Healthcare Reform… the Job's Not Done

Guest Post by Rita E. Numerof, Ph.D.

By a narrow 5-4 margin, the Supreme Court upheld the constitutionality of the Patient Protection and Affordable Care Act (PPACA), using the argument that the individual mandate penalty is a tax.  The intent behind the individual mandate was to ensure that all Americans would secure healthcare insurance coverage.  For those without the financial means to do so, subsidies would be available.  The law went further and defined the ‘essential health benefits’ that should be included in all insurance plans regardless of whether or not individuals wanted them or needed them.  This is at the heart of the debate — the right of the Federal Government to mandate the purchase of products and services.

Although the ruling is not the end of the health care debate, for employers, the message here is very clear — move forward with implementing and complying with PPACA, since major portions of it take effect in 2014 and other provisions take effect later this year and in 2013. As a result of the law changes are taking place at a feverish pace.  Medical Loss Ratios have already been implemented by private insurers.  Over 60 Accountable Care Organizations as envisioned by the law have been formed and they are all getting ready for a fee-for-performance environment.  Acquisition of physician practices by hospitals is at an all-time high.  State Health Insurance Exchanges are in various states of development, with the potential to dramatically increase the individual insurance market — at significant cost to states and consumers.

Overall, PPACA has heralded a new level of bureaucracy (approximately 2700 pages worth) only adding complexity and cost to a system desperately needing reform.  While PPACA took on the insurance sector and attempted to create ‘access’ for uninsured Americans and coverage for pre-existing conditions, it did so at great cost, and didn’t deal with the fundamental issues of delivery and payment reform.  Ironically, and predictably, costs are rising for primary care with all this change and are projected to continue down this path.

Until we address fundamental business model changes in healthcare — focused on transparency, accountability and market based innovation centered on the consumer — nothing will really change for the better.  Everyone agrees on two things… the system is broken… and someone else needs to fix it.

Healthcare is an industry in transition — globally.  It faces sweeping regulatory change, changes in competition, technology and market expectations.  At these times, innovative companies able to challenge base assumptions about their business — their consumers, the products and services they offer and how they go-to-market — will be the winners.

Even as we go down the path paved by the Supreme Court decision, we need to be open to find ways to finish the job and do it right.

Rita E. Numerof, Ph.D. is president of Numerof & Associates, Inc.