Re health care hullabaloo: It’s the costs, stupid!

The political and legal wrangling over Obamacare gained in intensity last week as the U.S. Supreme Court weighed its constitutionality and presidential candidates made it their central issue.

There’s great irony in all that high level attention, because the political commotion largely skirts the central issue surrounding health care in America. That issue, as we all know, is the hyperinflation that will take U.S. health care costs from $2.6 trillion to more than $5 trillion in 10 years.

Did it occur to the chefs cooking up the concoction at the federal level that there is an inverse correlation between access and cost/price? As costs ran amok over the last couple of decades, access grew to be a national problem.

The Democrats don’t think cost management. And Republicans have been AWOL on that all-important dimension as well; they just know what they oppose.

Little in the misnamed Affordable Care Act addresses cost. It addresses insurance and access, and it moves money from some segments of Americans to others to cover soaring bills. The young healthies will pay more if the mandate stands. The one-percenters will pay more. So will private sector payers as providers continue to shift costs their way to offset the lower-than-cost payments for the millions of Americans added to Medicaid roles.

Ironically, again, the private sector is racing forward to build a different business model for the delivery of health care. Businesses are taking charge, because they have no other good choice. Their innovations are becoming a replacement for the busted model that threatens to drive the country and individual citizens to insolvency.

The developing business model at leading private companies embraces:

• Consumer-centric plans with built-in incentives and disincentives, without which no economic system works. (Medicaid has none; Medicare has few.)

• Value-based purchasing that steers employees to providers who offer the best quality, service and price. The eye for value often selects clinics and hospitals that practice lean disciplines, the approach that has transformed manufacturing. One such provider now offers warranties on its surgeries.

• Proactive medicine that keeps people out of the hospital, as opposed to the reactive, fix-it-when-broke system now in practice. On-site clinics are being installed across the nation. There’s a stampede toward holistic care in those clinics.

• Primary care restored as the principal vehicle for care vs. the specialty dominated model that prevails in this country. Other countries, with much lower GDP expenditures for health care, base their systems on primary care.

• A transparent market for health care value vs. a chaotic non-market where prices vary 400%. Private companies are insisting on all-in, bundled prices, and they are getting them.

That’s a lot of change, but a lot of change is in order. Even local units of government are getting aboard real reform, along with a few states.

Most of these proven concepts have failed to dent the national debate, almost as if the private sector reforms at the ground level were invisible.

The pragmatic, proven innovations are bending the inflationary trend line. (Safeway has flat-lined its costs for six years.) They could be grafted onto Obamacare or Romneycare. Indeed, such savings could easily pay for universal coverage – without having to rely on possibly unconstitutional mandates as a funding mechanism.

The new business model is all about management science, not political science.

The sweeping reforms at the grass roots level won’t affect the federal debate much in this election year. In the nature of sound-bite campaigns, that debate will be simplistic: are you for or against ObamaCare.

But the private sector reforms will, of necessity, be adopted in the next decade. They will have to be adopted, because the financial pain — the crowding out of investments in education, defense, the environment, even in health care coverage as more doctors refuse to accept unprofitable federal payments – is too great to do otherwise.


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