Remaining Unresolved Cost Issues in the Health Care Reform Debate

Today, I’ll tackle the cost side of the health care reform debate.
The case for health care reform is this. If federal reform efforts are not enacted—within 10 years the cost of health care for businesses could double, and the number of uninsured Americans could reach 65.7 million—with middle-income families hardest hit, according to a report by the Robert Wood Johnson Foundation.

So, what are the remaining cost issues that lawmakers are negotiating?

How is Congress going to pay for this?
a- The House Democrats' version as of Friday July 31, would mandate companies with payrolls above $250,000 to either insure employees or cough up an 8 percent-of-payroll penalty. That’s a $20,000 minimum penalty. If the company has five employees, that’s just about $333 a month per employee. If it has ten employees its half that. It’s unclear if it changes depending on the number of dependents covered.

b- Another proposal to fund the expansion of coverage to the uninsured includes a tax on Americans earning more than $350,000 per year. Another provision includes a tax on the benefits of so called “Cadillac” or high benefit plans.
c- A new development occurred on August 3rd when two of President Barack Obama's economic heavyweights said middle-class taxes might have to go up to pare budget deficits or to pay for the proposed overhaul of the nation's health care system. The tough talk from Treasury Secretary Timothy Geithner and National Economic Council Director Lawrence Summers contradicted an Obama campaign promise.
So those are the primary cost issues.
What’s missing is the fact that real cost savings can be achieved through payment reform. Obama has touched on this issue but has not seemed to embrace it wholeheartedly. Obama has talked several times in recent weeks about incentives for better outcomes tied to such things as lower rates of hospital readmissions, and better prescription drug management, and changing end of life care processes.
Some experts like those at Thedacare’s Center for Health Care Value in Appleton, WI say that payment reform is needed to establish payment for episodes of care rather than individual service reimbursement where doctors get reimbursed an amount per procedure performed. Instead, Thedacare and others argue doctors should get reimbursed for managing care for a longer period and tie higher levels of reimbursement to positive health outcomes. The better the outcome, the better the reimbursement and doctors would find efficiencies in the episodes of care rather than ordering a multitude of questionable tests. See this link for more on Thedacare http://www.createhealthcarevalue.com/about/.
So Congress is missing a large portion of the debate because payment reform would be true health care reform. Simply expanding coverage and adding other elements, but not fundamentally changing the way health care is rendered will not achieve the cost savings needed to pay for the expanded coverage of the uninsured.