Checking the Vitals of Health Reform

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By David Durenberger

You can hear the volume of partisan rhetoric increase in Washington as public confidence in its ability to resolve any complex issue declines. It’s both dumbfounding and discouraging when you consider how prepared Americans really are to embrace real reform if only the people they’ve elected to leadership would level with them — and with each other.

Take health care as an example. We live in a nation in which the cost of coverage has doubled every nine or 10 years while a family’s average real income and buying power has stagnated. The good news is that in the past three years, the health care cost increases have averaged a record low 3.9 percent per year. So something is going on to which policymakers need to pay attention.

Most stakeholders in our $2.7 billion health care industry have decided that enough is enough and got on board the train of systemic health care reform. Their hoped-for destination is an affordable, accessible, high-quality health care system for all Americans. And they have concluded that the only way to get there is for everyone to work to flatten the trajectory of health care spending.

Three years ago, Congress provided a policy blueprint for the journey. Despite all the argument over other aspects of the Affordable Care Act, its systemic reform provisions were built around broadly accepted concepts: rewarding efficient and accountable providers, engaging empowered consumers, promoting a healthier population and rapidly identifying and applying health and health care delivery innovations.

While this blueprint may need significant improvement, there isn’t a community in America today where health care providers and insurers and consumers are not doing the work of cost-saving, value-raising reform.

That is as it should be. As Americans, we are always looking to do better, to unite around common cause and to back leaders who show us a way forward. That is who we are.

But in Washington, political polarization now stands in the way of what must be the next leg of the health care journey: making improved health and reduced health spending part of our nation’s fiscal strategy.

I am not talking about balancing federal budgets by shifting costs to consumers, providers or the private sector.

I am talking about real reform.

Real reform means replacing the Sustainable Growth Rate payment formula and transitioning Medicare away from fee-for-service toward value-based payment. After all, if Medicare, the largest payer, continues to reimburse most providers for quantity not quality, there is little hope that federal accountable care initiatives or private-sector innovators can successfully tame cost growth.

Real reform means harnessing competition to drive down prices for drugs, medical equipment and other services. Since the creation of Medicare Part D, drug plans have successfully used competition from generic drugs to hold down their costs. Provided that consumer protections are in place, expanding generic use elsewhere in federal programs could save billions. With adequate consumer protections, expanding competitive bidding from medical equipment to other goods and services could save billions more.

Real reform means engaging consumers in their own health and health care choices. In both Medicare and too many private plans today, benefit design neither supports self-management of chronic disease nor distinguishes between care that is effective and care that is not. A more value-based benefit could be an important step forward — provided that such a structure focused on improving care, not just shifting costs to beneficiaries.

Finally, real reform looks beyond federal programs to scrutinize increasingly uncompetitive private-sector hospital markets. In recent years, anti-competitive contracting practices and inadequate antitrust enforcement have allowed large hospital systems to dominate local markets. When markets are devoid of competition, health systems can respond to cost containment initiatives not by making care more efficient but by shifting costs to other consumers and plans.

Real reform as outlined here is consistent with the principles of both political parties. It would generate a good deal of the savings needed to resolve our fiscal challenges, and surprisingly, an array of voices stand ready to help in such an effort. As one example, the National Coalition on Health Care, where I serve on the board of directors, has already marshaled support from a broad alliance of consumer, provider, business and health plan groups behind a specific plan to advance these ideas.

Most important, a real reform agenda might just manage to enlist the one constituency with the greatest stake in the health care affordability — the American people.