 Critics of healthcare reform proposals in Congress get a boost from a Congressional Budget Office assessment that says healthcare costs under these plans will be unabated. The state model for universal coverage is a prime example.
Massachusetts’ universal healthcare, enacted in 2006, inspired the national policy reforms that are moving through Congress right now.
But, it appears, far from solving healthcare woes, the Massachusetts model has wrought a whole other set of problems that now bring the state to the brink of some dramatic changes in healthcare that most Americans may have never envisioned for themselves before.
In Massachusetts, the cost of subsidizing healthcare for legions of families below an established income level, similar to proposals Congress is advancing, has sent healthcare costs soaring – up 42 percent since 2006 (Wall Street Journal).
Even scrambling to enact every feasible tax is insufficient to pay for it – making the cost of healthcare even more unsustainable than it was before.
Unsustainable Path --
CBO: Fed Health Spending to Rise under Reforms
Medicare and Medicaid already are such gluttons of federal spending that the cost of these two programs will double from 5 percent to 10 percent of the nation’s economy in 25 years, concludes the Congressional Budget Office. Put another way, in 70 years, Medicare and Medicaid alone will cost more than everything the government has spent money on in recent years.
That assessment is dark enough, but grows gloomier because the CBO says nothing in current reform proposals will do anything to keep rising healthcare costs in check. Thus, expanding healthcare to more people will push costs even more unsustainably high.
Here is CBO Director Douglas Elmendorf’s comment about Congressional reform proposals:
"We do not see the sort of fundamental changes that would be necessary to reduce the trajectory of federal health spending by a significant amount. And on the contrary, the legislation significantly expands the federal responsibility for health care costs."
(quoted by Fox News).
Next Shoe Drops in Massachusetts
A system of payment for doctors and hospitals aimed at fostering more standardization of treatment by giving health providers an annual budget for each patient has been approved by a Massachusetts panel. The intention is to move away from a payment system criticized as giving doctors a financial incentive to order more tests, even unnecessary ones, to make more money (Wall Street Journal, July 17).
In just three years, universal health coverage has contributed to Massachusetts being “among the highest-cost states,” in the words of Sarah Iselin, co-chair of the panel approving the new payment concept for the state (New York Times, July 17).
Wearing the label now of “global payment system,” the idea of paying doctors a set amount per patient to oversee healthcare for the patient within that budget was prominent decades ago in managed care, when it was called “capitation” (see definition).
Consumers rejected it then for the same reason some are questioning it now: While turning the tide on the incentive to order more tests, will it go too far to the other extreme and cause doctors to not order needed treatment just to stay within the proscribed budget? See Boston Globe article, July 17.
With capitation, ACOs, or accountable care organizations, are set up to accept flat payments from insurers, which are distributed to providers. Doctors then are supposed to stay within the budget in treating patients.
If the cost of treating patients is below the global payment amount, the ACO gets to keep the difference as profit. Critics allege the concept instills a motivation to scrimp on patient care to enlarge profit.
Capitation: Pro and Con
Healthcare experts outlined scenarios for a capitation type payment system to be effective and possible problems in point-counterpoint articles in OB/Gyn News in April 2000.
Pro
Capitation would bring more standardization to treatment of illness and eliminate variations now arising from geographic practice differences and doctor-to-doctor subjective differences. But, the arguments go, the system would flourish only if consumer expectations changed and business whims stabilized.
Patients would need to be accepting of treatment by so-called physician extenders (physician assistants and nurse practitioners, not always their primary care doctor. And, businesses would have to avoid switching health plans every year to help stabilize the environment in which the physician is making healthcare decisions for the patient and is not encumbered with undue risk in carrying out that task.
Con
Capitation style payment plans provide an incentive to doctors to limit healthcare; doctors who want to go beyond a standardized treatment, a decision that might be in the patient’s interests, have to take additional steps to justify that decision. Doctors may decide to avoid the issue altogether and stick with a standard response, even if additional care was a better response.
In this article, medical savings account, where the annual budget is given to the patient to manage, was recommended as a preferable alternative, and one that would flourish if regulatory obstacles were removed – making the patient responsible for his or her own health and keeping third parties out of the decision.
Canadian Assessment
In May, the Canadian Medical Association Journal reported on one of the first studies of one of the largest voluntary shifts from fee-for-service to capitation, involving more than 500 physicians and 500,000 patients.
It found that the change in payment approach really did nothing unless there was first an attitudinal and behavioral shift by the provider to focus on the patient, instead of the disease. This is the point AOH highlight as critical – and possible for those who want to make it in the current environment, without all the costs and new hurdles involved with the major reforms now being contemplated (see subhead, Physician Behavior, Incentives in the AOH article, “Do Doctors Need Government Help”).
Conclusion
Healthcare costs in the United States are skyrocketing, even though 45 million or more Americans lack health insurance and, therefore, have limited or no access to healthcare. The focus currently is expanding health coverage, but the independent Congressional Budget Office sees nothing in current proposals to arrest the nation’s soaring medical costs.
Overuse of medical technology and tests have been identified as a factor in high healthcare costs, in part because of the consequence of the payment system giving doctors a financial incentive to order more tests.
Expanding healthcare may do nothing to improve health outcomes or control costs without other measures being taken, such as adopting a new payment system, one which critics claim will subject all Americans to a lower level of standardized care – a concept no one knows if Americans would be willing to accept.
There’s no question some people will receive less healthcare, and certain healthcare services will no longer be available, according to the physician blog, KevinMD.com.
“Bluntly put, (denying care is) the only way to control health care spending.
“In addition to the fear that doctors will be incentivized to withhold care, patients will also worry about a possible restriction on their ability to see any physician they wanted to see. But, the bottom line is that saying ‘no’ is the only way to control costs. Whether patients will accept that fact will determine whether these payment reforms will be successful,” it notes.
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