Even though it appears that the White House and many House members are still determined to get a robust public option into the final bill, the current prognostication is that it will not survive. In its place, there will be some kind of public operated exchange that gives individuals a place to buy their insurance from private insurers in a competitive market. These insurers will have to continue negotiating their rates with providers.  The Baucus bill may set these exchanges up by State and allow States to pool their efforts. In this scenario, different states may choose to give their exchanges different powers. It can be presumed with some safety that any House bill would only have a federal exchange.

Just as in Part 1 above, providers will benefit by more people being covered. Bad debt should decline and volumes increase fairly quickly. And just as above, the healthcare cost problem is going to be exacerbated going forward. At some point in the future (when Medicare and Social Security are substantially increasing the annual deficit, the new healthcare entitlement is more costly than expected, and the government’s ongoing operating deficit is unsustainable), the federal government will again have to take on the issue of healthcare costs. At that time, there will not be as profound an access problem complicating the debate. This new debate will focus on controlling healthcare costs.

To see into the future about how the government will proceed, it is best to look at the past. The major Congressional initiatives to control Medicare costs after they started to get out of hand were to implement the CON program in the early 70s, begin implementing prospective reimbursement in the early 80s, increase the anti-fraud efforts in the 90s, and reduce provider annual increases in the 2000s. Not once during any of those times was there a serious discussion about cutting back on Medicare benefits. Nor is there any reason to believe there will be any serious discussion of this possibility in the future. The baby boomers will be a large voting bloc that no politician will want to upset. Considering that a vast majority of this group will also not be financially prepared for retirement, they will vote to hold onto as many government benefits as possible. As in the past, the government will focus on a variety of ways to reduce their payments to providers.

It would seem that no matter whether there is a robust public option included in the current reform effort or not, the future challenges facing hospitals and all providers are fairly well mapped out. At some point in the future, providers are going to be faced with the challenge of how to survive with fewer revenues while the demand for services is rising. The providers that can establish clinical standards to ensure that each service provided is clinically “necessary” will be way ahead. The greatest barrier to setting such standards will likely not be physician obstruction. The greatest barrier will be the liability risk for limiting services based on low probabilities of clinical harm to patients.

                The Unintended Consequences of Healthcare Reform – #1
                The Unintended Consequences of Healthcare Reform – #2
                The Unintended Consequences of Healthcare Reform – #3 Part 1
                The Unintended Consequences of Healthcare Reform – #3 Part 2
                The Unintended Consequences of Healthcare Reform – #4