"It is common sense to take a method and try it. If it fails, admit it frankly and try another. But above all, try something."
Franklin D. Roosevelt
Cowboys and Indians used to hobble their horses when they weren't using them to keep them from running away or wandering off. When they wanted to ride the horse, they took the hobbles off.
Many people complain about government inefficiency and poor performance. The fact is, we hobble the government to keep it from running away, but then we try to ride it with the hobbles on. Then we say, what a crumby horse. The government is a very big and powerful horse and we need to figure out ways to take the hobbles off without getting kicked.
One of the most common criticisms of the Affordable Healthcare Act is that it does nothing to lower costs. I say it will save everyone money.
The government gathers data. This prospect is scary and rightly so. Issues of privacy and freedom are at the core of the every bit of data the government collects. At the same time, we require the government to collect data, and that data is critical to our ability to govern ourselves efficiently and effectively.
Data has awesome power when used wisely. Any one in business will tell you a good database will save you money by enabling the efficient gathering and analysis of critical business data and freeing people to do more creative things. Databases don't just collect numbers, they provide operational capabilities that cannot be achieved without them. Even people who design databases don't know what they can do until they actually have data with which to work.
Our health care system gathers a good deal of data but it is fragmented and zealously guarded by those who have control of it. It is difficult to determine what the system does, much less figure out how to fix it.
Personal medical records must be confidential. Insurance companies have detailed data on their costs but they don't share it because those are trade secrets. Medical service providers have a lot of data on doctor's diagnostic methods and treatment recommendations. It is extremely time consuming and labor intensive to study any issue in health care due to the difficulty of obtaining good data on a wide scale. Part of the power of databases is their ability to interconnect with other databases, selectively share, analyze and utilize data to make system and operations effective and efficient.
There is resistance to gathering and sharing health care data. It is expensive to implement. People are afraid of what could be done with it. Databases very effectively protect some data while effectively sharing other data. If for no other reason than advancing innovation and efficiency of health care delivery, this country needs a nationally managed, carefully designed, open source data gathering and sharing capability. From medical advances associated with storing DNA genomes to the diagnostic advances associated with analyzing the pixels in an MRI image; from the cost of an extra five pounds of body weight to the cost of funding weight loss programs; from the cost of a shortage of doctors to the cost of training more of them; collecting, integrating, analyzing and using data must expand for the sake of everyone.
One of the greatest cost saving features of the Affordable Healthcare Act is that it begins to construct a method for gathering health care data on a national scale. Selectively sharing, integrating, analyzing and utilizing non-private data has potential cost savings no one can even know until we have the data. In essence the very existence of a national health care plan will save money.
Many who oppose the Affordable Healthcare Act make statements along these lines. "Why should I have to pay for the health care of people who don't take care of themselves? They are not my problem." Of course they are your problem and you do pay for their health care already. Many corporations are investing in wellness initiatives for employees because they recognize that poor health in their "group" drives up corporate and employee cost of health care and health insurance. Good public health practices can save money in many ways. A healthier population benefits everyone by lowering the overall cost of delivering health care to anyone.
The Affordable Healthcare Act has funding for advancing many initiatives promoting wellness and preventive care. Health insurers will be required to provide recommended preventive care with no copayments, deductibles or coinsurance. There is funding for community wellness investment. There is funding to help students enter and pay for health professional training.
John F. Kennedy initiated a physical fitness achievement awards program because he recognized that fit children benefit the country. Investment in a healthy population is an investment in future savings.
The accusations flying around that paint the Affordable Healthcare Act as a move toward a socialist country obscures the real market changes that will make the health care delivery system more competitive.
The health insurance exchanges set up by the Affordable Health Care act will standardize insurance policies, making it easy to compare price and delivery. They will provide a simple online purchasing system that will force all insurance companies offering policies on the exchange to compete directly on price head to head.
When insurance companies have downward price pressure to compete, they will apply that pressure to health services providers.
Standardized insurance policies lower costs to health care providers as well. They only have to follow one set of rules instead of dozens. All forms and requirements will be identical and their administrative costs and demands on time will go down. These synergies will enable them to remain viable as health care payments from insurers are reduced.
At first, standardized policies will only be implemented on the health care exchanges. Employer group health insurance will not reap its benefits until these policies really exist. I predict that when they do, employers will adopt them because they make sense. Instead of shopping around for a group health insurance plan by going through meetings and detailed discussions with several insurance agents, a company can just issue a bid request to local health insurance companies for a price quote on a specified type of policy. In one sentence they can describe in detail what they want and the insurance company knows what to quote. This leads so much greater price competition and will drive down premium costs.
The health insurance mandates in the Affordable Healthcare Act deliver about 30 million new customers to insurance companies. More demand and more competition will lower premiums. It will increase business volume at every level of the system. Of course increased demand for care creates upward price pressure in the delivery end of the business unless the demand is matched to increases in supply.
There has been a shortage of health care providers for some time, and to some extent that is planned by the those who fund institutions that train these personnel to maintain their market value. Market forces do not fund teaching institutions, the public does. Market forces will never plan ahead for increases in population or geographical changes to the health care requirements in the country. A central planning organization must do it. Public funding for health care teaching institutions is subject to lobbying by the AMA and other powerful business organizations. Many capable and talented students seeking to enter health care professions are turned away because of a lack of seats in the teaching institutions. Funding in the Affordable Healthcare Act is designed to add more primary care physicians, more physician assistants and more nurse practitioners in the next 5 years.
When hospitals get paid, their overhead cost goes down and they will be able to lower rates to gain market share. The Affordable Healthcare Act means that more people will have insurance that doesn't reach caps or wind up cancelled in the middle of treatment. Hospitals will have to provide a great deal less unreimbursed care. HHS estimates unreimbursed care adds a $1000 yearly cost to every health insurance policy.
If a hospital has 10 ICU beds and 3 or 4 of them, through no fault of the hospital, wind up occupied by patients who have lost their insurance or reached their insurance caps, and subsequently gone broke, they are losing 30 - 40% of the earning capacity of that unit without reducing the cost of operation. The hospital is obligated to keep those patients, at a minimum, until they can be moved safely. Very few people in this country can pay for extended ICU care out of pocket without going broke. That's just one example of very high cost medical services that many citizens will require at some point in their lives. Once a citizen is bankrupt they not only don't pay the hospital bill, they don't pay any of their other creditors either. This cost has repercussions beyond the health care business.
Science based standardized treatment practices and procedures will lower the cost of defensive medicine in the health care provider market. When a doctor has a clearly defined set of practices and procedures to follow, as long as they do so competently, they are protected from malpractice law suits. It will be much easier for the legal system to identify and stop frivolous litigation as well.
The Affordable Healthcare Act establishes a National Prevention, Health Promotion and Public Health Council that will develop the standards and recommendations the industry needs based on the science not on market forces. Market forces follow what is popular, not what is effective. Efficient health care delivery requires adhering to those practices and procedures that are proven effective. We can't afford to pay for treatments that don't work even when they are popular and profitable.
The Affordable Healthcare Act establishes the Hospital Compare program. This program enables hospitals to report in a consistent manner the level of quality services they deliver. The system will track medical errors, health outcomes, cost of delivery and many other parameters that affect the quality of the health care a hospital delivers. This will allow published comparisons of quality and performance for hospitals. That will in turn drive competition for patients, create prestige for insurance providers and give hospitals incentives to improve and innovate the quality of care they deliver.
The Affordable Healthcare Act provides funding to establish pilot programs to promote bundled payments rather than fee for service payment. This is where a team of medical professionals gets paid for services as a group rather than each specialty billing individually. This provides incentives to operate more efficiently with less duplication of work and more sharing of information. They are rewarded by efficiency rather than volume. This will make care less expensive with better outcomes.
A key principle of science is that you have to build on existing knowledge to predict the effect of changes in the world, but you must test the prediction with controlled measurements to determine what information works and what does not. You have to have a method to take measurements. There are too many cases in health care delivery for which market forces will never effectively measure what variables lead to the best outcome. We need a scientific approach. The Affordable Healthcare Act begins to create the platform so we can do that.