Health Care Reform Team E Keller Graduate School of Management June 7, 2010

Health Care Reform and Consumers

Health care reform constitutes the process by which the social policies that regulate health care are created and or modified. In essence, health care reform is driven, to a large extent, by regulatory reform, consumers, and practitioners. Where Health care reform, represents a subset of health care policies, it is important to recognize non-regulatory drivers of health care reform such as the impact of market forces on the level of quality of care, as with the Leapfrog group, and the recent report from the Institute of Medicine regarding medical errors (Schuster, 2008). Health care reform can lead to changes in the degree to which the government controls and manages access of the population to health care and the way in which health care is financed (Mechanic, 2006). Many have passed opinions regarding the role and responsibility of the government in providing health care services, and the underwriting of such services, such as those can be seen in the United States and Canada, do not preclude health care reform from having a profound impact on patients, the public, providers, and payers of these very different systems. Health care reform and oversights has led to diminished independence of the medical profession. This, in turn, has resulted in the current system by which health care providers

are reimbursed for the services and resources that they provide. At one time, the medical profession controlled entry into the health care system and set the prices that would be charged for the delivery of their services (Geyman, 2006). The medical profession determined which hospital a patient would be admitted to, which laboratory a patient would utilize, and where a patient would go for other radiological and ancillary services. Pricing was led by the costs incurred by the provider. To determine pricing, the provider determined its costs and the desired profit margin. Regulation of health care, at that time, was focused on the licensing and accreditation of health care providers (Guglielmo, 2007). In addition, the medical profession determined which hospital a patient would be admitted to, which laboratory a patient would utilize, and where a patient would go for other radiological and ancillary services. Pricing was led by the costs incurred by the provider. To determine pricing, the provider determined its costs and the desired profit margin. Regulation of health care, at that time, was focused on the licensing and accreditation of health care providers (Guglielmo, 2007) However, in the 1970s, because of economic recession and inflation, health care reform became focused on health care cost containment. Primacy was given to the development of

reimbursement policies that would influence the behavior of providers, utilization of health care services, and the attendant medical costs, would be reduced. It is believed no matter what happens with health care reform inequities in the delivery of health care will persist. Some argue that a major problem overlooked by most reform efforts is the chronic undersupply of minority and female physicians. Regardless of good intentions, a health care delivery system reliant upon physicians who are, by and large, white, upper-class, able-bodied, and heterosexual males will inevitably yield poorer health care outcomes for patients who fall outside these categories. Others argue that even if a ready supply of physicians outside these privileged groups existed, inequities sustained by the existing system of medical beliefs remain unaddressed. These barriers stem from the nature of medical training and the ways in which medical knowledge is applied within health care delivery (Mechanic, 2006). Medical professionals are trained to complete the process of diagnosis and treatment by taking symptoms presented by a patient and using make a diagnosis for which they can then prescribe treatment. Patients who receive the best care are those who can most skillfully cooperate in the construction of these standardized medical narratives. Patients who are unfamiliar with the appropriate medical terms and phrases, whose

cases are complicated, or who attempt to present alternative narratives to the standard medical ones are less likely to receive good care (Geyman, 2006). It is believed adding 30 million people into the health care system will translate into a great amount of economic activity and opportunity for millions of Americans: jobs for many doctors, nurses, technicians, administrators and new jobs in research, information technology, and medicine -- not to mention the positive impact it will have on supporting industries and professions. Adding ten percent of the entire US population into a system of continuous preventive care will undoubtedly lead to job and infrastructure growth in an industry that l embodies the best way to improve the general welfare of our nations families. Therefore, a trillion dollar ten-year health care reform package serves double purpose -- not only does it begin to take the steps necessary to provide accessible and affordable health care for everyone, but it also acts as a massive jobs program and stimulus to uplift an economy struggling to recover (Health-care bill). Although Health Care Reform has its disadvantages and advantages it is still viewed as the process by which social

policies that regulate health care are create and driven by regulatory reform of the federal government.

Health Care Reform and the Health Insurance Industry

The health insurance industry will face intense regulatory scrutiny due to the new Patient Protection and Affordable Care Act and its companion, the Health Care and Education Reconciliation Act of 2010. PPACA would create a new system of

health insurance exchanges that would help individuals and small businesses buy subsidized, standardized packages of health benefits. The new exchanges will change the level competition, the researchers say. The effects will be different in each state, and they may include reduction of distribution costs and potentially tempering of rate increases in the individual and small group insurance markets, the researchers add. While new regulation does not necessarily go into effect immediately, it is clear those health insurers now face increased scrutiny and a new layer of regulatory complexity, researchers at Milliman, write in an analysis of the new laws. Health plans will have to focus on minimum loss ratios and administrative efficiency and will have to balance challenging cost dynamics against the need for affordable policies.

Patient Protection and Affordable Care Act of 2010 (PPACA) has left many insurance questions stumbling around for answers and clarification from the federal government. For example, at

Health Care Service Corporation (HCSC) work is under way to help their clients take advantage of PPACAs Early Retiree Reinsurance Program, in which groups that offer coverage to pre65 retirees can be reimbursed by the government for some claims. This program goes into effect for claims starting June 1, 2010, although the employer application will not be available from the government until late June. Several of HCSC employer groups are very interested in applying for this reimbursement; HCSC is left explaining this delay to their accounts as they will be assisting them with claims reporting and other services. Another discrepancy for PPACA is the new minimal Medical Loss Ratio (MLR) rule. This guideline will require that,

starting Jan. 1, 2011, insurers spend at least 85% of large group premium revenue and 80% of small group and individual policy premium revenue on medical care and health care quality improvement activities. Health insurers have many questions regarding the MLR rule. Questions such as, what does the

government consider as medical care and health care quality improvement activities? offer many guidelines. This provision is vague and doesnt

PPACA also refers to grandfathered plans which is a health plan in existence on the date PPACA became law, March 23, 2010. Grandfathered plans are subject to some, but not all, of PPACA's reforms. The reforms that apply to grandfathered plans include restrictions on pre-existing condition limitations, restrictions on lifetime and annual limits, expansion of coverage for adult dependent children, and waiting period restrictions. A number of PPACA's requirements will not apply However, no one knows yet whether, and

to grandfathered plans.

to what extent, a grandfathered plan will retain its grandfathered status once the employer makes material changes to that plan (other than changes to comply with mandatory PPACA requirements.) Accordingly, until more guidance on the grandfather rules becomes available, insurers and employers will want to tread carefully in making material changes to grandfathered plans.

References Mechanic, D. (2006). The Truth about Health Care: Why Reform Is Not Working in America: New Brunswick, NJ: Rutgers University Press: 145-189

Schuster, A. (2008). How Good Is the Quality of Health Care in the United States: The Milbank Quarterly: 76(4): p517563

Geyman, P. (2006). Myths as Barriers to Health Care Reform in the United States: International Journal of Health Services: 33(2):

Guglielmo, W. (2007). Managed care reform? Surebut don't look to Washington: Medical Economics: 23(6): p4041p315329.

http://www.nytimes.com/2010/03/22/business/22bizhealth.htm New York Times. Health Care overhauls Booms Hospital. Retrieved 5-9-2010

Retrieved from: http://www.examiner.com/x-24957-Progressive-Examiner~y2009m12d25-Healthcare-bill-willstimulate-economy-and-create-tens-of-thousands-of-jobs Health-care bill will stimulate economy and create tens of thousands of jobs