Yesterday, the Washington Examiner’s health policy wonk Philip Klein posted a column titled “One of Obama’s big ideas for reforming health care failed a test in California.“ Klein opens by quoting a 2009 speech by President Obama:
“We need to bundle payments so you aren’t paid for every single treatment you offer a patient with a chronic condition like diabetes, but instead paid well for how you treat the overall disease,” Obama told the crowd of physicians.
Obama was articulating what would become one of the key payment reforms in his health care law — a proposal aimed at giving incentives to providers to control costs by rewarding them for providing less expensive care.
But a study published in the journal Health Affairs looked at an ambitious three-year pilot program of bundled payments in California that was funded by a $2.9 million grant from Obama’s 2009 economic stimulus package — and found that the program was such a massive failure, it could hardly get off the ground.
Klein is a very good reporter. He is right to direct attention to the failure of this particular program to implement bundled payment for orthopedic procedures. This is especially disappointing given the need to reduce volume and cost in this high-margin area of care. It’s probably a mistake to extrapolate from this one failure to other bundled payment efforts, a variety of which are underway. Some are going well. Others are not.
Whatever the case with this specific pilot effort, Klein’s headline illustrates the depressing evolution of health politics and policy in the ObamaCare era.
ACA rightly sparked an ideological fight. It expands government regulating insurance markets, and transfers nearly $200 billion per year down the income scale to expand coverage to tens of millions of people. These provisions make ACA one of the most politically liberal measures in recent American history.
Alongside these inherently divisive provisions were hundreds of pages that might be called the junk DNA of health reform. Given the imperative to improve quality and to control costs, ACA includes a myriad of provisions that support pretty much every cost-containment idea proposed by health policy experts over the past thirty years: Accountable care organizations, a market-based competitive model of the new exchanges, funds for comparative effectiveness research to scrutinize care models and therapies, improved care coordination efforts for the most complex patients, funding for a new innovations center to evaluate and expand novel approaches to care, value-based insurance design, and more.
If no one had ever heard of ObamaCare, many of these same provisions would be in-play. Talk with any hospital executive, insurer, employer, public official, or almost everyone else within our $2.9 trillion medical care political economy. This person will tell you that American medical care is changing. Traditional fee-for-service medicine is too fragmented, provides too many incentives for costly or ineffective care.
Whatever happens to the politics of health care, medical providers will be increasingly compensated for care episodes based on outcomes and process quality measures. Moving in this direction will be unbelievably complicated and messy, with many missteps along the way. That’s why pilots of the sort Klein describes are so important, and why so many will fall short or prove unworkable.
These efforts should not, themselves, be identified with any particular ideology or political party. Many such efforts will surely be included in proposed Republican alternatives to the Affordable Care Act.
Bundled payment is a genuine big idea, but President Obama enjoys little pride of ownership. It’s been around for decades, and it’s no more central to ACA than it will be in any proposed Republican alteration to the health reform law. Medicare hospital reimbursement is, in part, a bundled payment system.
In 2008, the nonpartisan Medicare Payment Advisory Commission (MedPAC) recommended “a path to bundled payment.” Such proposals occasioned intense conversation among health policy experts and affected constituencies. But this was inside baseball, not an ideological or partisan matter. The Bush administration proposed various bundled payment approaches, for example in kidney dialysis.
Within a sane political world, the fate of such efforts would have little to do with ideological fights over near-universal coverage or Medicaid expansion. Yet here we are. A successful bundled-payment pilot would represent a political victory for the president. Its corresponding failure would represent a political defeat for ObamaCare. This is not a good development for the enterprise of health of health services research.
Perhaps health policy would be less polarized had ACA simply expanded coverage by raising taxes without attempting broad delivery reforms in the same bill. Then the straight-up ideological and redistributive battle could have been fought without damaging every other component of health policy with the predictable fallout.
I’m not sure such a separation would have been fiscally prudent or politically possible. It might, however, have avoided the place we inhabit right now, in which so many promising delivery reforms are tinged by their association with President Obama’s signature domestic policy achievement.