Hashing Out Healthcare
Arguments on Different Sides of the Issue Show There's Nothing Black and White about Reform
Even after the passage of President Obama's Patient Protection and Affordable Care Act this March, America remains in the midst of a very heated, very public debate about what is best for our children, our pocketbooks and our well-being. In light of recent health care conversations playing out in Washington, D.C., and around the country, Think asked two Case Western Reserve University alumni to voice their opinions. Rebecca Patton, MSN, RN, president of the American Nurses Association and a 1998 graduate of the Frances Payne Bolton School of Nursing, explains the merits of the reform measures, while health care entrepreneur Chuck Weller, who graduated in 1973 from the School of Law, discusses what he considers
the Achilles' heel of the legislation.
After nearly 100 years of effort and a year of intense debate, health care reform was at long last signed into law this spring. To state the obvious: Passage of this legislation was an historic and
momentous event in the lives of millions.
The past year has been an amazing journey in the fight for health care reform. As president of the American Nurses Association—the nation's largest nursing association, representing the interests of the nation's 3.1 million registered nurses—at times I feel like I have had a front-row seat to witness history in the making.
During the past year, I've had the honor of being invited to introduce President Obama at a White House press conference on health system reform. I've met with members of Congress and the
Obama administration to deliver nursing's message and develop solutions. I've also heard countless heartbreaking personal stories from nurses around the country who have witnessed the day-today
human costs of the pre-reform health care system.
On the day President Obama signed health care legislation into law, ANA was invited to participate at the bill-signing celebration, and was honored to have a seat reserved in the front row.
While I have enjoyed many opportunities to represent ANA and the nursing profession, participating in this particular event was one of the most emotional days I have experienced as ANA president.
As the nation's largest group of health care professionals, nurses truly understand exactly what's been at stake. Being on the front lines of health care means you see it all. People shouldn't have to die, go
bankrupt or suffer because they get sick and don't have health care.
Throughout the years, ANA has never lost sight of the goal of affordable, quality health care for all. This is an issue it has championed for the past 20 years. Now this goal has become a reality.
But with the signing of this bill, we are not at the end of the health care reform journey.
These reforms represent the beginning of a new era in health care—a transformation that will impact generations. These are some of the most comprehensive changes to the health care
system in our nation's history.
The reforms will extend coverage to 32 million uninsured Americans over 10 years with a first-time requirement for nearly everyone to carry insurance. They will ban some of the worst insurance company practices, such as denying coverage to sick people. Many of these reforms will occur over a four-year period, with others in effect this year.
So what does this mean exactly for the average American? These reforms have kept what is good in our health system and introduced oversight of insurance companies and their practices; controlled insurance rate increases; assured choice of plan and health care provider; increased competition in the health marketplace; and expanded access to primary and preventive care.
Insurance companies will be banned forever from denying coverage to children with pre-existing conditions. Young adults will be able to stay on their parents' health plans until the age of 26. More than $11 billion will be invested in community health centers to increase access to care in underserved areas. By 2014, health plans will no longer exclude people from coverage due to pre-existing conditions. Higher premiums for women will be banned. There will be a cap on out-of-pocket expenses.
In short, these reforms have laid a solid foundation on which we can carefully build a health system that uses competition to control costs and will work for our families and our children's families. For the first time we are guaranteed security and stability from our health coverage. These reforms give Americans more control of their health care. And whether you are a Democrat, a Republican or an independent, that is something we all can agree on.
Our nation's health care system is evolving once again, and there is still much work to be done. I know that nurses, as a whole, are going to answer the call and take our nation into a healthier next phase in our history.
On behalf of ANA, I applaud the lawmakers who had the courage to vote "yes" to health care reform and seize this historic, once-in a- lifetime opportunity to finally provide the American people with the health care system they deserve.
Rebecca Patton is president of the American Nurses Association and one of Modern Healthcare's 100 Most Powerful People in Healthcare
"If we fail to do more to move toward a high-value, low-cost health care system, we will be on an unsustainable fiscal path, no matter what else we do," Peter Orszag, director of the Office of Management and Budget in the Obama administration, wrote in The New York Times last year.
Unfortunately, the combined laws known as Obamacare do not move toward a high-value, low-cost health care system, primarily because of special interests.
Our cost problem thus remains "unsustainable," and the blunt reality is that all of us will be uninsured—the 260 million with health benefits and the 40 million-plus without—if we fail to get health care costs under control.
Fortunately, there is good news. There is substantial bipartisan agreement on two of three keys to the solution. First, Republican Bill Frist wrote in The New York Times in February: "The most powerful way to reduce costs (and make room to expand coverage) is to shift away from 'volume-based' reimbursement (the more you do, the more money you make) to 'value-based' reimbursement."
Orszag shared this view in an interview on the Charlie Rose show: "The single most important thing we can do...is move the incentive systems for providers...away from fee-for-service and towards fee-for-value."
That is, rather than paying each hospital and other provider separately for each service rendered—the usual method practiced today—pay the team of providers treating the patient's medical problem together. Pay for patient value, not volume. Second, changing patient incentives to encourage them to use providers who work together as a team can produce large dollar savings, without cutting quality or increasing taxes or deficits. Orszag stated "National costs for health care can be reduced by perhaps 30 percent"—more than $700 billion annually.
The difficulty, however, is the third key: How to get it done. All eyes to date have been on Washington to fix the problem. Mancur Olson in The Rise and Decline of Nations, however, makes clear that it is naive to assume government solutions are immune from special interests, which spent more than $1 billion on the heath care bills. Thus it is not surprising that Obamacare does not solve our cost problem.
Solving our cost problem requires solving the special interest problem.
Charles Schultze of the Brookings Institution in The Public Use of Private Interest provides the basis for a breakthrough solution: Use both market and government action, which leads to a two step solution.
Step 1: Leverage immunity from special interests
Solving the special interest problem inherent to Medicare and other government programs hinges on a little-known legal distinction between insurance, which is subject to state regulation and insurance companies, and self-insurance, which is not.
As a matter of state insurance law, employers and certain employee organizations, including Taft-Hartley trusts, can self-insure and pay health benefits without buying from a state-licensed insurer or HMO. Taft-Hartley trusts allow unions and employers to negotiate payments to the trust, and the trust pays health and other benefits.
The magic is that the decision makers for self-insured Taft-Hartley trusts and employers are immune from the special interests that restrict government.
And the number of self-insured is vast: 100 million of the 260 million Americans with health benefits—more than twice the number of people covered by Medicare (40 million).
Thus, free of special interests, the decision makers for each self-insured Taft-Hartley trust or employer can change how they pay providers and adopt the most innovative idea I've seen in my 37 years in health care. I call this idea "Pay for Value Organizations" (PVOs), and it was extensively developed by Michael Porter and Elizabeth Teisberg in Redefining Health Care. As a legal matter, those decision makers can change benefits and give patients incentives to use PVO providers, without any government, insurance company or special interest approval.
This is not just theory. It is the same method I was fortunate as a lawyer in the 1980s—1990s to help self-insured clients implement, although it was then known as Preferred Provider Organizations. In classic market fashion, it started small then spread like wildfire.
The result? According to the Congressional Budget Office, it was the "slowest rate of growth in over 30 years" in both public and private health care costs—the result we need now.
Step 2. Implement PVOs for government programs
I predict as the PVO advantage is experienced by many, the critical mass needed to overcome special interests will be reached. Then, the PVO solution can be applied to unsustainable government programs such as Medicare, Medicaid, the State Children's Health Insurance Program, Federal Employees Health Benefits Program and Obamacare. It will also permit the removal of the anomaly of state insurance regulatory barriers to interstate insurance company competition and risk pools—further lowering costs and increasing innovation.
The American health care system today is like the horse and buggy industry in 1890, just before its replacement by the automobile. The Cleveland area led the world to the automobile then. This two-step PVO solution can be adopted anywhere in the U.S. and take the world to the next level in health care now.
Chuck Weller is founder and CEO of Next Generation Healthcare Solutions LLC and has practiced law sin ce 1973 wi th Jones Day, Baker Hostetler LLP and the Ohio Attorney General.