The nation this week hears an address from President Obama that may make or break healthcare reform efforts. The August recess was a rough one for the President and the Democrats in Congress. The anxiety voiced at town hall meetings, whether you agree with the concerns or not, gave many pause about moving forward on the path (and there are multiple and varied paths) that Congress has indicated. The Democrats themselves are not in agreement on a key reform proposal – the public plan option. House liberals tend to support this, and the more conservative House Blue Dogs don’t. Support for the public option among Senate Democrats is even more tenuous.

So it is up to the President to hit the reset button and convince the country that healthcare reform is needed. Some critical items I will be listening for include: Does the President support the public option? (We know he does, but is it a line-in-the-sand item for him?)

• How will healthcare reform be paid for? (Or, who’s ox is going to be gored?)
• What is the President’s expectation on a time frame to pass healthcare reform? (As I have written in the past, every day we inch toward the House elections in 2010 makes the vote more difficult for each member of the House.)
• What is the reaction of the Republicans? If the public plan option is watered down or abandoned, will they support the plan? Is bipartisanship a possibility?
• What role will insurance companies play in reform? So far, hospitals, doctors and the pharmaceutical industries have stepped up to the plate, conceding some givebacks, but we have yet to hear what insurance companies will give up.

Stay tuned…

There is an amazing public debate going on about national healthcare reform. Some of it is heated. Some of it is based on truth. Some of it is based on misstatements of fact (to be kind) or inaccuracies (less kind) or outright lies (opposite of being kind). But almost all of it is based on a very passionate debate on what is best for our citizens when it comes to healthcare reform, and who can argue that a healthy debate is not a good thing?

I thought I’d take a moment to weigh in on some facts and observations.

1. Our country spends 17 percent of our Gross Domestic Product on healthcare. This is far more than any other industrialized nation. I just read an article about the Scandinavian healthcare system, and the three countries that comprise Scandinavia each spend about 9 percent of their GDP on healthcare. Now I will deviate from facts and suggest that 17 percent is simply not sustainable. That percentage is projected to grow dramatically and will become a weight on our economy. We spend far more than other countries, and yet we still don’t provide healthcare coverage to all. We need to reform our healthcare system, and if not now, then soon.
   
   
2. The option of a government plan for health insurance is scaring people. Why? Because many citizens are not convinced that the federal government can do a good job (often pointing to the Postal Service, which does a good job by me.) On the other side, some people point to our fine military and note what a terrific and heroic job they do on a day-to-day basis. Others point to Medicare and indicate that it is one of the largest governmental payers already and the federal government doesn’t mess that up. They go on to point out that Medicare has an exceedingly low overhead for administering the entire program (3 or 4 percent) as compared to most insurers which can range between 15 and 25 percent.
   
   
3. The so-called “Death Panels” never existed, but if they ever did, they are dead. The provision would have paid doctors to have conversations with patients regarding their options at the end of life. This isn’t a bad thing – I think every individual should consider their personal choices about end-of-life care and share their decisions with their families and physicians. Sometimes at the end of life, hospice is the best thing if the patientso chooses. New Jersey ranks 33^rd in the nation in use of hospice care, and we should do better for our citizens.
   
   
4. Health insurance coverage does not equal access to healthcare. I worry that if all Americans were insured tomorrow we would not have enough primary care physicians to treat everyone and would have long wait times for appointments. Some in Massachusetts are experiencing this with up to six-month wait times. Those wait times aren’t necessarily the fault of Massachusetts’ healthcare reform law, but rather the lack of resources to fully support the plan. We need to devote resources to ensure we have enough doctors, nurse practitioners and physician assistants to provide access to healthcare for all Americans. (And that’s needed regardless of whether Congress passes a reform bill.)

The rapidly escalating debate over healthcare reform prompted one reader to send a poignant and sobering response to my last post. It’s a reminder to us all that this debate is still about families and their ability to secure the healthcare coverage they need.

Tracey, a New Jersey mother, shared her frustration with the current system and the worries she has for her young son, who has a rare form of leukemia. She has good insurance (for which she pays very high premiums) but knows that someday her son’s extensive care will reach the insurance company’s “lifetime maximum benefit.” She lives in fear of that day.

She writes: “I know that my insurance company is tabulating and calculating every penny expended on my son. One day, a few years from now, the insurance company’s ‘death panel’ will send me a letter that says: ‘Your son has reached his lifetime maximum benefit. He will not receive any further insurance coverage.’

And she continues: “Why won’t anyone address the real issue of the insurance companies making record profits (and they’ll continue to do so)?”

Unfortunately, concerns like Tracey’s are getting lost in the overall debate over healthcare reform. Some of that debate is vitriolic, but some of it is borne out of real concern by citizens.

In reality, Tracey raises an excellent point about the responsibilities of insurance companies when it comes to healthcare reform. Of course, no one industry is to blame for this broken system, but everyone must share in designing a better system for the future. So far, we’ve seen hospitals, physicians and pharmaceutical companies offer financial concessions to achieve healthcare reform, but not much from the insurance industry. There just doesn’t seem to be the political will to take on this interest group.

I believe healthcare reform is desperately needed and I’m frustrated that the discussion has gone so far off track. We need to get back on course because the current system remains unsustainable – for hospitals and others who provide the care, for our government, and most importantly, for people like Tracey and her son who face the crushing costs and others pressures from their insurance companies.

I wrote on this blog a while ago that I viewed the glass half full when it came to healthcare reform. I thought we might actually accomplish health reform by this fall. Well, it’s now late July, and I unfortunately have changed that outlook. A friend of mine told me she was surprised by my earlier optimism, and I guess she was right. Here are four key reasons why the prospects have dimmed:

1. Controversy over a public health insurance plan. There are several reform plans floating around Washington, D.C., but every version includes some form of a public insurance plan. The theory is that a public plan would provide another insurance option for those lacking insurance, and since it wouldn’t need to generate large profits, its medical loss ratios (a fancy way of saying how much of every dollar is spent on medical care versus overhead) would be controlled and it would have low overhead like Medicare. Insurance companies, worried about the competition, have targeted this as their number one priority to fight. Organized labor, however, wants the option. My national organization, the American Hospital Association, prefers the Senate Finance Committee’s version of the public plan, which is organized in a co-op fashion and would allow providers to negotiate rates with the co-op. But in any event, you have a clash of titans on this issue with the insurance industry versus labor.
   
   
2. The cost of healthcare reform. The President has indicated he will not sign a bill unless it is budget neutral. However, the well-respected (and nonpartisan) Congressional Budget Office came out about two weeks ago and pointed out that the bills it has been able to “score” (a Washington term for figuring out the cost of the legislation) actually cost more money. Which leads us to item 3…
   
   
3. The “Blue Dog” fight. The “Blue Dog Coalition” of the House of Representatives is made up of approximately 51 fiscally conservative Congress members. Although the Democrats control both houses of Congress, the Blue Dogs are a necessary part of that majority. The CBO determination of a couple weeks ago has made the Blue Dogs question the efforts in Congress, and they are fighting hard to cut more costs in the reform bills.
   
   
4. Medicaid expansions. Earlier drafts of the various reform bills called for Medicaid expansions. Medicaid is a program for low-income people which is jointly funded by the federal government and state governments. In New Jersey, the cost is shared 50-50. So, no surprise, the nation’s governors have raised alarms about this element, pointing out that they too have very serious budget deficits to deal with and cannot take on the added expense of Medicaid expansion.

So some serious fault lines are emerging. The President is using his bully pulpit every day to talk up the importance of healthcare reform to the American people. His goal was to have bills passed through both the Senate and the House before the August recess, but it appears that at least one of the houses won’t make that deadline. I think a great deal will be determined by what happens when members of Congress take their August recess and go home to talk to their constituents about what they think of national healthcare reform. The New Jersey delegation has done a good job of reaching out to people, holding town hall forums around the state.

I’m not sure where my glass stands right now – half full or half empty. I still ardently hope that we can achieve national healthcare reform, but we need to get it right and not rush for the sake of rushing. Far too much is at stake for New Jersey’s healthcare system and the people who depend on it.

Some days it’s hard not to be cynical, but this week I became an optimist again on the topic of healthcare reform. I was lucky enough to be invited to a forum hosted by New Jersey’s U.S. Sen. Robert Menendez to discuss the hospital industry’s perspective on healthcare reform. He invited hospital CEOs from across the state of New Jersey to the Cook College Campus Center (my alma mater, so I loved going back) to discuss key items we think lawmakers must consider as reform is debated. Sen. Menendez is a member of the Senate Finance Committee, and all roads to reform pass through his committee. Last Monday, I had the opportunity to discuss health reform with New Jersey Congressman Frank Pallone at Meridian Health System’s Jersey Shore Medical Center. Congressman Pallone is chairman of the Subcommittee on Health of the House Energy and Commerce Committee. Again, all roads to reform on the House side must make their way through his committee.

So why am I optimistic? First, we have a wonderful congressional delegation that has traditionally remained united on healthcare issues. Second, we have two committed members of Congress who will be integrally involved in the reform debate. Both have indicated that their houses are committed to passing a bill by June 2009. Third, we have a President who has made a pledge to healthcare reform (devoting more than $630 billion of his first budget as a down payment on reform), even as he faces other significant major challenges. Fourth, we have a confluence of interested parties – business, organized labor, hospitals and certainly the uninsured – that want real healthcare reform. The time is right for us to move forward.

So the timing is right; now we need the right reform package. Here are 11 essential principles that I believe must be considered as we reform the healthcare system and provide healthcare coverage for all.

1. Healthcare for all must be paid for by all. If we truly believe that healthcare is a right and not a privilege, then we must all be committed to paying for it.
   
   
2. Coverage doesn’t equal access. We must be sure that all health insurers have adequate networks of providers, including primary care physicians in all settings. For some patients today – even those with healthcare coverage – finding the healthcare they need remains a struggle. These “underinsured” often have to fight for coverage for necessary care.
   
   
3. Reform must pay attention to behavioral health, substance abuse and the mentally ill. At NJHA we are studying the charity care patient population and finding that a large part of the state’s charity care needs are related to behavioral health issues or to medical issues related to substance abuse. The hospital setting is not always the most appropriate setting for these patients. We need to be sure we provide care for the behavioral health population in appropriate community settings – it’s better for the patients, and it removes a major financial strain on our struggling hospitals.
   
   
4. If we create a new federal bureaucracy, we should get rid of existing ones or at the very least consolidate them. There is a lot of talk about the creation of a National Health Board (promoted by Sen. Tom Daschle) to review best practices and examine the “comparative effectiveness” of different medical treatment. It’s a good idea to standardize care. But if we have a National Health Board, what happens to the Centers for Medicare and Medicaid Services, the National Institutes for Health, the Agency for Healthcare Research and Quality, MedPAC and the other units in the federal government? They need to be consolidated at a minimum.
   
   
5. Training the healthcare workforce of tomorrow must be part of our reform package. We have a shortage of primary care doctors right now, and medical students today have little incentive to enter primary care. Yet if we provide coverage for all, we will need more primary care doctors, more advanced nurse practitioners, etc. We need to plan for this now. In Massachusetts, a health reform strategy has been successful in providing health coverage for more than 90 percent of its citizens. Yet there aren’t enough primary care doctors, so those citizens must often wait months for an appointment.
   
   
6. Graduate medical education must be supported – and paid for – by all. Right now, the federal government pays teaching hospitals to train the next generation of physicians through these GME payments. State government also pays for GME to a much lesser extent through Medicaid payments. (In New Jersey, Medicaid currently pays teaching hospitals $68 million for their important work, but the Governor’s proposed budget for 2010 would roll back that figure to just $60 million.) These payments are essential to provide training for doctors, yet the cost of this is borne by two public payers only. GME is a “public” good, and all payers should contribute to training the medical professionals of tomorrow.
   
   
7. Paperwork must be standardized. We should have one claims form that is used by all insurers. It makes no sense that each insurer requires a different claims form. Standardization could save a lot of time and money if everyone was operating off the same page, literally.
   
   
8. Health information technology also must be standardized so systems can talk to each other and transfer information. Right now, there is no requirement that systems be interoperable so, for example, a hospital in Pennsylvania may not be able to transmit your medical records to the Jersey Shore area if you need it during a summer vacation. Just like someone years ago made the decision that all electrical outlets would have three prongs, the federal government needs to bite this bullet and mandate that the systems be interoperable. If we don’t, all the investment in HIT may be for naught, and that would be a crying shame.
   
   
9. Payment for care must be appropriate, and the incentives must be aligned between providers. Right now, Medicaid only pays hospitals about 70 percent of what it actually costs hospitals to care for Medicaid patients. Medicare pays about 89 cents on the dollar, and charity care pays less than 50 cents on average. It’s no wonder we have seen nine N.J. acute care hospitals close and six file for bankruptcy in the past two years. Payment for physicians is equally poor. Doctors get about $16 for an office visit with a Medicaid patient. I pay more than that to have my hair cut! Payment incentives must be aligned between physicians and hospitals so they are working together to provide efficient, quality care. If we are trying to control costs it makes no sense for an insurer to deny days of care to a hospital, yet pay a doctor for care rendered on that same denied day!
   
   
10. Medical malpractice reform must be examined. It’s a difficult political issue, but something must be done to provide relief to doctors who often order tests as a form of “defensive medicine.” Again, if we are trying to drive down costs, some protection must be provided to doctors in some form.
    
    
11. Medical loss ratios must be examined and standardized. Medicare devotes approximately 3 percent of every dollar to administrative overhead. While it isn’t perfect, Medicare operates remarkably well since it is the largest insurer in America. If Medicare can devote just 3 cents out of every dollar to administrative costs and devotes the remaining 97 cents to actual medical care (what a concept!) why do Americans sit idly by as other insurers charge 15 percent, 20 percent and sometimes even higher amounts in administrative overhead? It boggles the mind really. That is a huge cost driver that contributes to rising healthcare costs. Let’s standardize it and drive the dollars back into the actual provision of healthcare services.

So stay tuned. Right now the glass looks half full on healthcare reform. Only time will tell if I am right.