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 By Mark D. Smith, MD

At dinner parties, on a plane, and at the ball park, I get the same question: “Will the Supreme Court strike down health care reform?” I give the same response. In the words of Yogi Berra, “It’s tough to make predictions, especially about the future.”

Regardless of whether the Affordable Care Act (ACA) is upheld, overturned entirely, or stripped of key features, health care reform is already happening, and will continue, no matter what the Court decides.

The bill is massive. Some of its features have already been altered—the long-term care program (the CLASS Act), for example—and others are sure to change in the process of implementation. But in in the midst of uncertainty about the future of the ACA, it’s worth contemplating changes in the delivery system in response to spiraling costs of care, wider concerns about the Federal budget, and thus in anticipation of the ACA or something like it—something has to give.

 
Provider Consolidation
In times of uncertainty, it’s better to be strong than to be weak. Every hospital in the United States is considering “partnerships” with other institutions. (A joke at Wharton—the University of Pennsylvania’s business school—about mergers and acquisitions was “There is no such thing as a merger: see Acquisitions”). Although hospital consolidation flies the banners of “economies of scale” and “efficiency,” they seem to actually be more about increasing market power to improve their pricing leverage with payers.

More significant, perhaps, is the wave of purchases of physician practices and provider-led plans by hospitals and, surprising to some, by health plans. In California, Optum’s marriage with Monarch and Anthem’s acquisition of CareMore are striking examples. The ACA and unrelenting pressures from rising health care costs have jump-started a battle for the hearts, minds, and wallets of physicians.

Such consolidation was in the works before the ACA, but it has undoubtedly accelerated because of anxiety about the future. This trend of the big getting bigger is likely to continue even if the law goes away.

 
Pioneering ACOs
Some wag (okay, it was me) was quoted 2 years ago as saying that accountable care organizations (ACOs) were like unicorns, mythical creatures that everyone could describe but no one had ever actually seen.

Well, now we are beginning to see them.

ACOs are a provision of the health care law that will offer physicians and hospitals treating Medicare beneficiaries financial incentives to hold down costs while meeting certain quality measures, such as reducing hospital readmissions. Thirty-two provider organizations in 18 states, including 6 in California, are currently taking part in the Pioneer ACO Model, sponsored by the Center for Medicaid & Medicare Innovation (the CMS Innovation Center). Participating ACOs will be held financially accountable for the care provided to their patients.

In addition to these “pioneers,” there is also a growing catalog of other organizational and payment innovations. These attempts to create physician/hospital organizations that are prepared to take longitudinal clinical and financial responsibility for a defined group of patients are good developments. But make no mistake: their ultimate success is not going to be defined solely—or even principally—by their clinical accomplishments but by their capacity to save money. Which brings me to the 2 likely foci for discussion of health care leading up to the election: Medicare and insurance premium prices.

 
Medicare
Conservative lawmaker Paul Ryan and liberal economist Paul Krugman have precious little in common except their first names. Yet both agree that the country’s future prosperity depends on dramatically reining in health care costs.

Medicare is perhaps America’s most popular “entitlement” program; a decade ago it would have been inconceivable that ambitious national politicians would be arguing over how to cut it. But there is now broad bipartisan agreement that restraining the rise of Medicare costs is essential to the fiscal survival of the republic. The election season is likely to produce warring narratives, not about the necessity of constraining costs but about whose approach is more destructive.

 
Insurance Costs: Headline vs Core Inflation
Economists distinguish between headline inflation, which includes energy and food—seasonal and volatile but politically important entities—and core inflation, which excludes these hot-button items. There is a similar phenomenon in the pricing of health insurance. The headlines about premiums going up or (rarely) down are influenced by a host of ephemeral political and economic factors, such as regulations, underwriting cycles, the state of the economy, and political calculations or blunders by insurers. But the long-term cost of insurance is principally determined by the “core,” the underlying cost of the care that it finances. The ACA contains a host of measures designed to reform the delivery system to reduce its cost. And, notably, 2 important infrastructure investments—health care information technology and comparative effectiveness studies to determine which medical interventions work best—were products of the stimulus package, not the ACA.

The hope is that these efforts and others will cumulatively be able to restrain the cost of care by eliminating waste rather than rationing, as Donald M. Berwick, MD, MPP, and Andrew D. Hackbarth, MPhil, have compellingly argued. But most of these developments are, frankly, experiments; they may take years to bear fruit. Not surprising—we didn’t get into this mess in 3 or 4 years, and we won’t get out of it that quickly either.

Again, the electoral season will likely produce warring narratives, this time over headline insurance pricing. Democrats will likely point to the short-term benefits of the ACA—premium rebates, high-risk insurance pools, and adult kids on their parents’ insurance. Republicans will ask where the promised decreases in premiums are.

According to some recent reports, health care costs have started to flatten out. While some health economists think that the prolonged recession is behind the shift, others are convinced that the changes being adopted by hospitals, doctors, and health plans, which emphasize quality of care over quantity, are responsible. I’m skeptical of the latter, but of course time will tell.

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About the author: Mark D. Smith, MD, has been president and chief executive officer of the California HealthCare Foundation since its formation in 1996. CHCF is an independent philanthropy with assets of more than $700 million, headquartered in Oakland, California, and dedicated to improving the health of the people of California.

 

 
About The JAMA Forum: To provide ongoing coverage throughout this election year, JAMA has assembled a team of leading scholars, including health economists, health policy experts, and legal scholars, to provide insight about the political aspects of health care. Each JAMA Forum entry expresses the opinions of the author but does not necessarily reflect the views or opinions of JAMA, the editorial staff, or the American Medical Association. More information is available here and here.

By Diana J. Mason, PhD, RN

I don’t have any children but am a firm believer that “it takes a village” to raise a child. As a public health nurse, I’ve done my best to talk with youth in my extended “family” about safer sex practices, particularly if I know their parents are not having these conversations.

So I was interested in what 1 college student in this extended family thought about the discussions about birth control during this presidential race. I’ll call her Jennifer. We have had many conversations about reproductive health, and when Jennifer has questions, from her menses to birth control, she often contacts me.

I recently asked Jennifer about the Obama administration’s regulation requiring employers, including most employers affiliated with religious organizations, to include birth control in their health insurance offerings to employees and their families. Jennifer told me that she doesn’t follow the news much—she works as many hours as she can to put herself through college—and was not aware of these issues. When I explained it to her, she said she supported the mandate.

Jennifer would fall within the 18- to 40-year-old category of women responding to a February survey by the Pew Research Center. On this survey, 53% of women in this age group who had heard about this issue said that religious organizations should be required to provide birth control coverage, compared with 40% who said they should be exempt from the mandate.

 
The Price of Prevention
Jennifer has been sexually active, with only 1 young man, since she was 16 years old. Although we’ve talked about the importance of using a barrier method of birth control along with her birth control pills, I was dismayed to learn that she had quit using condoms because “we’re not having sex with anyone else,” even though her boyfriend attends a different college and has broken off the relationship on several occasions. When I asked her why, she said, “Because they’re too expensive, and I’m barely making ends meet as it is.”

She said she paid about $1 per condom, which surprised me since New York City gives them away for free. I hadn’t looked at the price of condoms for decades, but a visit to a drug store in upstate New York left my mouth agape when I found the price of a popular brand was $17 for a box of 12. I later looked online and found condoms ranging from $0.30 to $2 each, depending on the brand.

Jennifer is typical of about half of US women who use birth control: she doesn’t use it correctly, like 40% of the women in the United States who have unplanned pregnancies. She has had trouble remembering to take her birth control pills. After we talked, she developed a routine for taking the pill and asked her physician for a generic brand that costs her only $14 a month.

She told me she had no health insurance because her father had lost his job and the family coverage through her mother’s job was too expensive. “I don’t have $50 a month for insurance…. [Catastrophic] insurance would be good, if it was cheap.” But that wouldn’t pay for birth control. Jennifer added that she would like to have health insurance but hopes she doesn’t need it. Her desire to have health insurance but being unable to afford it conflicts with Justice Anthony Scalia’s claim, during the Supreme Court hearings on the Affordable Care Act (ACA), that when young people “…think they have a substantial risk of incurring high medical bills, they’ll buy insurance like the rest of us.” Not if there’s no money to buy it. Jennifer’s monthly take-home pay averages $400.

The ACA and the Presidential Race
Under the ACA, Jennifer (and her parents) could qualify for subsidies to reduce the cost of purchasing health insurance once their state has an insurance exchange in place. In addition, women will have access to birth control and other preventive care without a co-pay—a recommendation from the Institute of Medicine.

Although Romney is clear about his intention to repeal the ACA and his position on abortion is summarized on his website, the site says nothing about his position on access to birth control. During the February uproar about Obama’s mandate that all employers, including employers affiliated with religious organizations, provide insurance that covers birth control, Romney framed the issue as one of religious freedom, without addressing women’s access to birth control. It didn’t play well with women. According to an April poll by the Pew Research Center, women continue to contribute to Obama’s lead over Romney by a margin of 13 percentage points: 53% for Obama and 40% for Romney. Obama fares well among people who think that birth control is an important issue, but this is more likely to be women (40%) than men (27%).

But Obama can’t take women’s votes for granted. His record on women’s reproductive issues is mixed. For example, the prochoice community decried Secretary Kathleen Sebelius’s override of the Food and Drug Administration recommendation to make Plan B (levonorgestrel) emergency contraception available over the counter to women of all ages. She claimed that there was not sufficient evidence that Plan B was safe for women younger than 17 years—a claim that was countered by others who noted that it’s safer than Tylenol (acetaminophen).

Planned Parenthood continues to be threatened with defunding at the federal and state levels, despite the fact that only 3% to 9% (depending on who’s counting) of its services are abortions. The vast majority of its services are preventive. Birth control composed 33.5% of its services in 2010; screening and treatment for sexually transmitted diseases (STDs) composed 38%. Romney has stated that he supports eliminating federal funding for Planned Parenthood, while Obama has pledged his continued support of the organization.

Why should people care about Planned Parenthood and access to birth control? Compared with the child of an intended pregnancy, unwanted pregnancies can have serious consequences, including poorer physical and mental health and cognitive functioning for the child; an increase in depression for the woman; and impaired family relationships. Sexually transmitted diseases are transmitted to an estimated 19 million people in the United States every year, with young people accounting for half of these new cases. What’s more, STDs cost the nation’s health care system $17 billion each year.

Jennifer says she doesn’t plan to vote for either candidate because she’s not sufficiently informed about them. I can’t blame her for not keeping up on the rhetorical war between the candidates and their parties. Still, I think about how much easier and safer her life would be if she had free access to birth control that would protect her from STDs, HIV, and pregnancy. Maybe I should send her some of those free NYC condoms.

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About the author: Diana Mason, PhD, RN, is the Rudin Professor of Nursing and Co-Director of the Center for Health, Media, and Policy at the Hunter College, City University of New York, and President-elect of the American Academy of Nursing.

 

 
About The JAMA Forum: To provide ongoing coverage throughout this election year, JAMA has assembled a team of leading scholars, including health economists, health policy experts, and legal scholars, to provide insight about the political aspects of health care. Each JAMA Forum entry expresses the opinions of the author but does not necessarily reflect the views or opinions of JAMA, the editorial staff, or the American Medical Association. More information is available here and here.

By Austin B. Frakt, PhD

When the Affordable Care Act (ACA) was signed into law in March 2010, it ushered in significant changes to Medicare. Those changes include innovations to provider payment models, including episode-based bundled payments, various new types of accountable care organizations, and greater emphasis on efficiency and quality, among others. However, it’s clear from the presidential campaign rhetoric, as well as the legislative and political calendar, that Medicare could face additional, potentially dramatic changes in the coming year. The most likely engine for change to Medicare is a confluence of statutory deadlines that some observers think could lead to a bipartisan “grand bargain.”

But first there are a few events on the calendar that are less likely to lead to big, bipartisan changes to Medicare. In June, the US Supreme Court will rule on the constitutionality of the ACA or parts thereof. Although it is possible that the justices could throw out the entire law, which would invalidate the Medicare reforms mentioned above, this is unlikely. More likely is that the court finds none of the law or perhaps just the individual mandate unconstitutional, leaving Medicare untouched.

Next up is the presidential election in November. This too could have big implications for Medicare if Republicans retake the White House and the Senate while retaining the House. Repealing the ACA, as Republicans have promised to do, would take down the new Medicare reforms as well. In place of Medicare as we know it, candidate Mitt Romney has endorsed the notion of premium support. Instead of traditional Medicare and private Medicare Advantage plans operating as they do today, Romney’s vision—shared by fellow Republicans—is to offer vouchers to Medicare beneficiaries to use as they shop for coverage in a market with competitive elements similar to those present in the Medicare drug program today.

Full implementation of such a dramatic change to Medicare would require a filibuster-proof majority in the Senate, something Republicans are unlikely to achieve. Therefore, even if the majority of contested Congressional seats are won by Republicans in November, I don’t think that alone preordains a premium support program in Medicare.

But there’s one more big event—or confluence of events—on the calendar in the next year. On January 1, 2013, the 2-year extension of the Bush tax cuts is scheduled to expire. If it does, income tax rates will increase for nearly all taxpayers. On the same day, the current patch to Medicare’s Sustainable Growth Rate (SGR) expires, threatening to decrease payments to physicians by about 30%. Furthermore, as agreed on during last summer’s showdown over the US debt ceiling, $1.2 billion in cuts to defense and other domestic spending, including a 2% cut to Medicare, are scheduled to commence at the turn of the year. As if that’s not enough, the current debt ceiling will probably be reached this fall or early winter, forcing another potentially contentious vote to raise it.

Allowing all or even a subset of these to occur could be economically and/or politically disastrous. For this reason, some speculate that this unprecedented confluence of significant statutory events offers an opportunity for a grand bipartisan bargain, one that includes a major overhaul of Medicare. I agree that there is a greater opportunity for Medicare reform during a climate of legislative urgency this fall than as a result of the Supreme Court ruling or the presidential election. But just because the opportunity may exist does not mean it’s the appropriate time for a structural change to the program.

I am on record, along with economist Henry Aaron, PhD, of the Brookings Institution, with the view that now is not the time for premium support. Aaron and I list many reasons, and he provided even more detail in his recent testimony before the House Ways and Means Subcommittee on Health. Among them is this:

The Affordable Care Act (ACA) sets in motion a process of experimentation and change, including the implementation of accountable care organizations, bundled payments, comparative effectiveness research, a center for innovation, and an independent payment advisory board, that aims to transform the financing and delivery of health care. […]

Implementing these and other changes within the framework of the current program should make up today’s reform agenda. Serious efforts to control the growth in Medicare expenditures should begin with resolute implementation of the ACA.

The reforms already decreed by law have not yet been given a chance to play out. Although it is by no means certain they will move the program toward a more sustainable growth path, there is no reason to think they’re any less likely to do so than premium support. Of course, the ACA’s Medicare reforms are not perfect or universally adored; that would be too much to expect of any reform. Unsurprisingly, then, the same is true of premium support, which comes with its own set of risks, compromises, and reasonable skeptics.

The ACA made significant changes to Medicare. The prudent approach is to support their implementation and to monitor their effectiveness, making adjustments as warranted. This fall may provide a political opportunity to attempt significant structural reform to Medicare. But the next few years provide an opportunity for something more important: to make good on the reforms already in law.

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About the author: Austin B. Frakt, PhD, is a health economist and an assistant professor at Boston University’s School of Medicine and School of Public Health. He blogs about health economics and policy at The Incidental Economist and tweets at @afrakt. The views expressed in this post are that of the author and do not necessarily reflect the position of Boston University.

 
 
About The JAMA Forum: To provide ongoing coverage throughout this election year, JAMA has assembled a team of leading scholars, including health economists, health policy experts, and legal scholars, to provide insight about the political aspects of health care. Each JAMA Forum entry expresses the opinions of the author but does not necessarily reflect the views or opinions of JAMA, the editorial staff, or the American Medical Association. More information is available here and here.

By Larry Levitt, MPP

With former Massachusetts Governor Mitt Romney now the presumptive Republican nominee, this is shaping up as possibly the most unusual presidential race in history when it comes to health care.

Although health care is rarely a deciding issue in campaigns, it has almost always been a major point of contention. Every candidate for president in recent memory needed to have a health care “plan,” and typically the Republican and Democratic versions of these plans presented starkly different visions for the future. But they were always just visions, outlines (more or less detailed) of plans that never came to fruition.

Until 2010, that is, when the Affordable Care Act (ACA) passed. Now, for the first time, a President is truly running on his health care record. We don’t need to wait for President Obama’s health care plan: it’s the ACA. Although the ACA is not fully litigated (literally or figuratively), it is the law and as such represents a detailed platform the President will have to advocate for and defend.

Perhaps ironically, the Massachusetts health reform legislation Governor Romney signed into law in Massachusetts is quite similar to the ACA. But while Romney continues to support the Massachusetts approach for Massachusetts, he has clearly stated that he does not support it as a matter of national policy and indeed argues for the repeal of the ACA. So far, we have only the barest outline of Romney’s official position on what he would replace the ACA with, so we need to read a bit between the lines.

The overarching differences between the candidates on health reform and public programs like Medicare and Medicaid have received more attention, but they also envision divergent futures for private insurance. There’s no one right way to create a fair insurance market, but different choices have consequences. How accessible will coverage be for people with preexisting health conditions? What benefits will insurance provide and at what cost to patients?

President Obama and Private Insurance

The basics of the ACA’s private insurance provisions are by now reasonably well known:

• Beginning in 2014, all insurers would be required to take anyone, including those with preexisting health conditions. Premiums could vary to some extent by age but not by sex or health status.
• All insurers selling coverage to individuals and small businesses would be required to include a set of “essential health benefits” (which could vary state-by-state), as well as preventive services.
• The generosity of coverage (as measured by the amount of cost sharing patients face) would be standardized into so-called “metallic tiers” (bronze, silver, gold, and platinum). A bronze plan, which is the minimum that people would be required to buy, would pay for 60% of the cost of covered services on average. An analysis the Kaiser Family Foundation just released found that bronze plans would likely have very high deductibles, meaning the minimum coverage people would have to purchase would provide only catastrophic protection, along with up-front coverage of preventive services with no patient cost sharing. However, anyone would be free to buy more comprehensive coverage, and many probably would do so.

There’s little question that these changes would result in a more accessible insurance system, providing guaranteed access to coverage for those with preexisting health conditions, along with subsidies to make insurance more affordable. However, to make these reforms work, the ACA also includes the politically divisive individual mandate to buy insurance, which the Supreme Court will soon pass judgment on.

Governor Romney and Private Insurance

Instead of the additional rules for insurers in the ACA, Governor Romney proposes to “limit federal standards and requirements on both private insurance and Medicaid coverage.” He also says that consumers should be allowed “to purchase insurance across state lines.” This would have the effect of diminishing insurance regulation at the state level, as insurers would seek to sell coverage in loosely regulated states. According to the Congressional Budget Office (CBO), this could result in an “erosion” in the availability of coverage for people with high health care needs. However, the CBO also notes that the cost of individual health insurance could be reduced by 5% if all states had mandated benefits equal to those in states that now impose the least expensive requirements.

To provide access to coverage for people with preexisting health conditions, Governor Romney proposes “flexibility to help the chronically ill, including high-risk pools, reinsurance, and risk adjustment.” High-risk pools—which segregate people with expensive health conditions from the rest of the insurance market—are, in theory, a viable strategy. But to make them effective, the coverage needs to be adequate and the premiums affordable, which would require a significant infusion of subsidies. It’s not yet clear whether Romney is prepared to make such subsidies available.

As with previous Republican presidential candidates, Governor Romney also places a strong emphasis on high-deductible insurance plans paired with health savings accounts (HSAs), proposing to “unshackle HSAs by allowing funds to be used for insurance premiums.” This would likely accelerate the shift to higher deductibles and more patient cost sharing, which he argues will “drive quality up and cost down.”

The insurance market is already moving in that direction. The percentage of insured workers with a deductible for single coverage of $1000 or more increased from just 10% in 2006 to 31% in 2011. That, along with the lingering economic downturn, may be part of the reason why utilization of physician services has fallen substantially. These trends are likely to continue, regardless of how this year’s election turns out.

But this election could be a turning point for the future shape of private health insurance.

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About the author: Larry Levitt, MPP, is Senior Vice President for Special Initiatives at the Kaiser Family Foundation and Senior Advisor to the President of the Foundation. Among other duties, he is Co-Executive Director of the Kaiser Initiative on Health Reform and Private Insurance.
 
 
 
 
About The JAMA Forum: To provide ongoing coverage throughout this election year, JAMA has assembled a team of leading scholars, including health economists, health policy experts, and legal scholars, to provide insight about the political aspects of health care. Each JAMA Forum entry expresses the opinions of the author but does not necessarily reflect the views or opinions of JAMA, the editorial staff, or the American Medical Association. More information is available here and here.