Some worry healthcare reform won't cut costs

Los Angeles Times

Some worry healthcare reform won't cut costs

Even supporters of President Obama's plan to overhaul the system worry it's not focused enough on escalating medical bills, both for patients and for employers.

By Noam N. Levey
July 13, 2009

Reporting from Washington -- Although still publicly beating the drums for President Obama's healthcare overhaul, behind the scenes representatives of some of the biggest players in the game are beginning to express concern that it won't do enough about the major problem: runaway medical costs.

And, some say, the ballyhooed deals the White House recently struck with hospitals and drug makers to keep them at the negotiating table could make the problem worse.

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From the left, labor leaders are scheduled to have a closed-door meeting with Obama on Monday to push for more aggressive action to hold down costs.

"We are certainly for expansion of coverage. We think every American ought to have health insurance," said Terry O'Sullivan, president of the Laborers' International Union of North America, one of the most influential unions. "But if that doesn't come with making sure there is real prevention, if we're not talking about really controlling healthcare costs, this is going to be a train wreck."

At the other end of the political spectrum, business groups are stepping up pressure on the administration and its congressional allies to attack the cost issue more directly by changing the way hospitals, doctors and other providers are paid.

"Going into health reform, there was a lot of talk from the president on down that controlling costs had to be on a par with expanding coverage," said Steve Wojcik, vice president for public policy at the National Business Group on Health. "The priority on controlling costs seems to have fallen by the wayside."

Polls consistently show that Americans' biggest healthcare worry is escalating medical bills and insurance premiums. Obama himself has repeatedly promised that his campaign to overhaul the system will bring relief.

But the debate in Washington thus far has been dominated by how to raise hundreds of billions of dollars -- by tax hikes, if necessary -- to ensure that almost everyone has medical insurance. That emphasis is stoking fears that a historic opportunity to reform the system may be missed.

The skyrocketing cost of healthcare is a large reason that so many major interest groups rallied behind the president's effort.

Between 1999 and 2008, the average family with employer-provided health insurance saw its annual premium jump from around $1,500 to more than $3,300, according to data gathered by the nonprofit Kaiser Family Foundation and the Health Research & Educational Trust.

"Our No. 1 issue is to try to cap the rising cost of healthcare," said Joe Hunt, head of the International Assn. of Bridge, Structural, Ornamental and Reinforcing Iron Workers. "Every time we get a raise for our members, it goes into the health insurance."

For businesses, the rising costs have also been devastating, with the employer contribution to an average family premium more than doubling in the same period -- from nearly $4,250 a year to more than $9,300.

Acutely sensitive to public anxiety, Obama rarely begins a discussion about healthcare without insisting that healthcare spending must be controlled, a message he repeated last week even while out of the country.

On Capitol Hill, too, senior Democrats have pledged to tackle the problem, which has sent the nation's annual healthcare tab beyond $2.5 trillion and threatens to bankrupt Medicare in eight years.

Mammoth legislation being debated in the House and Senate includes new incentives to better coordinate care among hospitals and doctors, to cut costly hospital readmissions, and to evaluate what kinds of medical care yield the best results. There is also new money for prevention, which many experts say can save money in the long term.

But many of the proposals in the two healthcare bills released by Democrats are limited to pilot programs and research initiatives. (A third bill by the Senate Finance Committee is still being developed.)

House leaders envision a new "Center for Quality Improvement" and a "Center for Comparative Effectiveness Research" to analyze medical data. Similarly, the Senate health committee has outlined plans in its bill for a new "National Strategy to Improve Health Care Quality."

These new institutions would have no authority to force changes, however.

Both bills would create a new government insurance program that senior Democrats say could pressure providers to lower costs.

What is missing, critics contend, are bolder initiatives in the existing government Medicare and Medicaid programs that would reward doctors and hospitals that become more efficient -- and cut federal payments to those that do not.

"There are enormous opportunities to save money," said Ken Thorpe, an Emory University healthcare economist who has been advising Democratic lawmakers on the legislation. "What has been proposed is much too tepid."

Even the recent agreement between hospitals and the administration to cut federal payments to hospitals by $155 billion over the next decade does little to change the way providers are paid, said Mark McClellan, who headed the Centers for Medicare & Medicaid Services under the Bush administration.

Nearly all these projected savings are to come from across the board cuts in federal reimbursements, which critics fear could prompt hospitals to simply charge private insurers more.

"We need to make it increasingly uncomfortable to deliver care that is inefficient," said McClellan, who is helping to lead a bipartisan effort by former Senate majority leaders, among others, to push for healthcare reform.

Part of the reason such measures are not being proposed is political. Pressing doctors to accept guidelines on the most beneficial and cost-effective way to treat patients, for instance, instead of leaving such decisions to individual doctors, could alienate the American Medical Assn.

And the president and his congressional allies are trying to maintain the support of a broad array of groups.

But unless Democrats can do more to show their commitment to reducing costs, the political consensus that has sustained the Obama administration's effort may begin to crack.

"Cost is where the middle ground is," said Mark Blum, who helped lead liberal healthcare campaigns in Vermont and West Virginia and now directs America's Agenda, a partnership between labor unions and businesses.

"There is a sense that we need to refocus," Blum said.

noam.levey@latimes.com

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