UPDATE ON ISSUES REGARDING HEALTHCARE REFORM

Based on an article in Time magazine a lot of economists have said that it will be impossible to bring healthcare spending under control until everyone has medical insurance. The reason is because many of the uninsured wait until they're really sick and then go to an emergency room to obtain treatment which is extremely expensive.

Even though the congressional budget office has stated that health care reform should reduce costs there are more than a few people that dispute this. The real reason we have significant acceleration in healthcare costs is because of our wasteful inefficient payment system and very expensive approach to medical care. We need to be able to transform an industry that basically rewards volume. The only real way to control costs is to quit paying providers for every procedure they perform and base their pay on positive health outcomes for their patients. That can make a huge difference on reducing costs as has already been shown to work very effectively in the Mayo and Cleveland Clinics. They actually pay their healthcare practitioners salaries but pay them quarterly bonuses based on positive patient health outcomes rather than how many procedures have been performed for the patient. Another reform idea that is expected to bring costs down is the tax on the country's most expensive health insurance plans known as Cadillac plans. A lot of these plans basically have minuscule or virtually non-existent co-payments and out-of-pocket spending so there's no incentive for patients to seek cost effective care and it creates significant abuse of the healthcare system. There will be a tax on these plans so that will undoubtedly force employers and individuals to consider cheaper policies which should save money in the system overall.

Funding for a medical home concept will create a team based approach to deliver health care which will disperse responsibility for health care decisions across a broad range of providers and facilities, rather than just the physician. This concept is already being tested to manage chronic health conditions such as heart disease and diabetes and is focused on providing quality care, rather than the number of procedures performed.

The legislation allows private projects to explore various payment reforms that will be launched within Medicare to see how they work and if they're successful then they can be implemented across the nation. Medicare is in a position to be considered a testing ground for developing and implementing some of these new healthcare approaches that could create the most promise for the future. The new law also addresses wasteful subsidies that go to private insurers that contract with the federal government to provide Medicare-type benefits to seniors known as Medicare Advantage plans. Many times they require lower co-payments than traditional Medicare and provide extra benefits as well. These come at an extra cost and a lot of experts feel the government pays about 14 percent more for each Medicare advantage beneficiary than a traditional Medicare patient. These overpayments will gradually be phased out beginning in 2011. The Medicare advantage plans then will feel the pinch and will have to find a way to continue coverage without the government's subsidization anymore. Further cuts with Medicare will be made through what they call productivity adjustments where they shave small amounts off the annual growth and reimbursements to hospitals and other facilities.

The new law will set up an independent board to study clinical outcomes and evidence and come up with ways Medicare can reduce spending without sacrificing quality or access and they will pay actually bonuses to the Medicare advantage plans with the best clinical outcomes and highest patient ratings. Making this shift on a national level isn't going to be easy because many healthcare administrators acknowledge that as long as the fee for service reimbursement structure remains in place with private insurers doctors will be forced to practice two kinds of medicine: One in which they are reimbursed on the basis of volume of services they provide and another based on positive patient health outcomes and efficiency of their care.

Establishing health insurance exchanges on a state-by-state basis will allow people to shop around choosing from a selection of insurance policies much as the federal government employees do now including members of Congress. Some states will choose to operate these exchanges on their own while others might join up with their neighboring states in regional operations so there's a lot of talk about how this may play out over time. Over the longer term as more parts of the new legislation go into effect everyone will be watching closely to see whether the healthcare reform is working as intended.