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Thoughts on the new healthcare reform law

Now that the federal government has finally passed a health reform bill, we can all stop asking each other whether we think health reform will happen, and can instead start asking each other what we think the impact of the law will be. The hardest part to answering that question, however, seems to be gaining trustworthy understanding of specifically what the new health reform law actually entails. Average citizens are unlikely to cull through 2,000+ pages of “legalese”.

Based upon the various amalgamations of the data, the conclusion I have reached is that the health reform bill focuses largely on “access” through things such as:

• covering the currently uninsured by requiring (and where necessary, subsidizing) all Americans to purchase insurance,
• removing the ability of insurers to deny coverage based upon pre-existing conditions,
• removing the limits that insurers can place on members through ‘lifetime maximums’ that limit the total amount of money the insurance company spends on any member’s care
• extending the age limit for children to remain on their parents’ policy

I applaud these actions, and recognize that they are an important element of reforming the way we deliver healthcare by ensuring that people have access to care. That said, increasing access alone will not only fail to moderate the cost trend – it is likely to exacerbate it. So what’s missing?

1. Payment reform – much has already been said about the perverse incentives created by the fee-for-service reimbursement model. True health reform must include payment reform that puts the incentive on delivering better outcomes, not simply delivering more care.
2. Limits on litigation – another incentive that doctors have to prescribe care that doesn’t directly correlate to better outcomes is the fear of litigation. True health reform needs to address our litigious nature as a society, and protect doctors from frivolous lawsuits.
3. Patient behavior reform – despite plenty of evidence to the contrary, the predominant mindset among patients is that more care is better care, and that more expensive care is better care. In order to moderate the healthcare cost trend, there will need to be less consumption of healthcare and a shift from late stage medical care to more preventative medicine. Increased access to care will certainly help, but more will need to be done than to simply provide people with the ability to see a doctor – they will need incentives that actually change behavior.
4. Eliminating waste due to fraud and overuse – an obvious way to reduce healthcare spending is by eliminating the 30% that is estimated to go to waste or fraud. Advantages of health IT are that it can limit duplication of healthcare (waste), increase efficiency of the care currently being applied (efficiency) and apply controls to prevent or detect outliers (fraud protection).
5. Reforming the system itself – largely overlooked is the idea of reforming entirely the system of how insurers, patients and providers work together. True Healthcare reform would enable more disruptive innovation in the market – such as allowing members to select whatever combination of wellness and health insurance they like (even across state lines) rather than limiting to 2 or 3 choices by their employer, or allowing members to carry their plan with them for as long as they like, even if they change employers. There are limitless possibilities for new and unique business models that will provide better value at lower cost.

The reform bill that was signed into law this week is a start, but to really change the healthcare landscape in America, we will need to address many (if not all) of the items above as well.

What do you think?

© 2010 medullan | blog.