New England Journal of Medicine Blasts Obamacare

Friday, 19 Oct 2012 01:36 PM

By Nick Tate

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Obamacare will do little to address two of the three major problems facing the U.S. healthcare system — holding down costs and boosting the quality of care for patients, according to a scathing article published in this week’s prestigious New England Journal of Medicine.

The “perspective” piece notes that while the Patient Protection and Affordable Care Act is likely to address the third major challenge facing healthcare — expanding coverage to uninsured Americans — the goals of addressing costs and quality “remain aspirations and promises” without much else in the way of detailed provisions or proposals.

Editor’s Note: New 'Obamacare Survival Guide' Reveals Dangers Ahead for Your Healthcare

“Although the ACA expands coverage, it ignores the structural problems in the organization and reimbursement of care — a limitation that is disappointing but not surprising,” said the editorial’s author Gail Wilensky, an economist and a senior fellow at Project HOPE, an international health education foundation. “Adding more people to the insurance rolls is politically and technically easier than finding a way to ensure that care is effective, high-quality, and affordable for both the recipients and taxpayers.”

Wilensky said Obamacare’s primary accomplishment is likely to be that some 30 million previously uninsured people may end up with coverage — about half through new state insurance exchanges and the other half through Medicaid expansions.” But she argues the law's controversial individual mandate — requiring all Americans to have insurance coverage or to pay a penalty tax of several hundred dollars — may instead encourage people to postpone buying insurance until they need it. That’s because insurers will not be able to refuse coverage to people with pre-existing conditions, or charge them higher rates.

The non-partisan Congressional Budget Office has projected about 11-12 million Americans will be subject to the individual mandate’s penalties — and half will simply opt to pay the tax.

“The penalty for not having insurance is very small, particularly for younger people with modest incomes,” Wilensky noted. “Given the choice, many people may put off buying insurance to save thousands of dollars in premium payments”

Special: Should Obama's Health Plan Be Overturned? Vote Here Now!

The NEJM editorial also criticize other aspects of Obamacare and suggests more market-based approaches, such as those proposed by Democrat Sen. Ron Wyden of Oregon and vice-presidential candidate Paul Ryan, would more effectively reform the nation’s healthcare system.

Among the other key points of the editorial:

FEE-FOR-SERVICE: Despite widespread recognition that fee-for-service reimbursement rewards doctors and providers for the quantity of healthcare services delivered and not high quality, Obamacare does little to change reimbursement strategies now used in Medicare. “Much of the coverage expansion is financed through Medicare budget savings, which are produced by reducing the fees paid by Medicare to institutional providers such as hospitals, home care agencies, and nursing homes,” Wilensky noted, “but using the same perverse reimbursement system currently in place.”

PHYSICIAN PAYMENTS: Obamacare contains no reform of the way physicians are paid for some 800 specific services, which is “the most dysfunctional part of the Medicare program,” she argued. “This system rewards the provision of highly reimbursed services without consideration of whether clinicians are providing low-cost, high-value care for patients.”

MEDICARE CUTS: Obamacare provides Medicare “productivity adjustments,” but unless these institutions find ways to reduce costs, lower Medicare reimbursements will force providers to bargain for higher payments from private insurers. “Eventually, seniors' access to services will be threatened,” she said. “The Medicare actuary expects that 15 percent of institutional providers will lose money on their Medicare business by 2019, and the proportion will increase to 25 percent by 2030.”

FEW QUALITY PROVISIONS: Although some reforms are included in the law, such as value-based purchasing and accountable care organizations (ACOs), that could drive up quality while holding down costs, she said the amount providers will be paid are small and not likely to lead to many changes.

NO MARKET-BASED REFORMS:
Like Medicare, Obamacare relies on regulatory methods, instead of harnessing market forces, to promote spending reductions and improve quality of care. If that approach fails, the law authorizes an Independent Payment Advisory Board to reduce payments to clinicians and institutions. Although Congress can override the IPAB's recommendations, it can do so only by a three-fifth’s “super majority,” and only if it acts within a limited time and comes up with comparable savings.

Editor’s Note: New 'Obamacare Survival Guide' Reveals Dangers Ahead for Your Healthcare

“What is needed are reforms that create clear financial incentives that promote value over volume, with active engagement by both consumers and the healthcare sector,” Wilensky added. “Market-friendly reforms require empowering individuals, armed with good information and non-distorting subsidies, to choose the type of Medicare delivery system they want.”

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