Election Outcome Aside, Health Care System Needs To Be Innovative To Address Fiscal Challenges

Oct 25, 2012, 3:12 PM

By B. Japsen

No matter the outcome of the general election, the health care system faces “systemic change” that will be driven by daunting fiscal challenges that will force states and medical care providers to be innovative in how they deliver more cost-effective care.

A panel of health care policy experts at the Robert Wood Johnson Foundation’s (RWJF) 40th Anniversary Connections conference said that major financial challenges related to the “fiscal cliff” and deficit reduction faced by the next Congress and White House will likely require health care leaders and states to find new ways to deliver medical care.

The policy experts, led by RWJF chairman and former New Jersey Gov. Thomas Kean, said the expected close election will leave either a re-elected President Obama or Gov. Romney with no mandate to make substantial change. Meanwhile, he and other panelists said there will continue to be a lack of consensus in Congress, forcing change to come from state governments and the health care system at large.

 “We are facing a series of very difficult decisions,” said Sheila Burke, co-director, health project, Bipartisan Policy Center. 

A continued divide in federal government will likely mean major cuts in government spending and could slow implementation of the Affordable Care Act, which is supposed to expand health care coverage to 30 million uninsured Americans in 2014.

Should implementation be bogged down by continued gridlock, Burke said those in the health care system can take heart in the fact that there is ongoing innovation in how health care is paid for, how it is organized and how it is delivered.

As one example, Andrew Hyman, a member of the policy panel and Team Director and Senior Program Officer at RWJF said the health care system will escalate its shift “from fee-for-service to a pay-for-value system.”

The health law as well as private insurers and employers are placing a greater emphasis on a team approach to medical care that makes more doctors accountable for medical errors and quality improvement.

Most major health insurance companies are already paying more bundled payments to doctor practices, rewarding them if they work together to keep patients healthy and prevent hospital admissions through so-called Accountable Care Organizations (ACOs).

Panelist Alan Weil, executive director of the National Academy for State Health Policy, referred to last month’s Institute of Medicine report that estimated about 30 percent of health care spending in 2009 was waste from unnecessary costs, lack of coordination and inadequately delivered medical care service.

The providers in an ACO are responsible for managing the care of the health plan enrollees and are financially rewarded if the enrollees, or patients, stay out of the more expensive hospital.

No matter how the Affordable Care Act may be changed following the general election, value-based care and bundled payments through ACOs are designed to wrench costs from the system and will become common no matter who is in Congress or the White House.

Weil said the health care delivery system can be reorganized to operate more effectively but it will more likely occur at the state level, particularly when it comes to reimbursement from Medicaid programs that cover the poor.  

“The federal government is not good at saying no to anybody,” Weil said. “States are better about saying no to providers. State fiscal discipline can be harnessed to our advantage.”

Bruce Japsen is an independent health care journalist attending the two-day RWJF event as journalist in residence. He writes a health care business and policy blog for Forbes at blogs.forbes.com/brucejapsen. He also contributes health care stories to the New York Times, Chicago Medicine magazine and teaches writing at Loyola University Chicago. 

This commentary originally appeared on the RWJF New Public Health blog.