Cost reductions are key to proposed health care reforms

By Nicole Lucht (contact), In Business reporter

Fri, May 22, 2009 (3 a.m.)

Ever try to take a broken glass and make it whole again?

The nation’s health care system is shattered.

There is no doubting President Barack Obama’s resolve in reforming health care in the United States.

But a massive overhaul of the industry is proving to be no easy feat.

Obama’s plan includes reducing the increase of annual costs by 1.5 percentage points. In 2007 the U.S. spent $2.2 trillion on health care, according to the Centers for Medicare and Medicaid Services.

The plan also focuses on reducing hospital readmission rates by improving aftercare, reducing Medicare overpayments to private insurers, reducing drug prices, improving the accuracy of Medicare and Medicaid payments and expanding its hospital quality improvement program, which would link quality care to a portion of Medicare payments.

Speaking to congressmen and representatives of several health care industries, Obama said last week there is a “moral imperative” to reforming health care.

“If we don’t tackle health care, then we are going to break the bank,” Obama said. “I think that’s true at the federal level, I think that’s true at the state level. It’s certainly true for businesses, and it’s certainly true for families.”

More than 45 million people are without health insurance in this country, and he said it would not be fiscally responsible to simply “load them up” onto a system that is already financially strained.

“We will run out of money,” Obama said. “Don’t think we can solve this problem without tackling costs. ... We have to balance heart and head as we move this process forward.”

The biggest problems for Southern Nevada are the people who don’t have coverage, primary care doctors or access to primary care, said Larry Matheis, executive director of the Nevada State Medical Association.

“What happens is, they have an emergency and they access the health care system through the emergency department,” he said. “That doesn’t happen in most other countries. Most other systems really put their energy and their money into the primary care — upfront kind of access — because that reduces costs throughout the system.

“People who haven’t gotten primary care, pregnant women who haven’t gotten prenatal care, they all wind up accessing the system ... at one of the most expensive points there is ... That’s going to have to be rethought if we’re going to have meaningful reforms.

“I think for Nevada physicians, the issues really are quite complex,” Matheis said. “The system is so fragmented that the quality suffers.”

And falling back on the Medicare system as a model of what a reformed health care system should look like could be a detriment.

“The care has eroded as a system over the last few years,” he said.

As the number of people in Medicare has grown, the government has cut back on certain coverage and significantly cut back what it pays.

“For doctors, if there is going to be moves in that direction, then really the discussion of how to compensate for care, how to compensate for good care, how to link up doing the right care with compensation for it ... has to be done,” Matheis said.

But if more people buy into a Medicare plan, over time it would become a single-payer model, he said. The insurance industry opposes that option.

Health insurance brokers are hoping to preserve choices in the marketplace, said Larry Harrison, a broker and spokesman for the Clark County Association of Health Underwriters.

“We have to make a clear delineation between health care and health insurance,” he said. “Health care is very expensive. And why is health care expensive? Because of a lot doctors feel beholden to do every test available because maybe their liability insurance (requires it).”

And the insurance companies have brought this on themselves, Harrison said.

“They brought the problem on with the co-pays,” he said.

One concern of brokers is the consideration of guaranteed health insurance, a means to make health insurance available to everyone. Although Harrison agrees with the idea of insuring everyone, calling it a “beautiful thing,” he said he is concerned people will abuse the system, only buying insurance when there is a need for expensive care, such as a serious illness or a pregnancy. This, in turn, forces cost increases.

“We need to come up with a means to enforce the mandate,” he said. “The way it stands today, you have to buy insurance before you need it. With guarantee (health insurance) and no preexisting issues, it’s almost rewarding people for not taking insurance.

“At least with the way the program is today, most people understand you have to buy the insurance before you need it.”

Guaranteed health insurance also has to be done on a national basis, not as a state’s choice.

“Our coverage system is a mess,” Matheis said. “The system by which it’s defined, how much will be paid for it, or where you have to go for care, what the standard of care will be, it differs. No country has that, except us.

“What kind of system do we really want to be available to us, to our families? ... You would think that would be the point on which we would be trying to reach consensus, but really, we’re not. We’re eating at the edges of that, because it really does require fundamental rethinking of where our system has moved in the last 30 years.”

Other long-term cost reductions — although some that would require a significant initial investment in infrastructure — is an universal electronic health care records system and a refocusing of health delivery from the emergency room to a primary care doctor.

These days, doctors and medical offices may have electronic medical records, but the systems don’t speak to each other, and what one medical professional can read at their office, most likely can’t be read many other places.

“The problem right now is there is no national standard,” Matheis said.