Princeton healthcare economist Uwe Rienhardt predicts that if the Affordable Care Act — commonly referred to as Obamacare by both sides of the aisle — fails, those seeking a federal solution will wander in the healthcare desert for at least another 20 years while individual states assume the role of expanding health insurance coverage to reduce the number of uninsured, and the more critical effort to rein in health care costs.
New York would be among the states that are better prepared to enact meaningful health care reform, Rienhardt told an audience of about 500 at a lecture at the University at Albany, sponsored by Business Council member CDPHP.
“Since the political middle ground is disappearing, if Obamacare fails, don’t count on anything from the feds for at least 20 years,” Reinhardt said in his speech. “The burden, then, falls on states and communities. Assume the feds won’t help you.
“Albany can do that,” Reinhardt added. “You can be the wave of the future. The status quo is not acceptable. You just need community leaders and the elite to do this. The average person cannot do this.”
He said that is because the state already has a relatively small number of uninsured, due to existing programs including a Medicaid program with relatively high income thresholds, and a tradition of regional health system planning. During the 1970s and 80s, several regions of the state, including Rochester, had strong community health care planning programs with employers, providers and community leaders working to restrain health care costs, by negotiating fees, determining the need for new facilities and controlling the medical technology “arms race.” Reinhardt said regional planning efforts could again be effective at controlling costs.
Responding to Reinhardt’s comments, John Bennett, MD, president and CEO of CDPHP, says it’s urgent that employers help bring down the cost of health care.
“Employers are sorely needed in this debate, because they pay the bills. They need to demand of us better value,” Bennett says.
“The competitive market has not lowered costs. Do we need a new hospital building every five years? No. Do we need a CT scanner on every corner? I think not,” Bennett says. “But we don’t even have that discussion today.”
Reinhardt presented an overview of the changes in medical spending that led to the need for reform. Health care spending grew at unsustainably high rates from the late 20th century into the early 2000s. Recent rates of increase have been tempered by the recession. The weak job market has enabled employers to make cost-saving changes to their health benefit plans that would not be possible if employees were able to easily change to other jobs at employers with more generous benefits.
Reinhardt said there is a good chance that healthcare.gov, the online health insurance marketplace that is at the center of federal health insurance reform, will not be fully functional by the November 30th date promised by the administration. “When you start working in January and you need something to work in October, you are almost guaranteed failure.” The economics professor assigned the Obama administration a grade of “F’ for the Web site implementation, “because there is no grade of F-minus.”
About the people who provided the poor engineering behind HealthCare.gov, he said, “They are all, like me, geeks. [We are brilliant], but we can’t manage a damn thing, that’s for sure,” he said. His suggestion is that the Obama administration should have brought in a retired health insurance CEO, “someone with a willingness to chew through slacking employees before lunch,” he said.
He assigned New York’s online portal a grade of “A.”
“If the federal one had worked like New York, we would be in good shape,” Reinhardt said.
On the up side, he said, relatively few people are affected by the online marketplaces, or exchanges, and they are just one part of the federal health law, which has made progress in areas like payment reforms and electronic medical systems.
“To say all of Obamacare is a failure is not right,” Reinhardt said.
The big question that will determine Obamacare’s success or failure, he said, is whether young adults enroll in health plans rather than go without insurance and face penalties under the law. If they don’t sign up, then insurance companies will need to raise premiums to cover the costs of older, sicker people. Higher premiums will further drive young people away. And then premiums will go up further, marking the beginning of what Reinhardt called “a death spiral.”