After The Failure Of Reform

Brian Klepper and David C. Kibbee

The stalemate in the bi-partisan health care summit was cast the moment it was announced. Republicans demanded that the reform process start anew, and Mr. Obama insisted on the Senate bill as the framework going forward. The President may now offer a more modest reform bill that can demonstrate some progress on the health care crisis, but that remains to be seen.

We hoped the White House would seize the opportunity presented by Massachusetts’ election of Scott Brown to begin again, huddling away from the lobbyists to develop a new set of provisions that would include reasonable Republican elements, like medical liability reform, as well as other meaningful cost reduction provisions excluded from the first round of bills: pricing/quality transparency, a move away from fee-for-service reimbursement, and the re-empowerment of primary care.

They took a different path. As Ezra Klein speculated in the Washington Post, Mr. Obama and his advisors may believe that, with the 2010 elections bearing down on Congress, there is too little time to begin again.

But this is a questionable political calculation. The reform process soured the American people and American business on the health care bills. A January 27 Towers Watson/National Business Group on Health (NBGH) survey found that 71% of employers believe the bills “will increase the overall cost of health care services in the United States.” A February 11 Rasmussen survey found that 61% of voters think the bills should have been scrapped and the process started over.

And no wonder. Over the past year, the legalized bribery that is special interest lobbying was fully on display, with members of both parties (but led by the Democrats) taking contributors’ money with a gusto unprecedented since the Republican feeding frenzy set off by Newt Gingrich’s K-Street Project. A new report from the Center for Public Integrity shows that “more than 1,750 companies and organizations hired about 4,525 lobbyists — eight for each member of Congress — to influence health reform bills in 2009.” Together, they spent $1.2 billion on health care, more than one-third of the $3.47 billion spent by special interests in 2009 to buy influence over policy.

And then there was the brazen political deal making. Mary Landrieu brought $300 million in federal aid home to Louisiana for voting with the Democratic Leadership, which the GOP promptly dubbed “the Louisiana Purchase.” Ben Nelson got the Feds to pay for most of Nebraska’s Medicaid expansion…in perpetuity. And, on the eve of the Massachusetts Senatorial election, the White House cut a deal that exempted unions from the tax on “Cadillac health plans” until 2018.

The resulting reform provisions – a cynical combination of expert advice, uncompromising ideology and donor quid pro quos – would have extended entitlements while rescuing the industry at the top of a financial bubble, exacerbating the cost growth problem during a recession by replacing dwindling private funding with public dollars. At the same time, the bills specifically avoided committing to approaches that could wring excessive cost from the system.

In truth, either passing or blocking such poor bills would have had little impact on the increasingly threatening crisis. Short of starting over, American health care will continue to face some very harsh realities. More individual and corporate purchasers, particularly small employers, will be priced out of coverage as health care costs explode. This erosion in mainstream coverage is translating to a reduction in total health plan premium – the engine of the health care economy – and to escalating uncompensated care cost loads throughout the system. A plummeting number of insured patients will find it harder and harder to pay for a rapidly growing number of uninsureds and under-insureds.

These are recipes for instability and disaster. And as health care – the nation’s largest economic sector, representing one dollar in six and one job in eleven – becomes increasingly unstable, so does the larger US economy.

Americans are increasingly aware that a government in which both parties are compromised by political ideologies and special interests will likely leave them to their own devices in dealing with health care. American business had, to a great extent, put health care benefits decisions on hold until reform was complete. Now it is resigned to continuing to cope with that burden, but with a renewed commitment to innovation. A February 22nd Towers Watson/NBGH survey found that “83% of companies have already revamped or expect to revamp their health care strategy within the next two years, up from 59% in 2009,” a clear sign that businesses now think they need to act on their own behalves. (Of course, most individual Americans don’t have that latitude.)

One thing is clear. Without reform as it was constituted and the subsidies it promised, the industry faces an onslaught of actions from the marketplace that will focus on its excesses, drive down reimbursement, and hold it more accountable. A long list of innovations – re-empowered primary care; data collaboratives that identify and then create incentives for making the best choices; new technologies like minimally invasive surgeries, point-of-care testing, and clinical decision support tools; medical tourism; clinical groupware; check lists; Health 2.0 business-to-business ventures that streamline health care processes – are now proving they can improve the quality of care while reducing cost.

The result is inescapable. No system this far out of balance can remain unchanged indefinitely. So long as it was influencing the policy process, the health care industry would never course correct in ways that are in our national interest. But as the environment continues to intensify, the market will be driven to embrace and integrate these solutions. One way or another, the health industry is in for real change over the next few years.

Meanwhile, until America meaningfully addresses cost and access through policy, proper health care will continue to be out of reach to many and will threaten many more with personal financial ruin. It will continue to sap the nation’s economic strength, and compromise our efforts to lead and compete internationally.

Which is why the President should begin again, and make achieving serious health care policy reform a dedicated goal. In the process, he could challenge special interest influence over policy, and work to refocus the political process on the common interest. We believe the American people can see how the current paradigm is corroding our nation, and would rally behind this approach. More to the point, this was the premise of Mr. Obama’s election. The American mainstream is waiting for him to assert his leadership in this way.

Health care reform has stalled and possibly failed for the moment. But the stakes are so great for America that failure cannot be an option.