2016 Presidential Election Won?t Change Health Care Costs

Thursday, January 14, 2016 | Larry Sobal

Whether you are a Democrat or Republican, legislator or voter, optimist or pessimist, you can't ignore the fact that the Presidential election process is heating up with the Iowa Caucuses coming up on Monday, February 1st. Undoubtedly, one of many items being contested will be whether the Affordable Care Act (ACA) will survive depending on who wins the election on November 8, 2016.

If the conversations during last few weeks of 2015 are any indication, I know many of you are already formulating your opinions and sharpening your views. I hate to bear the bad news, but the federal election is not going to bring resolution to the harsh reality that federal Medicare spending, state Medicaid spending, and the amount of employer-sponsored health care costs being transferred to individuals are all increasing at unsustainable rates.

As the population ages and drives utilization upwards, controlling unsustainable health spending will require nonpolitical actions that coordinate delivery of services, reduce unnecessary care and spur innovations that improve quality and curb medical costs.

So, while some of the election rhetoric will be focused on whether to keep, repeal or modify the ACA, not enough of the conversation will be centered on a bipartisan and national acceptance that the recent five-year contraction in health care spending growth is predicted to come to an end this year as the stronger economy releases a pent-up demand for care and services.

Why is it that “bending the health care cost curve” doesn't seem to have the same urgency as other issues? Maybe it's because health care spending in the United States had been increasing at slower rates in recent years, essentially keeping pace with the growth of the economy, at least that's what the federal data tells us.

That may look like good news after decades of soaring health care spending that outpaced all other economic growth. But don't be duped: the main reason was likely related to the lingering effects of the recession that left millions of Americans unemployed, uninsured, short of income, and unable or unwilling to spend money on health care. Inevitably, that will catch up with us and health costs will soar again as is predicted for 2016 and beyond.

We don't need to reform our health system, we need to transform it. As the population ages and drives utilization upwards, controlling unsustainable health spending will require nonpolitical actions that coordinate delivery of services, reduce unnecessary care and spur innovations that improve quality and curb medical costs. Unfortunately, how to best do this will not be determined by the presidential election. This type of fundamental change will need to be driven by a combined provider-, employer- and consumer-centric effort. For what it's worth, here's my recipe for fixing the problem.

Seventy percent of all health care costs are caused by unhealthy behavior.

First, everyone knows unhealthy behaviors can be costly, but we are in denial that we (the people) are the largest part of the problem. Seventy percent of all health care costs are caused by unhealthy behavior. This includes smoking, obesity, lack of exercise, uncontrolled hypertension and uncontrolled cholesterol. Worse still, at least a third of people with basic chronic conditions are not adhering to their providers' directions, such as taking medications, and are therefore increasing their health risk and eventual health costs.

Aside from looking in the mirror and accepting personal responsibility, we need to accept (better yet demand) that there will be substantial individual financial impacts that come with not practicing good health.

The second change involves the “sponsors” of health care, namely employers and insurers, including state and federal government-sponsored health plans. They complain about bearing the risk but don't control the behavior. However, they hold the keys to the incentive model.

Every employer and health plan needs to incorporate an aggressive array of incentives and penalties to reward good health, reward compliance with chronic disease protocols and penalize those who don't want to conform. I'm talking serious differences in costs to individuals—up to 50% of premiums. The Affordable Care Act allows it, so why not do it? How creative employers and insurers get will determine their success in the market, and those who do will be rewarded with market share and profitability while those who don't will struggle to stay in business.

What about value-based care? The concept holds promise but there are significant parts of the country where the predominant payment system is still fee-for-service, and, despite proclamations to the contrary, it's sometimes the payors and employers who are slow to push the movement from volume to value.

The third change relates to providers (hospitals, physicians, etc…). Those seeking reform say, “The health care system is broken.” I don't agree that it's broken, but instead feel that we work in a health care industry comprised of systems (organizational, informational, etc…) that, for the most part, are not well connected or coordinated. As a result we end up sometimes going to heroic measures to get results, and some patients still fall through the cracks or are subjected to hand-offs. We all know it can be better.

Providers need to initiate a monumental shift in their reimbursement and compensation models to reward on how well they provide value across a system of care. Once again, I'm not referring to small tweaks, but serious changes that will substantially reward high quality and low cost providers who better coordinate care and weed out those who don't. I visit many health systems who are still focused on traditional volume growth and incentivizing executives and physicians based on traditional volume-based metrics—it's no surprise that some providers aren't leading the charge.

There are parts of the various presidential candidate platforms that address the issue of health care costs, but it won't be enough. For the most part, we control our lifestyles, our votes, our purchases, our employment decisions, etc…. Until a critical mass decides this is the way we want America to go, and acts accordingly, we'll be doomed to having this same debate 10 years from now, while paying twice as much for health care.

---

 

---

Larry Sobal is Executive Vice President of Business Development at MedAxiom. He has a 35-year background as a senior executive in medical group leadership, hospital leadership and insurance. As part of his current role, Larry consults, writes and presents on topics relevant to transforming physician practices and health systems.

 

---