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Healthcare Reform: Mandating Mediocrity

Health care reformers say they want to improve the quality and affordability of health care.

It sounds good.  But it’s not like there’s no one out there trying to do that.  Employers of all sizes have been working on this problem for a long time, and they’ve come up with a great many interesting successes and failures.

So what’s the problem?

Well, it seems like reformers in Congress are completely uninterested in these things.

Yesterday I had the opportunity to speak to and in front of two very prominent groups.  Without saying who they were, I will say that one is doing some very interesting work with smaller employers, the other focuses solely on very large employers.  Both are at the leading edge of successful efforts to improve health care quality and cost.  Neither has been asked by Congress to share with them what they are doing.

There is, in short, an enormous divide between what reformers in Congress are trying to do and what people who are in the business of health care understand about the reality of this kind of work.

Let me give you two examples.

One group has banded together hundreds of smaller employers – representing tens of thousands of employees – to try to control rising health care costs.   Unlike large employers, small employers can’t self-insure for health care risk, so they have to buy insurance from an insurance company.

You would think that this group could go to the insurance companies and negotiate some kind of a group rate for their members, right?  Well, they can’t – it’s illegal.  The state in which these employers are located has mandated the rates that insurers must charge small employers.  They can’t give a price break, or have the flexibility to create something that would suit these employers.

The only escape for these small employers would be to pool their insurance risk so they could self-insure like the big employers.  But this is a very complicated exercise.  And why should they have to go through this trouble, when all they really want is to negotiate rates with the insurance companies?  It makes little sense.  But you know what’s worse?  As reform moves along in Congress, this kind of thing may become federal law.

Who benefits from this?

Well, on one level the health insurance companies do.  They don’t really need to compete for business, they just charge what the government tells them and collect the money.  It will be the same if a government-run insurer shows up to compete, they will just get to do the same thing.  It’s almost as easy as collecting taxes.

But there’s more to it than this.  It turns out that many insurers in that state are working with small employers on innovative programs that improve the quality and cost of care.  Things like helping employers get their employees to stop smoking, lose weight, control their chronic illnesses and many others.  They’re working with hospitals and physician practices to create changes in how care is delivered, and they’re seeing results.  The trouble is, insurers aren’t able to reflect the impact of this work in the cost they charge to an individual small employer.  Well, it’s trouble if you’re a customer, it’s not so bad if you’re the insurer.

It’s something you see large employers doing all the time.  And since they can self-insure, they get the economic benefit of these programs.  In my series on Real People, Real Reform, I’ve shared a very small taste of what major employers in America are doing.  It’s programs like the ones I’ve just mentioned, and many others, and many of them seem to work.

But when you talk to these large employers, like I did yesterday, there is a sense of disconnectedness over what’s happening in Washington.  Few can explain what the government is up to, exactly, and there is a sense of cynicism that Congress hasn’t spent its time in rooms like the one I was in yesterday.  Why aren’t they talking with large employers about the successes and failures they have had with health care?

It’s enough to make you think reform is more about politics than health care.  Or, to give reformers the benefit of the doubt, maybe they just don’t realize they are heading down a misguided path.  It’s as if the government decided in the 1980s that the best way to reform the telecommunications business would be to mandate lower prices for rotary phones, and wanted to set up a government manufacturer of these phones to create competition for them.  It might have worked, but mostly at locking in place a stagnant and deeply unimaginative status quo.

And this is the larger point.

What’s wrong with health care reform isn’t that people have bad intentions.  It’s the total failure of imagination.  As one reform proponent told me the other day, “we’ve been waiting 16 years to do this.”  Well, the world has changed an awful lot in the last 16 years, and one thing should be clear.  We should spend far less of our time trying to settle old political scores, and far more time listening to people who are actually doing real and meaningful things to improve health care.

There is no more difficult art to acquire than the art of observation. – Dr. William Osler

*This blog post was originally published at See First Blog*

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