The New Health Dialogue

In his stirring remarks to the House of Representatives the day before the health reform vote, President Obama referred to the health reform bill as “a middle-of-the-road bill.” After it passed last night, he echoed those sentiments.

When applied to the bill’s financing and coverage elements, this description rings true. Compared to the 1993-94 Clinton plan, which envisioned regional health alliances, premium caps, and the eventual eclipse of employer-sponsored care, the transformation wrought by this legislation will be gradual. Alternatives like Senator Ron Wyden’s plan fell by the wayside early on, though they may come back if employer-based coverage continues to erode.

Obama’s health care summit rightly pointed out that the individual mandate and other key features owed at least as much to past Republican counter-proposals for boosting insurance coverage as to preferred Democratic alternatives, such as single-payer and employer mandates. The design of the bill, in fact, closely mirrored that championed by moderate Republican governors in Massachusetts and in California.

What does this mean? For the politics going forward, the bill’s largely unremarked modesty is likely to be a plus as Americans come to understand it better. Alternative reform ideas are unlikely to capture the center and without that the prospects of repeal are dim.

From the standpoint of practical implementation, as with the Massachusetts universal coverage plan, there will be a great deal of heavy lifting ahead. Wrapping a new set of state-based insurance exchanges around the framework of existing employer coverage will be one of the hardest tasks.

So will getting a handle on costs, which are driven largely by US health system fragmentation that this bill -- at first blush -- seems to do relatively little to address.

Fortunately, the bill is more ambitious on cost control than it has been given credit for.  So much debate focused on what wasn’t in the bill that some of its more important features -- mainly those aimed at nudging the delivery system in a new direction and controlling costs -- did not get the attention they merited.

For instance, even the modest excise tax on high-value plans will begin to affect what plans and employers will pay for over time. The linchpin of cost containment is payment reform. The independent Medicare advisory board, the Medicare and Medicaid innovation center, plus provisions to test bundled payments, accountable care organizations, and take a new look at payments for hospital-acquired infections and unnecessary readmissions speak directly to these needed reforms.  

The direction is important. So long as the industry and private payers believe that these innovations are here to stay, they will make changes to their business models that will outpace the speed of any demonstration projects and federal regulations. As Len Nichols, the past director of New America’s Health Program, correctly observed, “sending a signal that business as usual is going to end” is critical.     

Getting these provisions included in the bill is half the battle. More important is that decisionmakers and the public are beginning to embrace the idea that costs can be reined in while value is actually improved. Seventeen years ago, backers of the Clinton plan pointed out that more care isn’t necessarily better care and that the U.S. was an international laggard in terms of health outcomes, despite leading the world in spending. At the time, such ideas were largely confined to policy experts. Now the idea that we don’t get enough bang for our health care buck is echoed in hundreds of front-page stories and editorials, publicized by books such as New America’s Shannon Brownlee’s Overtreated, and championed by groups of physicians and hospital administrators. As the vital access-related components of the bill continue to take effect, this unsung impact on delivery reform could prove to be one of the bill’s most important legacies.