Health Care Reform and Health Care & Life Sciences and Health Care & Insurance

Expert: Reform can improve communities

June 2, 2010

The much-maligned health care bill provides a huge opportunity for local communities to improve the health of their citizens and for local health care providers to win bonus payments from federal health insurance programs.

That’s the message Len Nichols, a Beltway veteran and health policy expert, will bring to attendees at the “All Healthcare is Local” conference today at Second Presbyterian Church in Indianapolis.

Nichols, a health policy professor at George Mason University, was a veteran of the unsuccessful Clinton health reform effort in 1994. The law signed by President Obama in March is much “smarter,” Nichols said, because, instead of trying to reduce costs bluntly, the law gives incentives and resources for local players to improve the health of their citizens and patients, which will then reduce their need for health care.

“It’s really far better than given credit for,” Nichols said of the Patient Protection and Affordable Care Act of 2010.

Health care spending has been rising at roughly double the rate of inflation for years, squeezing budgets for businesses and governments. Douglas Elmendorf, director of the Congressional Budget Office, said in a May 26 presentation that the new health law "does not substantially diminish that pressure." But Nichols argues that the law's incentives will force private players to change their business models in ways that improve health and reduce costs at the same time.

Nichols breaks down the law this way:

Community groups can apply for piles of money set aside by the law to pay for programs to fight obesity or to build sidewalks, walking trails and other neighborhood assets that make it easier to exercise.

Health insurers are forced to accept all comers—instead of turning away the unhealthy as current law encourages them to do—and limits how much more insurers can charge the sick compared with the healthy. Those restrictions, Nichols said, will force insurers to get really good at directing their customers to the best heath care providers and enrolling them in effective wellness programs that reduce their need for health care.

Employers will be able to give larger incentives—tax free—to their workers to participate in wellness programs, meaning health insurers should find a willing base of customers for their wellness efforts.

Doctors and hospitals will be encouraged to team up and find ways to provide better care at lower costs. If they do, a Medicare pilot program is offering to split the savings with them—which could generate a bonus payment for the health care providers. Also, the bill will fund health care innovation zones that local hospitals can set up to try new ways to deliver higher-quality care at lower cost.

Critics question whether this and other pilot programs will expand enough to be meaningful, but Nichols is confident that Congress will do so: that’s because the health bill also commits billions in spending to help pay for health insurance for more than 30 million extra Americans.

“We never promised to cover 35 million Americans before. We never put a gun to our head before,” Nichols said.

Nichols said Wednesday’s conference, organized by Better Healthcare for Indiana, an Indianapolis-based not-for-profit group, is to help employers, hospitals, government leaders and others see how interdependent they are in finding a sustainable solution to runaway health care costs.

“Employers need good hospitals so their employees can get back to work. Hospitals need employers to pay the bills. Economies need health care jobs,” he said.

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