The Major Challenges of Healthcare Reform

The House came out with its initial Healthcare reform bill yesterday. Kudos for getting it out. By all indications it is an ambitious plan that address some of the core issues in our healthcare system. I haven’t read enough to comment much on it, but I want to use this as a jumping off point to lay some foundations for later discussions.

One of the central challenges to healthcare reform is the magnitude of the failure of our current system. We have three major challenges that need to be addressed at some point: cost, coverage, and quality. If you want to throw in a paean to healthcare consumers like you and me, you can also add “choice.”

Cost:

As I noted in yesterday’s entry, we spend a very high percentage of our GDP on healthcare—according to The Commonwealth Fund, “The U.S. spends 16 percent of gross domestic product (GDP) on health care, compared with 8 to 10 percent in most major industrialized nations.”

Not only do we spend more, but the rate of annual increase of healthcare expenditures is also higher. Thus, we spend more than others, and our spending begets more spending. In an effort to make my posts more manageable, I will address some of the sources of our higher costs later, for now, I think it is clear that “cost” needs to be tackled somehow.

Coverage:

In yesterday’s entry, I also touched on coverage. We have about 1/4 of our country that either lacks coverage, or has inadequate coverage. Taken as a stand alone issue, covering more people, obviously, costs more. More premiums, most services delivered, etc. Big dollars, especially when you consider the number of folks we’re talking about.

Quality:

Measuring quality can be a bit of a sticky wicket, so be wary whenever you hear anybody talking about quality. Chances are folks are not talking about the same thing.

Quality can take a number of forms: There is clinical quality (eg. HEDIS measures), there is quality of life (QALY), a bazillion different quality measures for hospitals and individual MDs (both at the aggregate and specialty level). And, these are just the things that can be measured. Keep in mind that there are a ton of other subjective measures of quality that cannot be captured. As a parent of school-age kids, a “good school” doesn’t mean my kids will have a “good teacher.”

Oh….don’t forget that quality measurement and improvement initiatives, well, they cost money, too. Sometimes lots of it.

Summary:

So looking at these three central pillars of healthcare reform we have countervailing forces: We want to keep costs down, expand coverage, and improve quality. It is nigh on impossible to do one without compromising the others.

And here is the crux of healthcare intelligence: As a zero sum game, action is impossible. Only when we start doing things differently, can we really start to change the economics of the system. This means in an ideal world, we would address multiple domains (cost, coverage, quality) simultaneously. But no matter what, something HAS to get done—the complexity of our system means that everyone wants change, but no one wants to lose their revenue cash cow. Given the long-fuse, big-bang nature of healthcare reform, we’re going to have to decide to do something long before we see any of the results, which means big outlays of cash. But where to start?

Most of the debate that I’ve seen thus far is focused on a public plan or no public plan. This means the real fight at this stage is over coverage. This is a good first step. My $0.02 is that we can’t start reforming the system until everyone is part of it. Once that happens, we can focus on the really interesting stuff.