Strategy & Implementation

Strategy for Sensible Healthcare Reform

“A strategy is an integrated set of actions aimed at achieving a clearly defined and sustainable objective”.

The objective of Sensible Healthcare Reform is “to continually improve the health of all Americans while systematically reducing national health care spending”. Achieving this objective will require actions both to shape a cohesive healthcare system as well as to address exogenous factors such as unhealthy lifestyles. The actions for achieving a cohesive healthcare system have both short-term and longer-term components. In the short-term, the primary focus will be on decreasing costs and improving access by reducing complexity, controlling utilization and eliminating regressive tax preferences. These programs can be developed and implemented in the first three to five years and should eliminate in the order of 30% of unproductive spending. They will also result in a more transparent system that can be well understood by all Americans. However, although these actions alone, while absolutely necessary to bring costs under better control, do not address two fundamental longer-term challenges – the need to address more directly the misaligned incentives of our providers and the challenge presented by the unhealthy lifestyle of many Americans that drive the very high incidence of chronic disease.

The longer-term component of achieving a cohesive healthcare system will be to accelerate the move from fee-for-service reimbursement of individual providers that rewards professional activity to integrated delivery systems (IDSs) and reimbursement financing that reward keeping people healthy and avoiding unnecessary delivery of care. The objective of rewarding value, not volume is not something new; it’s been a topic of debate and experimentation for many decades. Moreover, it’s something everyone can embrace; and it has been embraced at the highest levels of Government by Alex Azar (Secretary of Health and Human Services) as well as Seema Verma (Administrator of the Centers for Medicare & Medicaid Services). Perhaps, more importantly, there are numerous examples of highly successful IDSs including Kaiser Permanente, the Cleveland Clinic, the Mayo Clinic, Intermountain Health and dozens of others. Nevertheless, the actual adoption of ACO’s and IDSs seems to be proceeding extremely slowly and the overwhelming majority of healthcare delivered is still reimbursed on a fee-for-service basis. Unless this changes, we can expect the nation’s healthcare costs to continue to consume an ever-increasing portion of the nation’s GDP.

A second longer-term program essential to Sensible Healthcare Reform will be to address the addiction of many Americans to unhealthy lifestyles which contribute to the chronic diseases that account for 90% of US healthcare spending. Both the power and feasibility of fostering positive change in lifestyles has been demonstrated by the enormously successful anti-smoking campaign that has reduced the percentage of adult smokers in the United States from 42.2% in 1965 to 13.9% in 2017.

Both these longer-term challenges are well recognized but the urgency for seriously addressing them seems to have been lost in the noise surrounding repealing Obamacare and Medicare for All. However, there is no sustainable solution to the problems the country faces in keeping the population healthy and still having the financial resources to deal with a myriad of other challenges.

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Implementing a Strategy for Sensible Healthcare Reform (below) provides a reasonably complete summary of the actions that comprise the strategy, the impact on cost and quality and a rough timetable for implementation.

Implementing A Strategy for Sensible Healthcare Reform

Define the fundamental Guaranteed Access Plan (GAP) for all Americans See below for estimates by type of saving Substantial improvements in access for lower- and middle-income Americans Complete in one year by building on an existing comprehensive plan
Segment all policies (public and private) into
1. GAP
2. Optional additional coverage on a self-pay basis
Will drive complexity out of the BIR (Billing Insurance & Reimbursement) system.
Reduces administrative costs not related to the delivery of care by ~$500 Billion
None Phase in over 5 years to allow orderly consolidation of the insurance industry
Consolidate all public agencies (e.g. Medicaid, CHIP, VA) into Medicare GAP Will generate significant reductions in redundant administrative costs; no reliable estimate identified Facilitates delivery of routine care, preventive care and chronic care to the publicly insured population Phase in over 3 years
Eliminate tax preference for Employer-Sponsored Insurance Generates $280 Billion in additional/new tax revenue None Phase in immediately
Eliminate middlemen between pharmaceutical companies and patients Reduces costs of pharmaceuticals by $150 Billion More affordable drugs will improve management of care Phase in over 2 years
Offer Medicare GAP on a full pay basis to all Americans Creates constructive competition between Medicare GAP and Private GAP None Introduce after first 3 years of the transition to GAP
Develop and mandate nationwide published measures of quality of care for all Providers Some increase in costs TBD Focus attention of providers on quality of care and outcomes
Equip individuals to make better informed choices of providers
Long term program of development and implementation driven by CMS
Accelerate move from Fee-For-Service reimbursement to Affordable Care Organizations Major; will reduce total spending on health care by substantially reducing the need for chronic care Major; will shift priorities of health care providers to keeping people healthy instead of treating them after they are sick Requires substantially increased priority for implementation at top governmental levels
Develop and implement programs for minimizing the effects of unhealthy lifestyles (e.g. obesity, alcohol and drug abuse) Successful implementation will substantially reduce the incidence of chronic diseases which account for 90% of health care spending Major; decreasing the incidence of chronic disease will result in a substantially healthier population Requires substantially increased priority for implementation at top governmental levels
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