the US is overwhelmingly private. There is a little bit of veterans’ care, and some state universities have partial relationships with university medical centers, but otherwise, it’s overwhelmingly private. From a payment standpoint, it’s about 50% private, but when you add in all of the different components of Federal and state payment (Medicare, Medicaid, etc.), there is still a significant amount of private health plans paying for healthcare.
Within that, despite great achievements in the US healthcare system, it’s become clear, and more public, in the last decade that there are too many medical errors and the cost is unsustainable. In 1999, there was a book that came out of the Institute of Medicine called "To Err is Human," which made public the fact that there are as many as 100,000 unnecessary deaths a year in US hospitals due to medical error.
There was then a report two years later, also from the Institute of Medicine, that said that we have not a gap, but a chasm, in terms of the quality of healthcare we could have in this country, versus what we actually have. In this case, "quality" means healthcare that is safe, effective, efficient, patient-centered, timely and equitable. Starting about a decade ago, this set the stage for a movement that came out of academia around evidence-based medicine.
This movement began to take root in policy circles, and ultimately in those private delivery circles. Government can’t make policy and automatically have it take place in the delivery system, because it doesn’t control the delivery system – it only regulates it in various ways. That’s part of the complexity of how this healthcare system, which is mostly private, moves forward. And it’s a system that’s private with thousands and thousands of disparate companies.
The US spends about $2.6 trillion per year on healthcare, which is over 20% of the GDP. This is projected to rise to $4.6 trillion by 2020, and be about 25% of the GDP, which is bigger than almost any other economy. If you look at the charts of per capita healthcare expenditures in the US, the US is more than double almost any other developed country, with a few exceptions. But on the other hand, if you look at international studies and rankings on quality and efficiency, the US is last or near-last among developed nations for a lot of quality metrics.
So there are incredible things that this system can do to save lives in individual transactional circumstances, but we’ve come to understand that the overall system has flaws. There’s a general consensus that the challenges and solution relates to our fee-for-service system – Lynn talked about this as a series of individual transactions that providers (hospitals, physicians, etc.) are paid, or individual episodes of care.
The incentive for a private system in a capitalist country is to do more of those individual transactions, especially the expensive ones, some of which people need. However, there is less attention paid to preventative care, because no one actually pays for that. The thinking that has evolved, coming out of academia, about evidence-based medicine really hit the public airwaves in 2001 and it’s gradually been gaining acceptance throughout the country, moving away from not only that fee-for-service system, but what is also a very fragmented delivery system.
Right now, we have thousands of individual physicians, who are not connected from an IT standpoint, and thousands of hospitals and other providers who don’t collaborate very well – they actually compete. While there are benefits to competition, it doesn’t always create effective hand-offs when a patient goes from one type of care to another. There are also a variety of other problems with fragmentation and the lack of standardization which have been increasingly researched and made public over the last decade.
In addition, we have a regulatory structure that is quite complex. Doug said that they talk about 51 regulatory structures in the US – Federal, plus the fifty states. So healthcare providers are subject to various scrutiny from an antitrust standpoint (which Stuart works in) to fraud and abuse (which Lynn works in), but those regulatory systems generally got developed in a period 20 years ago, before healthcare was totally individual and fee-for-service payment. The view was that collaboration, and particularly financial incentives paid to cause providers to collaborate more, were suspect – those were kickbacks. That was illegal restraint of trade, a system that reinforces what the payment system drives, which reinforces again tremendous individual capabilities, but not always the best outcomes.
The academic thinking, which has moved into policy and industry circles, is to go towards structuring the system to involve much greater collaboration incented by payment that’s less about fee-for-service, and more about the global treatment of a patient or group of patients to assist them, in which you measure actual patient outcomes, satisfaction and cost-efficiency. The idea is to reward the things that do better in those three domains – "better care, better health, lower costs."
This thinking got far enough along on the policy front that in 2008, the Obama and McCain campaigns pretty much agreed, relating to the questions of cost and quality. However, their view of how to address the 50 million uninsured – the access question – is where they differed.
That’s the hot button debate currently going on in this country – do we cover the 50 million uninsured? How do we do that? How do we pay for it? If we’re going to pay for it, we’ve got to get some savings back from Medicare and other things. It’s a very divisive issue. But, although right now the parties don’t want to agree on anything, and because it’s an election year, they won’t even appear to agree on anything, Doug’s view is that from a basic policy standpoint in healthcare, there is general agreement around these notions about coordinating care and changing payment from fee-for-service to global fees that reward providers for keeping people healthy.
Doug suggests that the debate around Affordable Care Act, passed in 2010, is really about half of the law. Half of it deals with this employer-based healthcare system and the issues of how to create more access, etc. and whether the individual mandate is a tax, etc. The other half, quiety, puts all kinds of programs into place to try to drive more coordinated care, more integrated care, and move away from fee-for-service. He added that it will be interesting to see where that goes, regardless of the Supreme Court’s ruling on the Act (either the individual mandate or the whole Act), and regardless of who wins the White House next year, and whether Congress changes, because these ideas are out there.
He asserted that there’s no question that the half of the Affordable Care Act that put together programs to change the way that healthcare is paid for and delivered under the umbrella term "accountable care," which really speaks to the idea of measuring in terms of patient satisfaction, cost efficiency, and changing the way we incent providers to work together – that portion of the law and the Federal movement to set up pilot programs has been an important expediter of this.
Having said that, the commercial market, which is half of the payment and all of the provider side, is moving in this direction. There is a transformation going on in US healthcare, but how quickly it happens, how effective the transformation is, remains to be seen. Also, and this is the key that links cost, quality, and access, there is a view by many who have observed our system that this kind of change, the way we pay for and deliver care, is really the only long-term solution to the cost problem. We can do all sorts of other stuff, and no doubt raise the Medicare eligibility rate, but ultimately, this could take costs out.
So if we stop doing more expensive procedures – like giving ten MRIs when one or none would do – and we put in better fail-safe systems like the airlines do to keep planes from crashing because they assume there will be human error, which the US healthcare system has never done, it will ultimately take costs out that can be used to cover more of the uninsured.
Doug said he would also assert that the Federal leadership role is important, and that all of these provisions that he’s talking about have nothing to do with the individual mandate. In his view, the Court ought to see that differently, and if they want to strike down the mandate, they would and could sever it.
But there are more complex arguments around that and in any event, we will see what effect the decision and the upcoming elections have on this movement. It’s Doug’s hope that regardless, that the movement is not slowed down, because he thinks it’s proceeding in a very good direction which will help to continuously improve our healthcare system.