Long Live Health Reform
Getting health reform legislation through Congress was a major, historic accomplishment. But, broadly speaking, it was largely a matter of clearing the way for a new system—a new system we haven’t yet devised.
Maggie Mahar offers up this illustration of hard problems that lay ahead:
If, under reform, we try to pay for quality, and “payments to health care providers are based on risk-adjusted costs and risk-adjusted outcomes, those who diagnose more will have a double advantage,” Skinner observes. “Every time a hospital enters new diagnoses for its patients, reimbursements will go up because” Medicare will assume that it is more expensive for a hospital to care for patients suffering from more diseases. Meanwhile, in places such as Miami, doctors’ risk-adjusted outcomes will look better; even if their outcomes are only average, because it will appear that they are doing better than other doctors while treating much more vulnerable patients.
In other words, the McAllen problem—the existence of structural incentives favoring over-utilization—will be very hard to overcome, even with bundling and other provider-payment innovations facilitated by the Affordable Care Act. Not to mention the difficulties we face in implementation. (See RAND and Austin Frakt for a taste of the challenges presented by bundled payments.)
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