A Health Reformer’s Online Diary

Health Reform Report From Transition Central

There was nothing really radical or transformative in the health care reform platform that Barack Obama presented during the election campaign. While it had much in common with the centrist proposals of Hillary Clinton and John Edwards, it didn’t even go as far as his primary opponents’ plans did, because Obama’s proposal didn’t require all adults to obtain health insurance. In terms of reforming the health care delivery system, Obama also echoed other Democrats’ (and some Republicans’) calls for better preventive and chronic care and the rapid adoption of health IT—neither of which would shake up the health care establishment, especially if these initiatives were supported by new federal funds.

       Nevertheless, a new report from the Center for American Progress, which is closely allied with Obama’s transition team, suggests that the next Administration might be prepared to go much further in restructuring the system than Obama’s campaign platform indicated. Entitled The Health Care Delivery System: A Blueprint for Reform, this relatively brief tome (117 pp.) was written by 15 health-policy experts, including John Podesta, the head of the transition team, and Dora Hughes, Obama’s senior health-policy advisor. Among the other luminaries who penned this report are Robert Berenson, a senior fellow at the Urban Institute and formerly a top Medicare official; Donald Berwick, president of the Institute for Healthcare Improvement and one of the leaders of the hospital safety movement; David Blumenthal, a Harvard Medical School professor and director of the Institute for Health Policy; Paul Ginsburg, president of the Center for Studying Health System Change; Jeanne Lambrew, a senior fellow at the Center for American Progress and a professor at the University of Texas; Thomas Lee, network president for Partners Healthcare System and also a Harvard professor; and Steven Schroeder, a professor of health policy at the University of California, San Francisco, who was president and CEO of the Robert Wood Johnson Foundation from 1990 to 2002.

      While all of these experts are mainstream thinkers, some of the ideas they advocate in this report are positively radical. Among other things, they’re talking about having physicians join larger organizations and work in care teams as part of a major effort to create a high-performance health care system. In addition, they propose fundamental changes in how physicians and hospitals are reimbursed. They’d move away from fee for service and embrace various prospective payment systems, including bundled case rates and capitation. They’d move the emphasis of American medicine from specialty to primary care and from personalized medicine to population health. In all of this, the federal government would play the lead role.

      Here just a few of the proposals to smash through our century-long gridlock in health care reform efforts:

     Organizing providers. “The most effective way to address our cost and quality challenges is to confront the root cause—the chaos in everyday health care,” write Robert Berenson and Thomas Lee. “We should focus our efforts on accelerating the organization of health care providers so that they can adopt systems that are likely to reduce errors and improve the overall coordination of care.”

     In the current environment, they note, approaches such as disease management and health IT are of limited value. To use these tools to help build a high-performance system, the federal government “should provide compelling incentives to encourage providers to become part of organizations, and then achieve the efficiencies that will enable them to reduce costs.” To overcome patient resistance to large clinics, they suggest, small offices should be maintained within these organizations and tied together with the aid of information technology.

      According to Berenson and Lee, changing how providers are reimbursed is the key to shifting the system’s center of gravity from small independent practices to large integrated delivery systems, such as those of Kaiser Permanente and Partners Healthcare, which they view as the ideal type of organization. Instead of paying doctors primarily fee for service and “lite” pay for performance based on process measures, they would use “robust” P4P tied to patient outcomes, case rates, and capitation that includes quality incentives. Physician groups could be paid more if they accepted a higher level of financial risk and delivered high-quality care.

     Quality improvement. Donald Berwick and Chiquita Brooks-LaSure state, “Most health care providers, even large hospitals, still lack both the will and the competence to improve the processes of care, and most health care boards of senior executives and trustees view the improvement of care as a strategic agenda at best secondary to maintaining revenues and stabilizing public reputation.”

      While some hospitals and doctors do their best to improve quality, they note, hospitals lose money when they do the right thing—such as trying to prevent congestive heart failure patients from being readmitted—and primary-care doctors lack the resources to coordinate care properly. In other advanced countries, they note, the need to work within limited budgets has forced providers to become more creative and to provide better health care for specified populations. They propose that the U.S. system be restructured to create similar conditions. “Integrated care structures and population-based budgets provide the conditions for far higher value and lower cost,” they conclude.

     Reimbursement reform. Throughout the report, the coauthors cite the perverse payment system in the U.S. as a key obstacle to change. Fee for service encourages providers to do more, even when it won’t improve health. And even in Medicare’s prospective payment system for hospitals, far too much is paid for certain surgical procedures, while medical services are undervalued.

     Paul Ginsburg would change all of this with a mixture of payment methods to incentivize more appropriate provider behavior. He’d reimburse episodes of acute care with case rates covering hospital, physician, outpatient lab and drug services, and would pay providers more when their patients had better outcomes. In addition, he supports the idea of the patient-centered medical home, in which primary care doctors would receive capitation payments for care coordination services that today are not covered by either Medicare or private payers.

      Cost effectiveness research: David Blumenthal and Karen Davenport would have Medicare look not only at the clinical effectiveness of tests and treatments, but also at their cost effectiveness--an idea that has been banished from American political discourse since the demise of the U.S. Office of Technology Assessment in the early ‘90s. They would have Congress give Medicare authority to examine the clinical impact of especially costly interventions and give providers incentives to use less expensive, equally effective methods.

 Clearly, these experts have a number of different agendas, and some specific details of their reform plans conflict with each other. But their main point—that we need to change how doctors and hospitals provide care—comes across loud and clear. If President-Elect Obama heeds their call, we could see real reform in his first term in office—at a price that we can afford as a nation.

Obama's HHS Choice--Dean, Daschle, or a Republican

The job of Secretary of Health and Human Services will be a particularly important one in the Obama Administration, because the President-Elect is strongly committed to health care reform. Among those who have been suggested as contenders for the post are former South Dakota Senator Tom Dashle, former Vermont Governor Howard Dean, Rep. Rosa DeLauro of Connecticut, and Kansas Governor Kathleen Sebelius.

      While DeLauro and Sebelius are little known nationally, Dean has been prominent since his 2004 run for President, and he has also been Chairman of the Democratic National Committee since 2005. When he was Vermont’s Governor, Dean, who is a physician, expanded health care coverage to nearly all of the state’s children, and he also expanded Medicaid to cover prescription drugs for a third of the program’s recipients. As a Presidential candidate, he proposed enlarging Medicaid and the State Children’s Health Insurance Program to cover all uninsured children and young adults up to age 25. (Obama, too, wants to cover all children but would make some parents responsible for buying the insurance.) Dean also wanted to bring poor adults under the SCHIP umbrella. 

     Tom Dashle is familiar from his years as Majority Leader and later Minority Leader of the Senate when it was dominated by Republicans. In that stressful, difficult role, he showed a remarkable equanimity under pressure while keeping the beleaguered Democrats together. Since leaving the Senate, he has been fighting for health-care reform, trying to achieve consensus across party lines with the help of fellow ex-Majority Leaders George Mitchell, Bob Dole, and Howard Baker. Their Leaders’ Project (part of the Bipartisan Policy Center) has held forums across the country this year. Dashle has also written a book called Critical: What We Can Do About the Health Care Crisis.

      In that book, Dashle makes a number of proposals that are close to Obama’s health care platform, including more emphasis on preventive and chronic care, a shared responsibility approach to financing, and changes in how doctors and hospitals are paid. Like the President-Elect (and many other Democrats, past and present), he also wants to create a national insurance pool, similar to the Federal Employees Health Benefit Program, that would allow individuals and small firms to get lower insurance rates.

      Dashle’s major proposal is to create a Federal Health Board that would oversee and set the rules for government-funded and government-subsidized health programs, including Medicare, Medicaid, and the expanded FEHBP. Together, these programs might eventually cover the majority of Americans; in any case, private insurers would be likely to follow the policies of this Federal Health Board, as they follow Medicare in many areas.

     Comprised of government-appointed experts, Dashle’s Federal Health Board would, among things, decide which benefits would be covered, supervise comparative effectiveness research, and recommend infrastructure investments. It’s a smart plan from the viewpoint of protecting rational health policy decisions from the assaults of special interests. In fact, in terms of drawing up standard benefit packages, it’s the only way to go. But I have serious reservations about how well it could run the health care system—even a system that might, in the future, be increasingly government-financed.

     For starters, all health care is local. While Dashle does propose an advisory role for regional health boards that would include business and consumer representatives, his model is too centralized to respond to the differences in how health care is delivered at the local level. One size does not fit all in health care.

     Second, even if experts could agree on what should be in a benefit package or on how doctors should be compensated, that doesn’t mean that the stakeholders would abide by the outcome. Interestingly, Dashle points out that the Federal Reserve’s power rests on its support from Congress. The same would be true of a Federal Health Board. Simply punting the decisions to a group of experts would not remove their political impact. Also, at a time of economic meltdown, let’s not forget that neither the Federal Reserve nor the SEC—both models for Dashle’s plan—have functioned very well in terms of oversight. We can’t depend on a Federal Health Board to make the right decisions for health care any more than we can rely on regulatory agencies to keep our financial system on the tracks.

      That said, either Daschle or Dean would make a fine HHS Secretary. Daschle would have excellent relations with a Democratic-controlled Congress, and Dean would be able to apply his proven executive abilities. Obama might also consider Dr. Mark McClellan, who heads the Brookings Institution’s Engelberg Center for Health Reform. As a former head of the Food and Drug Administration and of the Centers for Medicare and Medicaid Services in the Bush Administration, McClellan knows the levers of HHS well, and he also has a detailed knowledge of the policy issues. Among his accomplishments: He implemented Medicare Part D. Whatever you think of that program, it was a monumental job to put it into place. If Obama wants to bring a Republican into his Cabinet, McClellan has a lot to offer—including his recently stated belief that the time for healthcare reform is now.