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The Senate Bill: Access But What About Costs and Quality?

An expert commentary from Richard G. Stefanacci, DO, MGH, MBA, AGSF, CMD


Under the recently passed Senate Finance Committee, access for health insurance would be advanced for both the insured and uninsured. Of course, this bill still has a long way to go before being signed into law. While the Senate bill focuses on access it pays, much less attention on cost and quality improvement.


For the insured there is the promise of more security and stability through:
• regulations against denial of coverage because of a pre-existing condition
• elimination of arbitrary caps on the amount of coverage over ones lifetime
• limits on out-of-pocket expenses
• required to cover, with no extra charge for routine checkups and preventive care


For the some 36 million uninsured Americans there is a requirement to obtain insurance, and they will be aided by insurance available through a Consumer Operated and Oriented Plan or CO-OP. These CO-OPs will be non-profit, member-run health insurance companies in all 50 states and District of Columbia that is different in scope and oversight from the government run national public option being proposed by the House. This CO-OP will be available with other plans through state-based exchanges.


To further assist the uninsured gain coverage, tax subsidies will be made available to individuals and small businesses and penalties will be levied against those forgoing this mandate. The penalty will be phased-in according to the following schedule: $0 in 2013; $200 in 2014; $400 in 2015; $600 in 2016; and $750 in 2017. It’s not clear whether or not these penalties will be sufficient to force healthy individuals into the insurance pool.


Costs are consider in the Senate bill although it is not clear how these provisions would change the slope of the climbing cost curve. Instead these cost reductions are mostly one time events more focused on funding the access expansion. These cost provisions focus on:

  • Fraud & Abuse
  • CMS Innovation Center
  • Medicare Cuts ($404B)
  • Excise tax on high cost insurance plans ($201B)
  • Malpractice Reform ($54B)
  • Administrative simplification
  • Medicare Prescription Drug Coverage

In actuality, the main reason that the Senate bill was so significantly below the $1 trillion is that unlike the House bill which includes some $228 billion to solve the longstanding problem of Medicare physician reimbursement, the Senate bill choose not to address this issue. The House bill assumes that Congress will continue preventing the provider cuts which have been set to go into affect for the last several years but instead been simply postponed in favor of slight reimbursement increases. As a result, the 22 percent reduction set for 2010 has once again been postponed.


Quality is also included in the bill with some continued focus on value based purchasing and bundling of payments to provide incentive for efficient and effective care. There is also creation of new delivery groups under the title of Accountable Care Organizations (ACO). These are similar to the PHOs (Physician Hospital Organizations) of years ago that were supposed to deliver better care without the administrative overhead of a traditional managed care organization.


The concern is that this bill misses the opportunity to decrease health care costs. Instead, it may actually accelerate costs through the significant increase of coverage. Real cost reduction can only come from promotion of a healthier population cared through a system delivering PCP dominion patient centered coordinated care.


If we do not achieve significant cost reductions now, we will in the future have costs reduced through rationing both on demand and supply side of health care delivery. On the demand side, the rationing will be forced meaning that patients will see a decrease in available benefits. On the supply side, if the significant provider reimbursement reductions eventually go through such many will likely opt out of the insurance system, the result of this large decrease in providers will be a forced rationing because patients will be unable to find the help they need.


This scenario can only be averted if health care reform is comprehensive covering not only access but cost and quality improvements.


Dr. Richard G. Stefanacci is the executive director of the Institute for Geriatric Studies at Mayes College of Healthcare Business & Policy at University of the Sciences in Philadelphia.


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