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What If There Is No Major Health Reform?

By February 9, 2010Commentary

Now that the likelihood of comprehensive health reform passing has dropped dramatically, considering what might happen in the system in the absence of reform is an obvious step.  At a macro level, many might suggest that costs will accelerate beyond what they would have in a reformed system.  That is unlikely, partly because the reform bills had little in them that was likely to reduce aggregate health spending, and partly because public health programs and private payers will continue to be under substantial pressure to rein costs in.  Medicare and Medicaid will continue to cut provider payments and seek new methods to pay providers, such as episode or time-based global payments.  Private payers and employers will continue their efforts to expand wellness and disease management programs, which have had some success in limiting cost increases.  Employees and individuals will endure continued cost-shifting, which raises their share of health costs but also likely reduces their consumption of health services, which may or may not be good for health outcomes, but probably lowers costs in the short run.

The number of people having insurance of some form seems likely to drop.  The states are strapped and won’t be able to sustain Medicaid or CHIP expansions.  Employment-based insurance probably will continue to decline for cost reasons, although as the economy improves, some employers may need to offer health plans to attract workers.  Individual insurance will be unaffordable or unavailable for many.  No insurance has a clear effect on access to care and free or low-cost health centers will face more demand.  Quality initiatives, however, will proceed and quality seems set to continue its improvement, both in hospital and outpatient settings.  Quality reporting programs and pay-for-performance will be drivers of this improvement.

Hospitals may continue to expand their overall capabilities by employing physicians and adding other services.  They are increasingly becoming one-stop shops, partly to facilitate the anticipated introduction of global payments and medical homes.   Physicians will continue to be willing to aggregate among themselves and with hospitals, largely to mitigate reimbursement pressures and also to aid in meeting HIT requirements.  Product companies–drug, medical device and equipment–will face ongoing reimbursement pressures and higher new product costs from regulatory delays and demands for more cost and effectiveness data.

So generally, in our view, the world won’t look a lot different that it currently does and the big three problems–cost, quality and access–will continue to be attacked in a piecemeal, sometimes successful, sometimes not, manner.  The greatest unknown in a particular geography may be what the states do in lieu of federal reform.

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