July 25, 2009

Schumer and Orszag -- Arriving in the Vicinity of Real Reform

We are hearing prominent voices with great influence on writing health care reform getting close to the best answers, but not connecting the last dots.

They are close.

Consider this article from Friday's NewYorkTimes on another cooperative-care (aka "accountable care") system that delievers higher quality for less cost. This is a short article and should be read in its entirety. Once you do, consider this situation:

“Everyone knows that the Bassett model is the right model,” said Senator Charles E. Schumer, a New York Democrat involved in negotiations over health care legislation.

“The question is, How do you get from here to there?”
Whether these trends will encourage the creation of more hospitals like Bassett is uncertain. Legislation pending in the House instructs the government to create pilot programs for “accountable care organizations” like Bassett.

But the history of Medicare is full of pilot programs.

Dr. Streck said there was growing recognition that hospitals like Bassett were models. “Does it appear that Congress is going there?” he said. “No.”

Senator Schumer said the Senate Finance Committee was determined to make major changes to the government’s fee-for-service payment system.

“We talk about it all the time,” he said, “but it’s uncharted waters.”

Listening to Peter Orszag I hear a similar approach. Competent in his own background, Orszag reasonably hedges his bets by categorically avoiding any complete system -- could any delivery system laid out all-at-once work as hoped? Would a complete system be flexible? Could it respond to results with rapid modifications or to take advantage of new information and ideas to change quickly?

I can understand this. Complexity does indeed merit caution. Repeatedly we hear the idea that we can't change the current system "root and branch", etc. This makes perfect sense.

We should not change the system root and branch.

What we really need instead, says Orszag, is "...a continual application of incoming information...."

That's not a bad idea.

We'll come back to this shortly, but first consider the proposed solution at the moment -- IMAC.


Hoping for piecemeal evolution starting from where we are, we have the reasonable proposal from the administration of a panel of experts to develop reform for medicare (MedPAC, now IMAC):
Obama: "Well, over the last week, working with not only health care experts, but also members of Congress who are concerned about this, we actually have now gotten a commitment to incorporate an idea that has a panel of doctors and health care experts advising on how we can get a better value for our money in Medicare. And every expert out there says this can be a valuable tool to start reducing inflation over the long term....
"It's called the MedPAC program. By the way, it was originally a Republican idea. I want to give credit where credit is due. The Republican Congress passed a bill that created a panel of health care experts to make recommendations to Congress on how we could get better quality, lower cost. The problem is every year, it would just go on a shelf and nobody would act on it. So what we said is, let's give that body some power. Let's require Congress to vote on the proposals that they're making every year. Congress can still reject them, so it's not completely removing it from politics, but they have to reject or accept it as a package. And that, I think, would incentivize and empower important changes.

This is an idea that might produce good results (for instance a small group of experts could excel in certain ways, such as more dramatic reforms, if they have the right motivations.) It's also a way for Congress to move more significant reform decisions out to a panel if Congress itself cannot make effective reforms due to lobbying pressure. It's reasonable to think a panel of experts could bring forth good ideas.


But what would happen if we simply blended the leading ideas together right now?

What would happen if you took the consensus from Orszag and many others about changing fee-for-service and combined it with the Republican devotion to the "market?"

This is more than hand-waving. Consider.

What exactly is "a continual application of incoming information" that also changes fee-for-service into "paying for quality?"

It sounds familiar, yes?

If you involve all participants (medical providers) then....you have something that appears exactly like...

"paying for outcomes where outcomes are defined by criteria chosen in an ongoing process involving all participants (medical providers)."

These are essentially the same idea. Once you look closely.

Orszag has the right basic idea, and only needs to trust what we know already works very well -- a well-developed, regulated market where there is a strong connection between the quality of what is sold and the price it fetches.

Republicans have one good piece -- the idea of a well-developed market (i.e. -- where there is a strong connection between the quality of what is sold and its price) -- and need to only imagine actually applying it in detail to health care. What would they get?

They would get "a continual application of incoming information"...aka -- a "market" so to speak.

So...let me highlight exactly such a system -- a pay-for-outcome system that is structurally dynamic, responsive, and evolves by nature, due to built-in continual application of incoming information from all participants.

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