Thursday, June 18, 2009
Barack Obama’s bitter medicine
(This article is reproduced from The Hindu)
Success will depend on the government’s ability to get service providers such as doctors and insurance companies as well as patients to break with conventional thinking in at least four areas.
With the oratory that has now become the Obama signature, the U.S. President recently addressed the American Medical Association (click here to read Obama's speech) (AMA) on one of the thorniest issues his country faces: reform of the U.S. healthcare system. Barack Obama’s persuasive powers were further challenged by the composition of his audience. A powerful lobby representing the medical profession, it has often in the past sided with the Republican view in debates on healthcare reform.
As with the other challenges Mr. Obama faces domestically and internationally, actions will matter more than words. Both the AMA and his detractors elsewhere in America will be waiting to see what concrete policies emerge to back his promise to expand medical insurance to the 50 million Americans who are uninsured and face uncertain prospects should a health problem or crisis emerge. What is more, virtually all Americans now have a vested interest in how reform pans out: the country faces a public finance crisis given the Wall Street bailouts and the deep recession. Costly healthcare reform, if mishandled, could be the sledgehammer that breaks the camel’s back. Critics of Mr. Obama will point to two aspects of the proposed reform that are ambiguous: first, the numbers and, secondly, the attitudinal or paradigm shifts needed to get this reform working on the ground.
The numbers thus far do not ring in Mr. Obama’s favour. Democratic Senators Edward Kennedy and Christopher Dodd, responsible for the proposal for healthcare reform, have produced a draft version that suggests, according to Congressional Budget Office calculations (click here to read the document), that reforms would cost $1 trillion over 10 years, increase the number of insured Americans by 16 million, and yet leave 36 million Americans uninsured, even by 2017. Hardly an easy case for pushing through one of the most complex and embattled cases for reform?
Wrong, answered Mr. Obama, who contended that “one essential step” on the American journey towards prosperity was to “control the spiralling costs of healthcare in America... and in order to do that we are going to need the help of the AMA.” Recent estimates suggest that the U.S. spends close to $700 billion a year on healthcare and almost 50 per cent more per person than the next most costly nation. According to Peter Orszag of the Office of Management and Budget: “For families, after adjusting for inflation, health insurance premiums have increased 58 per cent while wages have risen only 3 per cent since 2000.” Similarly the states face burgeoning healthcare costs and resultant budget squeezes, which lead to cuts in essential services and tax rises.
So where, in the parched wastelands of the U.S. economy is the President going to find $1 trillion? A major portion will come from what Mr. Obama calls the Health Reserve Fund — $635bn set aside over 10 years. Half of this massive saving will be financed by limiting the itemised deduction rate for the wealthiest Americans to what it was when Ronald Reagan was President (an implicit allusion to Republican provenance); the other half from ending overpayments to Medicaid and Medicare Advantage plans (a system of private companies offering care under Medicare and essentially a subsidy to insurance companies). A further $313bn will be wrested by reducing payments to hospitals that cater to uninsured Americans — the logic being that the number of such Americans should decline if the overall insurance coverage is expanded, as the Kennedy-Dodd proposal hopes it will be.
While these proposed savings, assuming they are possible, puts the Obama administration “in a good position to fully fund health reform in a deficit neutral way,” the real bite of the reform will depend on the government’s ability to get service providers such as doctors and insurance companies as well as patients to break with conventional thinking in at least four areas.
First, doctors must be incentivised to provide the best care rather than simply more care. For this to happen there would not only have to be changes in the system of doctor remuneration, for example, rewarding doctors for good patient health outcomes rather than for treatments prescribed. Doctors would also need to be provided better information on patient histories and the relative effectiveness of different treatments. President Obama spoke of both issues to the AMA, asserting that a switchover to an electronic records system would help restore doctors to their traditional role of healers instead of being “bean-counters” and “paper-pushers”. Further the system’s ability to inform doctors about the most effective treatments available will be honed. Currently less than 1 per cent of healthcare spending goes into determining which treatments are most effective. However, Mr. Obama said, initial investments towards improving electronically available information to doctors have already been undertaken as part of the economic recovery programme.
Secondly, patients will have to invest much more in preventive care so as to “avoid illness and disease in the first place,” Mr. Obama demanded. The American struggle with obesity and sedentary and harmful lifestyles is well known, the stuff of movies like “Supersize Me” and numerous newspaper columns. But if there is to be any real hope of long-term cost reductions in healthcare, this message must be spread with unprecedented emphasis and effect. Mr. Obama seems to agree. He now faces the task of convincing America.
Thirdly, insurance companies will have to yield to the growing clamour of voices seeking greater competition in the industry. For decades, health insurance giants such as Cigna and Humana have enjoyed a relatively unrestricted ability to set insurance premiums and in many cases deny payouts to sick patients on the basis of controversial ‘prior conditions.’ This status quo may be significantly altered under Mr. Obama’s plan to introduce an “insurance exchange” or a system of publicly provided, lower-cost insurance policies for the uninsured. The AMA has already signalled its opposition to this single payer public-funded insurance plan. The path of persuasion Mr. Obama has chosen may be longer than he hopes.
Fourthly, and this is being hailed as a benefit of Mr. Obama’s revolutionary campaign tactics, is his gentle hint to the AMA that medical malpractice reform, anathema thus far to Democrats and very much a Republican agenda item, may be necessary. If the 44th President really hopes for a cost-effective healthcare system where doctors can prescribe treatments based on evidence and evidence-based guidelines, it does imply a shift away from excessive treatments, leading to a potential increase in medical malpractice suits. Under other Democratic administrations, including Bill Clinton’s, the President’s ability (setting aside the question of willingness) to tackle the increasingly obese white elephant of malpractice suits has been circumscribed by the fact that the Democrats have had an entrenched relationship with the trial lawyers interest group. The latter, the prime beneficiaries of the litigious circumstances that have trapped the U.S. healthcare system, have fiercely resisted challenges to this source of their ascendancy. Yet Mr. Obama has, given his grassroots approach to campaigning and campaign financing, been able to sidestep the influence of this lobby, perhaps by sheer luck — or perhaps not.
Beset by massive financing and paradigm-shift challenges, President Obama is likely to sleep lightly over the coming months. However, his conciliatory approach combined with a no-nonsense speaking of truth to power might turn out to be the best chance of transforming the ailing healthcare system that any President could ask for.
Success will depend on the government’s ability to get service providers such as doctors and insurance companies as well as patients to break with conventional thinking in at least four areas.
With the oratory that has now become the Obama signature, the U.S. President recently addressed the American Medical Association (click here to read Obama's speech) (AMA) on one of the thorniest issues his country faces: reform of the U.S. healthcare system. Barack Obama’s persuasive powers were further challenged by the composition of his audience. A powerful lobby representing the medical profession, it has often in the past sided with the Republican view in debates on healthcare reform.
As with the other challenges Mr. Obama faces domestically and internationally, actions will matter more than words. Both the AMA and his detractors elsewhere in America will be waiting to see what concrete policies emerge to back his promise to expand medical insurance to the 50 million Americans who are uninsured and face uncertain prospects should a health problem or crisis emerge. What is more, virtually all Americans now have a vested interest in how reform pans out: the country faces a public finance crisis given the Wall Street bailouts and the deep recession. Costly healthcare reform, if mishandled, could be the sledgehammer that breaks the camel’s back. Critics of Mr. Obama will point to two aspects of the proposed reform that are ambiguous: first, the numbers and, secondly, the attitudinal or paradigm shifts needed to get this reform working on the ground.
The numbers thus far do not ring in Mr. Obama’s favour. Democratic Senators Edward Kennedy and Christopher Dodd, responsible for the proposal for healthcare reform, have produced a draft version that suggests, according to Congressional Budget Office calculations (click here to read the document), that reforms would cost $1 trillion over 10 years, increase the number of insured Americans by 16 million, and yet leave 36 million Americans uninsured, even by 2017. Hardly an easy case for pushing through one of the most complex and embattled cases for reform?
Wrong, answered Mr. Obama, who contended that “one essential step” on the American journey towards prosperity was to “control the spiralling costs of healthcare in America... and in order to do that we are going to need the help of the AMA.” Recent estimates suggest that the U.S. spends close to $700 billion a year on healthcare and almost 50 per cent more per person than the next most costly nation. According to Peter Orszag of the Office of Management and Budget: “For families, after adjusting for inflation, health insurance premiums have increased 58 per cent while wages have risen only 3 per cent since 2000.” Similarly the states face burgeoning healthcare costs and resultant budget squeezes, which lead to cuts in essential services and tax rises.
So where, in the parched wastelands of the U.S. economy is the President going to find $1 trillion? A major portion will come from what Mr. Obama calls the Health Reserve Fund — $635bn set aside over 10 years. Half of this massive saving will be financed by limiting the itemised deduction rate for the wealthiest Americans to what it was when Ronald Reagan was President (an implicit allusion to Republican provenance); the other half from ending overpayments to Medicaid and Medicare Advantage plans (a system of private companies offering care under Medicare and essentially a subsidy to insurance companies). A further $313bn will be wrested by reducing payments to hospitals that cater to uninsured Americans — the logic being that the number of such Americans should decline if the overall insurance coverage is expanded, as the Kennedy-Dodd proposal hopes it will be.
While these proposed savings, assuming they are possible, puts the Obama administration “in a good position to fully fund health reform in a deficit neutral way,” the real bite of the reform will depend on the government’s ability to get service providers such as doctors and insurance companies as well as patients to break with conventional thinking in at least four areas.
First, doctors must be incentivised to provide the best care rather than simply more care. For this to happen there would not only have to be changes in the system of doctor remuneration, for example, rewarding doctors for good patient health outcomes rather than for treatments prescribed. Doctors would also need to be provided better information on patient histories and the relative effectiveness of different treatments. President Obama spoke of both issues to the AMA, asserting that a switchover to an electronic records system would help restore doctors to their traditional role of healers instead of being “bean-counters” and “paper-pushers”. Further the system’s ability to inform doctors about the most effective treatments available will be honed. Currently less than 1 per cent of healthcare spending goes into determining which treatments are most effective. However, Mr. Obama said, initial investments towards improving electronically available information to doctors have already been undertaken as part of the economic recovery programme.
Secondly, patients will have to invest much more in preventive care so as to “avoid illness and disease in the first place,” Mr. Obama demanded. The American struggle with obesity and sedentary and harmful lifestyles is well known, the stuff of movies like “Supersize Me” and numerous newspaper columns. But if there is to be any real hope of long-term cost reductions in healthcare, this message must be spread with unprecedented emphasis and effect. Mr. Obama seems to agree. He now faces the task of convincing America.
Thirdly, insurance companies will have to yield to the growing clamour of voices seeking greater competition in the industry. For decades, health insurance giants such as Cigna and Humana have enjoyed a relatively unrestricted ability to set insurance premiums and in many cases deny payouts to sick patients on the basis of controversial ‘prior conditions.’ This status quo may be significantly altered under Mr. Obama’s plan to introduce an “insurance exchange” or a system of publicly provided, lower-cost insurance policies for the uninsured. The AMA has already signalled its opposition to this single payer public-funded insurance plan. The path of persuasion Mr. Obama has chosen may be longer than he hopes.
Fourthly, and this is being hailed as a benefit of Mr. Obama’s revolutionary campaign tactics, is his gentle hint to the AMA that medical malpractice reform, anathema thus far to Democrats and very much a Republican agenda item, may be necessary. If the 44th President really hopes for a cost-effective healthcare system where doctors can prescribe treatments based on evidence and evidence-based guidelines, it does imply a shift away from excessive treatments, leading to a potential increase in medical malpractice suits. Under other Democratic administrations, including Bill Clinton’s, the President’s ability (setting aside the question of willingness) to tackle the increasingly obese white elephant of malpractice suits has been circumscribed by the fact that the Democrats have had an entrenched relationship with the trial lawyers interest group. The latter, the prime beneficiaries of the litigious circumstances that have trapped the U.S. healthcare system, have fiercely resisted challenges to this source of their ascendancy. Yet Mr. Obama has, given his grassroots approach to campaigning and campaign financing, been able to sidestep the influence of this lobby, perhaps by sheer luck — or perhaps not.
Beset by massive financing and paradigm-shift challenges, President Obama is likely to sleep lightly over the coming months. However, his conciliatory approach combined with a no-nonsense speaking of truth to power might turn out to be the best chance of transforming the ailing healthcare system that any President could ask for.
Labels: healthcare, insurance, Obama, reform, U.S.
# posted by Narayan Lakshman @ 4:09 PM 
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