The ongoing battle over health care reform

Health care reform continues to be a hot topic for political debate.

Health care reform continues to be a hot topic for political debate.

By Douglas A. Samuelson

The House of Representatives, now with a Republican majority, has already passed a bill to repeal the entire landmark health care reform legislative package enacted last year.
Even most Republican leaders acknowledge, however, that all-out repeal is extremely unlikely to pass the Senate; indeed, there will be a battle over whether to bring it to a vote at all. The next steps, therefore, will be proposed modifications of specific parts of the law. As readers of Analytics [20] may recall, it appears that health care systems analysts will see huge opportunities to help to figure out what the act actually provides, what unforeseen effects may arise, and how the law could and should be modified.

As also noted in the Analytics article, the act is more than 2,000 pages long and difficult to comprehend in full. President Obama, in his humorous speech to the White House Correspondents’ Dinner shortly after the bill passed, pointed this difficulty out: “Some Republicans have suggested that the bill contains a few secret provisions. That’s ridiculous. There aren’t a few secret provisions in the health care plan – there are, like, hundreds.”

Some expensive procedures won’t be covered unless and until their life-saving necessity can be clearly demonstrated.

We can see, however, a few areas emerging as promising analytical targets:

  • The effect of the coverage mandate. The mandated coverage phases in over several years, and one major enforcement mechanism is that people will be compelled to enroll when they seek care. There are some exceptions to the mandate, and several states have filed lawsuits contesting the requirement. One argument in favor of the bill was that it would slow the rise of premiums, if not lower them, because most of the people pushed into the insurance risk pool would be young, relatively healthy people. The actual results are unclear and will be difficult to measure.
  • The effect of eliminating exclusions for pre-existing conditions. This provision took effect immediately and is one of the clearest consequences of the act. Insurance companies are intensively analyzing how this may affect them and what they can do about it. One specific aspect of this is the creation of an assigned risk pool, subsidized by other beneficiaries, similar to what is done with automobile insurance. Expert assessments of how this is working differ drastically.
  • The effect on small businesses. The National Federation of Independent Businesses (NFIB) has been one of the most vociferous opponents of the new law, claiming that it will drive many firms out of business and greatly harm others by imposing a costly requirement to obtain group coverage for their employees. NFIB generally tends to oppose any and all government requirements, however, and how accurately they reflect the full range of views of small businesses is open to question. Some economists argue that, over time, on the whole, the new mandate will help small businesses by increasing productivity and reducing turnover. This is one of the most heated and most difficult to quantify of the issues arising from the new law.
  • Whether premiums rise more slowly than they would have without the new law. Premiums tend to rise in any case, as the population ages and new treatments become available. Economics predicts that the creation of health insurance exchanges, basically purchasing pools that negotiate better deals for beneficiaries, will push the market toward lower premiums. Some states, in particular California as a result of O.R. analyst Alain Enthoven’s efforts there, have reported success with this approach. Still, what will happen on a national scale remains to be seen, and the comparison to what would have happened under different policies remains more conjecture than quantitative assessment.
  • Employment and entrepreneurship effects. A major argument for this new law was that people would be free to make different employment choices, including starting their own businesses. Opponents, on the other hand, claim the new law will cause massive declines in employment. The extent to which any of these predicted outcomes will actually happen, or even the extent to which it has happened, viewed in retrospect, will be another challenge to quantify.
  • Tax effects. Most economic models of tax effects, based on past legislation, depend on the assumption that employment patterns will not change much. If employment patterns do change, as the bill’s advocates predict, assessing the tax consequences will be another challenge for analysts.
  • Rationing of care. There won’t be “death panels,” but some cost-driven restriction of access to care happens now, and it will continue to happen the same way: some expensive procedures simply won’t be covered unless and until their life-saving necessity can be clearly demonstrated. What will change is that some of these exclusions will become more visible and, therefore, potentially more widely debated and reviewed. People with more money will continue to have more choices – such as buying the care they want, perhaps even traveling outside the United States to do so – than other people. Collecting and analyzing data about these changing patterns of access will be yet another interesting challenge.
  • The extent and effects of moving toward a single set of rules and procedures for payment. The hodge-podge of different requirements for claims processing before the new law is one of the big reasons that the American Medical Association and the American Hospital Association, among other providers’ groups, supported this legislation. Some hospitals have to pay claims specialists to file their claims with as many as 40 insurance carriers, all with different rules and procedures. Standardizing will save serious administrative costs. As with Medicare now, standardizing rules and procedures can occur while private insurance carriers continue to administer the claims. How strongly providers push for standardization, who resists and how it works out will be an intriguing topic.
  • The extent to which standardization of claims rules speeds up the long-delayed transition to standard electronic patient records, and the effects of that transition. This improvement in information support for medical decisions could, in turn, substantially reduce preventable deaths from system errors, principally bad hand-overs of information among providers. In 2000, the Institute of Medicine, part of the National Academy of Sciences, published a study estimating that medical errors accounted for nearly 100,000 preventable deaths per year in the United States, mostly attributable to system problems despite reasonable care by all the individuals providing care and related functions (such as labs and radiology.) They followed up with a second publication in 2001, recommending system improvements to address these problems.

    Another aspect of uncoordinated care is polypharmacy, the use of multiple prescription medications in combination, with too little attention to possible interactions. According to the medical examiner’s official report, polypharmacy killed high-profile celebrities Anna Nicole Smith and Michael Jackson, both of whom used multiple doctors and multiple pharmacies. Safety testing is usually done one medication at a time, so interactions can take quite some time to become identified and publicized. This is a growing problem, and information technology offers a promising answer.

The competition between cost-cutting and the need to attract enough providers to meet the programs’ expected levels of care will continue.

Health care reform continues to be a hot topic for political debate.

  • Levels of funding for Medicare and Medicaid. Projections of lower federal costs under the new legislation assume restrictions on payments to doctors under Medicare and Medicaid, enacted several years ago but then suspended. Many doctors already refuse to participate in Medicare and Medicaid because of low payments. The competition between cost-cutting and the need to attract enough providers to meet the programs’ expected levels of care will continue, with significant impact on the actual costs. Balancing these goals will be yet another analytical challenge.
  • Research and assessment about comparative effectiveness of treatments. The act specifies that the federal government will fund more research in effectiveness. Providers, regulators and insurers all will want to know what really works. If there are lawsuits over “rationing,” they will most likely hinge on this question. Employers will want to know how to tailor the health insurance packages they offer, to get good perceived value for restrained cost. Analysts who have taken the time to learn about medical outcomes evaluation, assessment of effectiveness and risk of new treatments, preventive care and other such topics should find many opportunities in this area.
  • Effects on national security. A delay of as little as a week in detecting an incipient epidemic can make a huge difference in its extent of spread. The magnitude of the effect of having most people seek medical attention quickly in the event of infection is difficult to measure – another analytical challenge. Universal coverage will presumably promote prompt seeking of care, but this, too, is uncertain.

    By way of illustration, however, consider that the 2009-2010 H1N1 “swine” flu infected, by the most recent CDC estimates, 65 to 81 million Americans before an effective vaccine could be manufactured and distributed in sufficient quantity. These estimates differ substantially from earlier numbers and still reflect considerable uncertainty, another indication of how unsure the analytical basis for choosing a response was. Basically, the United States failed horribly on this one but then got lucky. This flu, fortunately, had unusually low lethality, killing less than .05 percent of those infected. More serious pandemic influenzas within the last century have had lethality of 15 percent or more; the H1N1 “bird flu” a couple of years ago killed over 50 percent of those infected. A flu as infectious as the recent H1N1 but with 15 percent lethality would have killed 10 to 12 million people in the United States alone. No conceivable attack in the U.S. with a single thermonuclear weapon could kill nearly as many people. Earlier detection and response is the best defense against such a catastrophe. How much improved coverage will promote earlier detection and response is another open question.

  • The effects of improved access to mental health care and new research on what works in such care. Among the probable benefits are lower costs in the criminal justice system: most serious mental health diagnoses are now made there, as the police and courts have to deal with large numbers of non-violent nuisance offenders who should be treated, not incarcerated. Meanwhile, however, a combination of cost containment and increasing deference to individuals’ rights sends more and more seriously mentally ill people, some of them inclined to violence, out into society with no one monitoring their compliance with medication directives, if they have received any, or intervening when they give early indications of trouble. The recent shooter in Tucson, Ariz., looks like a prime example. The new law provides more money to mental health, and removing the risk of losing general health insurance coverage may prompt some more people to seek treatment. Again, however, measuring actual effects and assessing policy alternatives will require quite a bit of analysis.
  • The political effects in 2012 and beyond. President Clinton was re-elected comfortably in 1996 despite failing to enact his health plan and losing both houses of Congress in 1994. Long-time readers of OR/MS Today may remember political historian Allan Lichtman’s “Thirteen Keys,” one of the most successful models of election outcomes [19]. According to this model, having made a major policy change helps the incumbent, regardless of how popular the change is, as just having been able to get it enacted is a favorable indicator. If, by 2012, people think the health care legislation doesn’t look so bad, and other indicators have turned for the better, President Obama may campaign by asking, “So what was all that fuss about?” and put his critics on the defensive. And some of the same senators and representatives who now criticize the new legislation may decide that they like it once they position themselves to provide good constituent service, a key component of their own reelection campaigns, by helping people to deal with the new system.
  • How health care systems analysts will benefit. We all agree that the new law is complicated. Therefore, there’s a market for figuring out what it will do and how to deal with it – enough of a market to keep many of us employed for a long time. Finding where to position ourselves in that market, however, and where the best opportunities are, may not be obvious for quite some time. At this point, the action is in writing regulations to implement the law, and in court and legislative squabbles over what deficiencies in the law now need to be fixed. Large employers and insurance companies will participate heavily in these deliberations where they see their interests at stake. Eventually, other sponsors, including foundations and federal agencies providing research grants, will promote other analytical activities. Analytical priorities, like most other effects of the new law, remain to be sorted out.

Douglas A, Samuelson ( is president and chief scientist of InfoLogix, a small consulting and R&D company in Annandale, Va. A frequent contributor OR/MS Today and Analytics, he has a doctorate in operations research from George Washington University.


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