Reform, Chapter 1: The good, the bad

By Ted Townsend

The health care reform legislation recently passed by Congress and signed by President Barack Obama will fit the classic definition of the end of the beginning for needed reform within the American health care system.

There is much good and bad in the legislation, but the greatest disappointment is that it does not solve the real problem: rising health care costs and heading off our inevitable “tragedy of the commons” where individuals overuse a resource until it is ruined for everyone.

That said, given the near inscrutability of our current health care system, it is very clear that folks with insurance have a better deal than folks that don't. The legislation does expand coverage to an anticipated 32 million additional individuals and brings our national level of folks insured up from the mid-80 percentiles to the mid-90s. It does this with a “mandate” that is really a request and a modest fine if you decline the privilege, new “health insurance exchanges” and subsidies.

The downside for Iowans is that we're already 97 percent insured, so this will have little to no impact here at home.

There is little argument, however, that eliminating insurance companies' ability to decline coverage because of pre-existing conditions and lifetime expense caps will do away with at least the first two of their most egregious abuses.

How these new insureds get paid for, however, will impact us. We already know that much of the subsidies will be paid for out of higher Medicare payroll taxes and reductions in payments to Iowa physicians and hospitals from our already national bottom-feeder rates.

To help compensate for this added insult to injury, the legislation does offer Iowa some glimmers of fiscal hope. Rural legislators like our own senators and congressmen did manage to insist the bill offer

$400 million of “make good payments” to providers who are in the lowest quartile of Medicare spending - virtually all of us in Iowa - and even better managed to hold out until the bitter end to force the inclusion of formal studies by the Institute of Medicine on these long-term disparities in payments nationally. We only can hope these studies result in a more permanent resolution.

Other pilot projects testing new methods of reimbursement could also hold promise for Iowa. There are initiatives to bundle larger episodes of care and put physician and hospital payments in lump sums for the providers to fight over. Accountable Care Organizations are envisioned that would work like kinder, gentler versions of the failed managed-care plans of 15 years ago. Value-based purchasing, where providers would be paid for hitting quality and outcome measures, versus volume, holds great promise as long as it's a level playing field.

If providers get paid more only for measurable improvement, Iowa will get punished all over again because our quality statewide is already well ahead of most states. We need to pay for quality, period, and everyone should be held to the same benchmarks.

We shall see.

There are lots of other elements of the legislation. More people will qualify for Medicaid. There will be a new “independent” board to make binding “recommendations” on Medicare payments going forward. There are new dollars for expanded wellness and prevention programs, and restrictions on physicians' ability to own hospitals. In short, there are plenty of things in this massive legislation for virtually all of us to both love and hate.

The good news is there are plenty of seeds being planted that may help in the long run.

The bad news is there is no sustainable way in the new law to pay for what's being created.

Ted Townsend is CEO/president of St. Luke's Hospital in Cedar Rapids. Comments: townsete@crstlukes.com