Slouching towards healthcare cost controls



Save for President Barack Obama acting exactly as doddering Clint Eastwood recently portrayed him, the Affordable Care Act will likely survive whether he is reelected or not.

In addition to turning out Obama, the GOP would need to gain 13 seats in the Senate and hold onto to the House to even make a run at repealing the law. Achieving all of that is highly improbable at best.

The ACA is not only far from perfect, it also is deeply flawed. Its biggest problem is its lack of truly coherent and effective cost controls. Proposals such as readmission penalties and value-based purchasing nibble around the margins. The only alternative taken seriously by lawmakers--Rep. Paul Ryan's voucher plan for Medicare--is simply too radical to adopt.

So, it's little surprise that the trial balloons for healthcare cost control are beginning to float out into the public policy ether at about the same time the real thing will be dropped on convention attendees in Charlotte, N.C. Of course, for political reasons they're being floated by the surrogates of surrogates--former advisers of Obama who despite having exited his inner circle remain immensely powerful and influential people.

The most ambitious proposal so far is a large-scale replication of the global budgets and bundled payments being used within most accountable care organizations. It's being floated by a group headed by Neera Tanden, a former White House senior advisor who now heads the Center for American Progress, and is not so far removed from the cost-control law recently enacted in Massachusetts.

Such a budget would be applied to every hospital and provider in the country, and their payments would be based on a continuum of care provided for each patient.

Annual budget increases also would be pegged to the overall rise in wages. In case you've been trapped in one of Al Gore's Medicare lockboxes for the past dozen years, wages haven't been moving upward too much of late, and certainly do not compare to the annual rate of medical inflation.

Another proposal is being floated by Peter R. Orszag, the Obama Administration's former director of the Office of Management and Budget who left for a vice chairman position at Citi Group. He also is part of the Tanden-led group that recently made cost-control recommendations.

At least year's Healthcare Financial Management Association's conference, Orszag recommended a "safe harbor" of standards that would allow providers to avoid frivolous malpractice litigation if they're followed. He's reprised the recommendation within Tanden's group.

Orszag is an economist by training and seems touchingly unaware that tort lawyers are trained to argue anything--including whether a provider followed safe harbor practice guidelines. However, his heart is in the right place.

These proposals make perfect sense in a reality-based world, but in the hyperpartisan environment where our policy is made, they have no chance at succeeding. Already, those few cost controls already put into practice daily struggle to survive. The Sustainable Growth Rate payment mechanism for physicians has been circumvented for a decade now. The fledgling Independent Payment Advisory Board has all but been portrayed by Republicans as an actuary Illuminati.

Instead, expect to see incremental changes toward cost control. What course they take remains to be seen, but don't be surprised if watching a mountain erode seems positively speedy by comparison. - Ron (@FierceHealth)

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