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Wall Street and Uncle Sam: New forces will impact health care financereform
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If a year or two ago I wrote that three of our largest financial institutions, Freddie Mac, Fannie Mae and AIG (with roughly a combined market value of over $250 billion) would be worth $6 or $7 billion in October 2008, you would have thought I was losing it. The current financial crisis and the governmental intervention in response to it have positioned the United States government, as one of the largest players on Wall Street.
The private sector’s failure to control and regulate itself has contributed to our current mess. One of the few certainties as we work through this fiscal debacle is that the pendulum will swing toward more regulation. There is no question with the forecasting of a Democratic-controlled U.S. House and Senate, we will see new regulations that will result in limits on profits as the government positions itself to take on the $700 billion responsibility for the losses (potentially from none to a large amount).
Health-care financial reforms
Regardless who is our next president, the current financial environment and our escalating national debt will impact any approach to reform future health care financing.
Current statistics show that Americans spent more than $2.3 trillion on health care last year — more than $7,600 per person. Government projections indicate that in less than a decade, we will spend 20% of our annual incomes on health care.
Financial experts have opined that health care is the biggest fiscal woe facing our country.
Compounding this potential crisis is the fact that large and small businesses are unable to sustain the impact of the escalating costs of health care.
Government-based plan
In a presentation to the American Society of Surgery of the Hand in September, William H. Frist, MD, the former senator and senate majority leader said that the future is definitely going to bring more regulation, more oversight and more investigation, and that a government-based health care plan will be formed to compete with private insurance and have a negative effect on the health care market.
He said, “There are two camps out there: those who believe that health care is a consumer good in which the financing of should be the responsibility of the people who receive it ... and those who believe that medicine is a social good that should be available to everybody and financed by all members of society at a cost based on your ability to pay. It is a dialogue that the United States of America has never had, but it is a dialogue that we must have.”
Because of concerns about increasing our deficit, much of the money for future reform of our health care financing will need to come from current expenditures. Here are some of the areas where reformers will look to finance many of the proposed changes:
- It is felt that we spend 40% more than other countries, on health care and we reportedly are not obtaining better outcomes — an estimated potential $400 billion in savings if we could duplicate there systems.
- More people believe that one-third of medical costs do not benefit patients and some treatments actually may harm patients — possibly $50 billion could be saved or used elsewhere by eliminating these expenses.
- Currently, about $1 out of every $25 of health care financing is now being spent for prevention — many feel this is an area where other savings could be achieved.
- Policy makers are finally talking about pulling out the hidden costs in health care financing and any changes will most likely attempt to remove more of the profits in the system and socialize the distribution of these savings.
The trends for reform have started and will probably accelerate following the elections. There will likely be an increased push to control costs by trying to identify the best providers for cost and outcomes. These best providers will need to be clearly defined, and the data collection has started.
Team approach
Many of the changes will result in “teams treating problems.” An example is the area of joint replacement. The hospitals and doctors will have to work together on cost containment and outcomes. It will involve streamlining and standardizing care.
The orthopedic surgeon will be part of the team, perhaps as a director, who can provide each aspect of the total care most cost efficiently and not detract from the outcomes. The reimbursement for the overall care may be a lump sum for the team to divide between the hospital (team) and physicians. It probably will result in less reimbursement for the physician but the team will do more aspects of care.
Need to make changes
There are many who feel more regulation is needed to control our health care costs and change the current system driven by procedural-based remuneration. These new regulators will be armed with the beliefs that much of what we do is unnecessary, or has not been demonstrated to be beneficial.
Hopefully, the coming changes will be well thought out and introduced incrementally. It is very important that we, as orthopedic surgeons, are part of the discussions before the changes are made.
Douglas W. Jackson, MD
Chief Medical Editor