Congressional fireworks over health insurance legislation may ultimately seem a minor footnote compared to a subtle, but seismic shift toward something reformers have long yearned for–one-stop shopping.
The idea is to combine insurance, where the economic incentive is to spend as little as possible on care, with medicine, where money’s to be made by providing maximum treatments. One such iteration is a health maintenance organization, like Kaiser Permanente, which Washington has been relentlessly pushing a resisting system toward since the Nixon Administration.
This shift would involve all Americans, unlike the Congressional reform package that would only impact a modest minority who aren’t insured via an employer or Medicare.
The shift toward insurer-provider entities has come slowly, but now seems to be accelerating, only partly because of provisions in the Affordable Care Act that promote evidence-based medicine, which is a requirement for making such combos really work, and Accountable Care Organizations, where broad payments for getting patients well challenge a la carte reimbursement for particular treatments.
Partly in response to government nudges the market is headed that way, a trend recently confirmed by the announcement that the Cleveland Clinic and a small innovative new insurer, Oscar, will offer a product that pays only for care provided by the Cleveland Clinic.
Such arrangements will become increasingly popular because insurers have a harder time making money reimbursing providers they can’t exercise control over and physicians are increasingly interested in the stable income and reduced business responsibilities that come from being an employee rather than the operator of a small business.
For the first time ever, at least half the practicing physicians in America are on someone’s payroll and thus, inevitably to a greater or lesser degree, subject to protocols that mandate what care is appropriate — and cost-effective — for a given diagnosis. Creating such protocols has always been a major challenge because they limit physician autonomy. But as more medicine becomes evidence-based, the trend will grow.
Intermediate solutions with fewer controls haven’t been adequate, provoking backlash from doctors and patients. Some of the early preferred provider organizations that introduced so-called “managed care” in the 1990s imposed few restraints on selected doctors and were based largely on volume discounts. In return for getting new patients, the doctors received less reimbursement per patient. Basically, the PPOs were buying wholesale. One lesson learned is that providers will respond to lower reimbursement by upping the volume.
Similar rules govern many of the Advantage plans that now cover more than 30% of Medicare beneficiaries. In such plans, the insurer gets a fixed payment from the government and can profit if the cost of care delivered is less than that. Some of these are nothing but PPOs, but others are more coordinated like Kaiser, which offers such coverage itself. A growing number of state medicaid programs are based on comparable capitation schemes.
As a rule, tighter coordination leads to a more efficient system.
Many patients have long been wary of such systems which explains why the most restrictive HMOs like Kaiser have basically served a self-selected population that’s comfortable with a rule-based seamless system. There’s a broad fear that insurers skimp on needed care and that patients will be denied some life-saving treatment by an insurer with a focus on keeping costs down. Independent physicians, a disappearing breed, have fueled such fears.
Reformers acknowledge that is a potential problem, which is why there’s a need for ongoing oversight. But there’s bipartisan agreement among analysts–who’ve yet to convince the broader public– that there’s a vast amount of expensive, but useless care now being provided. Estimates vary, but all top 20%. Attempts to eliminate such services have been frustrating, often creating a painful backlash from physicians who feed patient fears on this issue.
Either a single payer or Medicare for all plan would also merge provider and insurer priorities. But the market seems to be moving in that direction already with only modest nudges from the government.
For 16 years, Jim Jaffe worked for House Democrats who served on the Ways and Means Committee, apprenticing with Representatives Green, Gibbons and Gephardt before working for Chairman Dan Rostenkowski.
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