Speaking Notes

PADM 5791

Dr. Neubauer

March 24, 2010

 

WHERE WE ARE

 

Chapter 9 -- Reforming the System

 

This chapter includes the explanation of "half-way technologies" I needed last week.  A half-way technology does not cure the problem but only allows the patient to live with the problem through continued use.  They tend to be costly because they tend to be "chronic solutions." 

 

The upshot of this entire chapter is that the Clinton plan failed because of the structure of Congress, the powers of interest groups, disagreements among policy advocates, and the people's concerns regarding the ability of "bureaucrats" in Washington to "get it right."  A number of states then tried reforms that generally failed.  The conclusion is that whatever progress we can make will be made incrementally, and the title of the next chapter is, "The Triumph of Incrementalism."

 

My favorite explanation in this chapter is the explanation of, "demosclerosis" on page 382.  As the number of stakeholders (in the present state of affairs) increases the more difficult it becomes for any changes to be made because almost any change produces both "winners" and "losers."  Potential losers gain the power to block progress.

 

Last Sunday, the Obama Administration managed the passage of the Senate version of health reform in the House and President Obama has already signed it, while political and legal maneuvers continue. 

 

On Sunday, the House passed the Patient Protection & Affordable Care Act (H.R. 3590) and the Health Care & Education Affordability Reconciliation Act of 2010 (H.R. 4872).  It is really two bills (so far) and somehow the means by which the federal government supports student loans is involved.

 

Information about the bill and lists of organizations supporting and opposing.

http://www.govtrack.us/congress/bill.xpd?bill=h111-3590

 

Supporting:

 

http://maplight.org/us-congress/bill/111-hr-3590/423082/contributions-by-vote

 

The figure below comes from the Web page above. (incomplete table for sake of space)

 

 

Summary:

http://www.govtrack.us/congress/bill.xpd?bill=h111-3590&tab=summary

 

The attempt to gain national health insurance under the Clinton Administrative failed because it "took on" major lobby groups including those for the drug companies, insurance companies, and hospitals.  The attempt by the Obama Administration has been more successful because it gained the support of the major stakeholders.  This might be termed policy cooptation.  It could be labeled in other ways.  Politics is the art of the possible.  The outcomes are clearly evolutional in nature.  A "single payer" system might be the best solution (if a federal agency had the ability to manage it effectively) but is not politically possible. (textbook, page 386).

 

For example, the major drug companies gained a 12 year patent protection for new biotech drugs.  Hospitals get more insured patients (and perhaps less need for cost shifting).

 

The following report attempts to assess the impact of the new health insurance policy for providers and insurers. 

 

http://www.businessweek.com/investor/content/mar2010/pi20100322_662113.htm

 

Please notice the following opinions.

 

 

 

 

 

 

 

 

 

 

The new approach depends upon MANAGED COMPETITION and CONSUMER CHOICE but suffers from what might be termed TEMPORAL INCONGRUENCE.

 

 

Article on managed competition:

http://content.healthaffairs.org/cgi/reprint/12/suppl_1/24

 

http://content.healthaffairs.org/cgi/content/abstract/12/suppl_1/24

The History And Principles Of Managed Competition

Alain C. Enthoven

Managed competition in health care is an idea that has evolved over two decades of research and refinement. It is defined as a purchasing strategy to obtain maximum value for consumers and employers, using rules for competition derived from microeconomic principles. A sponsor (either an employer, a governmental entity, or a purchasing cooperative), acting on behalf of a large group of subscribers, structures and adjusts the market to overcome attempts by insurers to avoid price competition. The sponsor establishes rules of equity, selects participating plans, manages the enrollment process, creates price-elastic demand, and manages risk selection. Managed competition is based on comprehensive care organizations that integrate financing and delivery. Prospects for its success are based on the success and potential of a number of high-quality, cost-effective, organized systems of care already in existence, especially prepaid group practices. As it is outlined here, managed competition as a means to reform the U.S. health care system is compatible with Americans' preferences for pluralism, individual choice and responsibility, and universal coverage.

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But it seems to me that managed competition leads to managed care that necessarily leads to (already necessary) rationing of available care.

 

The authors of our textbook sum this up nicely on page 383.

 

"The public wants the current quality of care, at a lower cost and with the assurance that they will never lose it." 

 

We believe in SOCIAL EQUITY.  Many believe that access to medical care is a RIGHT.  So, we want everyone to have quality medical care without "breaking the bank" and WITHOUT ANYONE LOSING ACCESS TO THE QUALITY CARE THEY ALREADY RECEIVE.

 

The authors of our textbook summarize the Clinton approach on page 383 and surrounding.  IT SOUNDS A WHOLE LOT LIKE WHAT JUST PASSED.

 

Perhaps the problem is that a relatively abstract choice made PROSPECTIVELY PRIOR TO INSTANCE OF A NEED is not the same as a CHOICE AT TIME OF NEED.  In other words, MANAGED COMPETITION regards the choice of a plan at a prior time.  The problem is that when the need actually arises the "calculus of decision" changes.  People get "boxed in" to a plan before they know what their needs will be.  But perhaps if they have the option to go "out of plan" (at personal expense) and can afford to do so, that is not a problem (at the level of public policy).  (But this is the very nature of insurance.  Who would buy flood insurance if they knew there would never be a flood?)

 

The problem (at the personal level) is when people choose "cheap" plans because they cannot afford a better plan and then when a serious condition arises they are unable to afford to go out of plan.  In this scenario people suffer and die.  This creates real ethical dilemmas for managed care providers and probably leads to outrageous pricing for well-insured patients to try to offset the costs of providing at least a minimum level of care for those who cannot pay.

 

SO WHAT IS AHEAD?

 

I "see" two possible paths (realizing that there is an infinite number of "alternative futures")

 

Path 1: President Obama (as if he needs more things to do) will continue to actively  "sell" what has passed.  As people become attached to the ideas of it, it will become difficult to amend or repeal.  There may be some evidence of positive economic consequences as it become implemented.  The policies created by the federal agencies involved may not become major bones of contention.  In time it will become "mainstreamed" into what already exists and subject to further incremental refinement.

 

Path 2: "The people" experience "buyer's remorse."  Republicans and "Tea Party" activists gain additional public support.  The Republican party gains control of the House of Representatives in 2010.  The Republic party gains control of the Senate by 2012.  A Republican becomes president of the United States in 2012.  The Republican party now becomes burdened with the impossible task of undoing what was done to an already broken system.  As attention shifts to new crises (international and/or environmental) the percentage of Americans without insurance or adequate medical care continues to rise.