Jim Alexander 

Now that the new occupant of 1600 Pennsylvania Avenue has been decided, it's a good time to take stock of what the new administration will mean to the healthcare industry, and particularly providers.

Let's take a look at the prospects, for the short term-say, within the first four months after the Obama team is in place-drawing from the president-elect's campaign platform(www.barackobama.com/pdf/issues/HealthCareFullPlan.pdf).

If you've been following the news from the HFMA and other sources over recent months about Congressional hearings, the leanings of the department of Health and Human Services (HHA) and the Centers for Medicare & Medicaid Services (CMS), and the discussions of the Medicare Payment Advisory Commission, most of the points of Obama's plan will sound familiar. The ideas have been out there; absent from the scene have been the champions.

The Obama plan sets forth three broad objectives for the nation's healthcare system:

  • To reduce costs so the system will "work for people and businesses-not just insurance companies"
  • To provide "affordable, accessible coverage options for all"
  • To promote prevention and strengthen public health

Cost Reduction Initiatives

To meet the first of these objectives, Obama's plan focuses on four strategic areas, each of which is likely to see some action over the short term.

Invest in electronic health IT systems. A no-brainer? Obama spoke often of applying technology used in his campaign to make government function more efficiently and effectively. Congress has a track record of taking an interest in IT as an essential means for our healthcare system to come closer to its potential. Although legislation is unlikely to be passed in short order (it may have to wait for the administrative processes and adjustments of the next Congress), look for positive action here sooner, rather than later.

Representative Pete Stark (D-Calif.) introduced his "Health-e Information Technology Act of 2008" on Sept. 15, to add to the already-building momentum.

Improve access to prevention and proven disease management programs.
The operative word is proven. Greater emphasis on prevention and disease management is primed and lacks only direction. And complemented by medical homes, the improved coordination and integration of care for those with chronic conditions should be a significant system cost-saver.
The plan speaks of ensuring that providers deliver quality care and sees the action steps as:

  • Reporting medical errors
  • Aligning incentives
  • Using comparative effectiveness
  • Dealing with disparities in the delivery of health care

Providers have, to varying degrees, recognized the necessity of these steps, but for action to occur quickly, industrywide support needs to quickly become a priority of the provider

And then there's reform for medical malpractice (now that really sounds familiar).

The Democrats may want to take advantage of their heavy majority in both houses and move on these issues sooner rather than later.

Take on anticompetitive actions of drug and insurance companies.The plan calls for health plans to be more open about the percentage of premiums going toward patient care as opposed to administrative costs. There's nothing too dramatic here, except that this information has mostly been shared with investors and much less in negotiations and discussions with providers or the public. Will this step be one of those "with the stroke of a pen" things? Seems like it to me.

What strikes fear into the hearts of healthcare providers of all types are the words "lowering costs," because when said by the government or the public, it nearly always means less pay for care, and it usually refers to Medicare or Medicaid.

Under the Obama plan, the "lowering costs" references are to:

  • Increasing competition in the insurance industry
  • Reducing the subsidies to Medicare Advantage plans
  • Allowing the importation of drugs from other countries
  • Preventing the blocking of generic drugs from consumers
  • Having the Medicare program negotiate for cheaper drug prices

Yet even though Obama does not mention cuts to Medicare and Medicaid in his plan, some payment reductions are almost certainly unavoidable due to the current enormous budget deficit. Again, Congress should currently know all that is needed to be known to act on these fronts, so we can expect some quick action.

Help mitigate costs of catastrophic illnesses for employers and their employees. Action at the national level should be cost-effective and is way overdue. It would make healthcare coverage available for the many who have been uninsured because of the threat or experience of catastrophic costs. Employers' savings would have to be used to reduce workers' premiums, but health coverage should be more affordable for both the employer and the employee. Implementing legislation could come quickly, but it seems the processes necessary will have to be put in place before the relief can be realized. Legislation in the early months, however, is doable.

Affordable Coverage Options

The Obama plan for making health insurance available and affordable for all Americans outlines seven broad steps:

  • Guarantee eligibility for all health insurance plans
  • Create a National Health Insurance Exchange to help Americans and businesses purchase private health insurance
  • Provide tax credits to families who can't afford health insurance and to small businesses
  • Require all large employers to contribute toward health coverage for their employees or toward the cost of the public plan
  • Require all children to have healthcare coverage
  • Expand eligibility for the Medicaid and SCHIP programs
  • Allow flexibility for state health reform plans

In particular, the proposed National Health Insurance Exchange would guarantee eligibility for coverage and a health plan for all. Benefits would have to be on a par with the Federal Employees Health Benefits Program, and the plans would have easy enrollment, portability, and-most important-affordable premiums, copays, and deductibles. This one is, for the most part, a longer-term goal.

However, for the shorter run, there's mandated coverage of all children,plus expansion of eligibility for Medicaid and the state children's health insurance program (S-CHIP). Children could remain in parents' plans up to age 25.

Other than the mandate for children's coverage, S-CHIP and Medicaid measures should already be on the front-burner (recall the trials and tribulations of the previous Democratic leadership and the Bush vetoes).

Prevention and Strengthening of Public Health

In asserting the importance of this goal, the Obama plan makes the following statement:

Protecting and promoting health and wellness in this nation is a shared responsibility among individuals and families, school systems, employers, the medical and public health workforce, and federal and state and local governments.  All parties must do their part, as well as collaborate with one another, to create the conditions and opportunities that will allow and encourage Americans to adopt healthy lifestyles. 

The plan includes empowering individuals to monitor their health by ensuring that all federally supported health plans (Medicare, Medicaid, and the new public plan) have essential clinical services covered. Wellness and educational campaigns would also be a part, as would funding for expansion of community-based preventive interventions to help with health choices.

Here, again, the basic organizational structure is largely in place, the details should have been well thought-out, and quick action should be forthcoming.

Too much for a new administration and the budget, you say? I'm one of those "glass half full" people and think these changes in health care must be a part of the country's economic recovery plan. If healthcare coverage for one's family can be had at reasonable cost, if individuals' fears of bankruptcy from medical expenses are reduced, if the employers' burden of high health benefit plan costs is reduced, and if institutional providers see more payments in place of rising bad debts, I see a net positive impact on our struggling economy.


Jim Alexander, FHFMA, CPA, is a consultant, Alexander Consulting, Franklin, Tenn., and a member of HFMA's Tennessee Chapter.

Publication Date: Thursday, January 01, 2009

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