Tuesday, July 3, 2012

The Game’s Not Over, and It May Not Even Be The Real Game

by Brian Klepper

Like most health law watchers, I was surprised by the recent Supreme Court decision. I'm sure that on this issue, as with everything else, zealous responses rationalize the result and split the country down the middle.

I expected the Court to be purely partisan, but apparently Chief Justice John Roberts, acknowledging the gravity of his role, saw his way clear to support the law with some constraints. Here's the comment from SCOTUS (Supreme Court of the United States) Blog:
Salvaging the idea that Congress did have the power to try to expand health care to virtually all Americans, the Supreme Court on Monday upheld the constitutionality of the crucial - and most controversial - feature of the Affordable Care Act. By a vote of 5-4, however, the Court did not sustain it as a command for Americans to buy insurance, but as a tax if they don't. That is the way Chief Justice John G. Roberts, Jr., was willing to vote for it, and his view prevailed. The other Justices split 4-4, with four wanting to uphold it as a mandate, and four opposed to it in any form.
It undoubtedly weighed on Chief Justice Roberts that his decision could mollify or exacerbate a Washington free-for-all that affects nearly one-fifth of the US economy. He may also have wanted to gently rebuke Congress for pushing the Commerce Clause too far, though he let it slide as a tax.

Even so and important as it is, the Fat Lady hasn't sung yet. It's important to place this ruling in context. Virtually every DC health care and party-aligned organization was poised to spin the result, no matter what that result looked like. Today and into the foreseeable future, the parties are far apart and not likely to compromise. The same organizations that, in 2009, contributed $1.2 billion to Congress in exchange for influence over the law's formulation, remain unrelentingly engaged. Princeton Professor of Public Affairs Julian Zelizer, observing the quid pro quo exchanges in the ferocious lobbying environment then, quipped, "They cut it. They chopped it. They reconstructed it. They didn't bury it. I don't think they wanted to."

While the individual mandate will allow us to spread risk more broadly and make access more available, especially to lower income Americans, it isn't perfect. The dire problems of extravagant health care utilization, unit pricing and cost remain largely untouched by the law in its current form. Half or more of all US health care spending provides no value by design, meaning that Americans pay double for health care compared to citizens in other developed nations, and our quality is spottier. The requirement to keep up with this excess through the mandate will be onerous for many Americans. As analyst Bob Laszewski points out, a $60,000 annual income household will need to find 9.5%, or $5,700, in its tight budget, for the premium.

But the threat of health care costs extends beyond individual households to our national economic security. A recent RAND study showed that, in the decade leading up to 2009, 79% of all growth in US household income was siphoned off by health care. That leaves only one in five new dollars available for other purposes, like education and infrastructure replacement, a frightening prospect. This is the direct result of Congress' embrace of money for influence, the embodiment of regulatory capture.

In the face of this national paralysis, pragmatists' solutions will be found in the marketplace rather than in policy. Meaningful approaches - e.g., empowered primary care, data collaboratives, large case management, medical destinations, incentive programs, collaborative benefit design, paying for management rather than volume - do dramatically drive down cost while improving quality, though of course some are more powerful than others and some vendors execute better than others.

It is as though there is an awakening in the health care marketplace, as the pressures intensify for purchasers and, now, health care vendors. Many purchasers are finding that they can gain a competitive edge by exploiting health care's egregious market vacuums, and if it is at the expense of the brokers, the health plans, the hospitals, the specialists or the suppliers who have driven excess in the past, so be it. Some vendors are realizing that they can win by changing course and by delivering more efficiencies in exchange for greater market share.

The rancor preceding and surrounding the Supreme Court decision is, to some degree, a reflection of our national dysfunction: our inability to have fact-based discussions and our unwillingness to directly confront dire problems that threaten the public interest. We swim in a media-rich, content-poor environment fueled by lobbying, where buzzwords, sound bites and the special interest trump thoughtful discourse and the public interest. It has become impossible to fix our health system through law and statute.

The decision is a fascinating and, to some degree, heartening study in national legal process, but the game isn't nearly over. The tug-of-war will continue and become more ferocious. Nothing in the larger game has changed, an election is around the corner, and, literally, trillions of dollars are at stake.

But for those who are watching, the real game for health care now is in the market, which cares only about value.

This post first appeared at MedScape. Brian Klepper is a health care analyst based in Atlantic Beach, Florida and a friend and frequent contributor to this blog.
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