United States: No Matter The Outcome Of The Supreme Court’s Review Of Health Reform - The Health Care Community Should Consider Five Illustrations Of "The New Normal"

Last Updated: May 11 2012
Article by Ilisa Halpern Paul

Since last November – 365 days from the 2012 election to be exact – at the invitation of various health care providers, I have been going around the country giving a "crystal ball speech" about the future and outcomes of government spending, health reform, and the election. Whether I speak to an audience in Chicago, San Francisco, New Orleans, or Florham Park, New Jersey, the most frequently asked questions I receive are: "What will the Supreme Court do?" and "Is there any hope that they can get something done and start to agree in Washington?" The answer I give to the former is my favorite answer to give: "It depends." The answer I offer to the latter is "I hope so – and if I didn't think so I wouldn't keep doing what I do."

In all seriousness, there are four separate but related questions before the Supreme Court and a number of different combinations and permutations that can result from the court's deliberations and determinations. Tens of thousands if not millions of people are making their guesses and sometime in June we expect we will know who is correct. In the meantime, I offer these five examples of the new playing field for those in health care:

  1. We are in a period of fiscal contraction – call it austerity, compression, retraction, or budget tightening – these are not times of Congress taking steps to expand programs or increase funding. As such, it is important to recognize this fiscal and political reality and modify your expectations, requests, and approaches to policy makers accordingly.
  2. So goes the economy, so goes provider reimbursement. The nation's tax base is at an all-time low – meaning the available pie is shrinking – while entitlement spending grows, especially within federal health care programs (Medicare, Medicaid, VA). Using baseline FY 2010 estimates from the Office of Management and Budget, entitlement spending is approximately 60% of the budget while non-defense discretionary funding is 15% and defense spending is 20% (remaining 5% is interest payments). It is a basic math issue: We cannot balance the budget only paring down the smaller, non-entitlement parts of the pie. So, if your interests are in the entitlement slices, expect those – at some point – to shrink.
  3. Health care has become a "pay-for" for health care. When I first arrived in Washington more than 20 years ago, most Members of Congress did not want to pit members of the same community against one another or pick among their children – hence the holistic approach to the doubling of the National Institutes of Health (NIH) budget. Those also were much better economic times. Now given current circumstances and the fact that health care spending is crowding out other parts of the budget, Congress is looking and finding money from within other areas of health care to pay for things like the "doc fix." This trend likely will continue ... Indefinitely.
  4. Innovation in care delivery is the key to survival. The days of paying for volume are over. Patients, insurers, and the government want value and quality and providers need to respond to the marketplace. Those leading the field in innovative care delivery models and real outcomes based, patient-centered care – that measurably decrease costs – will do well from both private and public payor perspectives.
  5. Don't necessarily fear the sequestration – some alternatives could be worse. See items one, two, and three above. Don't get me wrong – it's bad ... And depending on where you reside and in which pieces of the pie, it's really bad ... for non-defense discretionary spending the estimates are 10% cuts across-the-board, and for Medicare (the reimbursement side of the equation) cuts are capped at 2%, but for many providers 2% poses a threat to their ability to maintain access to care. But it could be – and can get – way worse. Taking a page out of the earlier example of doubling the NIH playbook of collaborative advocacy, the health community is banding together with other communities (e.g., energy, environment, education, transportation) and those in the non-defense discretionary spending slice of the pie to work together to protect funding.

While the crystal ball remains cloudy with respect to the Supreme Court, the future of health care spending generally is pretty clear: public and private payors will want more for less and somehow, as a nation, we have to get health care costs and spending under control. The reality of current and long-term fiscal projections is that the intense budgetary pressures on the country will have as much – if not a greater – impact on the future of health care than anything those nine cloaked justices decide in June.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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