Can reform die from a thousand costly cuts?


The ink from the healthcare reform legislation barely kissed paper when the nation's conservatives became schoolyard bullies rooked of their lunch money. They were going to smash reform into smithereens not because it was unsound policy, but to show who was really in charge.

A wholesale repeal cannot work so long as Democrats control half of Congress and the White House. So, the Republicans are now trying to defund it piecemeal, their confidence no doubt boosted by this week's lower court ruling invalidating the insurance purchase mandate. Add to that the jelly-legged triangulation displayed by President Obama on other issues of late, this strategy could gain some purchase fast.

According to Politico, the first target on the GOP hit list is a provision within reform that created the Prevention and Public Health Fund. It's a relatively small sum--$15 billion over a decade. However, it would fund bike paths, community farmers' markets and other things intended to pry Tivos and Taco Bell from the citizenry's hands for an hour or two and try and get into shape. One GOP operative dubbed it a "slush fund for jungle gyms." That conveniently ignores the slush fund the fast food lobby has been cramming into politicians' pockets for so long that most of their constituents are now the shape of bowling balls.

The intent of this strategy is to leverage this funding against the $19 billion needed to lay in a one-year Medicare "fix" on payments to physicians. Under the sustainable growth rate formula, they're set to go down 25 percent on Jan. 1. GOP lawmakers can claim that by defunding this aspect of reform, they can pay for an aspect of healthcare delivery far more pressing.

This is a breathtakingly cynical move for a variety of reasons. SGR replaced the old value performance standards formula in 1998 in order to smooth out yearly variations in payments--a year of overpayments is supposed to be countered with a lower-paying year. Quite frankly, the reason the physicians are facing such a steep dip is the fact they've been unable to control their costs for providing care. In the long-term, this is what is leading the Medicare trust fund toward its slow totter to insolvency.

Plus, that suggests there will be a fix every year. The American Medical Association is a powerful influence on Congress. And as I've said before, Republicans often cater to economic elites like doctors.

So, over the course of a decade, the GOP appears willing to spend at least $190 billion to suction $15 billion out of reform--a $175 billion, gold-paved highway to nowhere. Most of these pols are the same ones who recently campaigned on the notion that government spending is out of control.

Moreover, sending the message that the first phase of preventive care--lifestyle change--is imminently disposable isn't going to save anyone a penny.

Instead, letting the physicians ride out the rate cut until they get their costs under control makes far more fiscal sense. The ones who can will adjust their practices--and cost structures--accordingly. The ones who won't will court other payers, consolidate their practices or seek full-time employment with an accountable care organization or similar structure. The notion that a doctor who is a lousy businessperson should be able to continue practicing solo because they whine to their Congressman is long past its prime.

Indeed, it's a scenario faced by every Wal-Mart vendor over the past 30 years--cut costs or perish. Yet it's being soundly rejected by a faction whose hate of their opponents' legislative success blinds their supposed devotion to free market solutions.

What happens next is anyone's guess. But given the caustic strategies being deployed on the right, it's a great bet reform will be far less effective than anyone envisioned--and cost far more than anyone predicted.

Note: To our readers on LinkedIn, we invite you to join FierceHealthcare's new Healthcare Leader Idea Exchange. Take part in discussions, learn from other members, share your passion and knowledge, and most importantly, connect with other healthcare industry leaders.

I look forward to seeing you there. - Ron

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