Health care leaders outline legislative concepts to reform US health care system

During a webinar conversation on Monday, health care executives, lawmakers, and thought leaders discussed potential legislative concepts to reform the US health care system. The concepts build on the Affordable Care Act and aim to move the country closer to universal coverage while also reducing the total cost of care and freeing up money for investments in the social determinants of health.


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Speakers on the panel included Rep. Earl Blumenauer, former Oregon Gov. John Kitzhaber, and former CMS Director Don Berwick. Also joining the conversation was Don Crane, CEO of America’s Physician Groups, Arielle Kane, Director of Health Care at the Progressive Policy Institute, and Chuck Hofmann, Eastern Oregon CCO Clinical Consultant.

Kitzhaber kicked off the conversation with a rundown of three legislative concepts that he says build upon President-elect Joe Biden’s health care proposal:

  • Concept 1: Streamline the section 1115 waiver process to facilitate adoption by other states of a Medicaid model that includes similar protections and features of Oregon’s Coordinated Care Organization (CCO) model.

Since 2012, Oregon has utilized a capitated model to provide care to Medicaid enrollees. CCOs operate within a global budget that can grow no more than 3.4% per member per year. They are also held to high quality and outcome metrics. Kitzhaber says that through this model, from 2012-2017, the state saw a cumulative total funds savings of over $1 billion.

“It is the savings that we accrue from reducing the total cost of care that gives us room in the budget to invest in the social determinants of health — especially in chronically under-resourced communities, where people of color are disproportionally represented,” said Kitzhaber.

  • Concept 2: Move the ACA individual market away from its current fee-for-service payment model to capitation and risk-based contracts indexed to a sustainable growth rate.
  • Concept 3: Use the restructured ACA market as the “public option.”

“The ACA market is already established and, if the second legislative concept is adopted, it would be moved to a capitated, risk-based model,” said Kitzhaber. “There has been some talk about using Medicare as a public option, but that is a bit more problematic. It’s a much larger market – about 60 million people on the way to 78 million as the baby-boomer generation retires. And although Original Medicare does have a fee schedule, it remains a pure fee-for-service system.”

During her comments, Arielle Kane discussed the importance of looking at incentives and the unintended consequences of any potential reform efforts that seek to address the total cost of care. She gave the example of the Medical Loss Ratio rules under the ACA which required insurers to spend a large portion (80-85%) of their premium revenues on health care-related expenses. This left 15-20% of revenues to be spent on things like CEO salaries, marketing, and administrative costs. This rule had the unintended consequence, says Kane, of driving up health care prices so that insurers had a larger pot of money to spend on non-health care expenses.

“When we think about large-scale health care policy reform, we need to consider the incentives we are creating. And when we continue to do health care policy in a ‘whack-a-mole approach,’ where a problem arises and we try and solve it, it is not always clear that we’re creating the right incentives to improve outcomes and reduce costs,” said Kane. “As we debate the path forward, I think it’s vital that we think about the long-term incentives that the health care policy creates.”

Don Crane noted that while health care leaders consider coverage expansion options, it is also critically important to simultaneously focus on moving from fee-for-service to value. He describes the US health care system through the leaky boat metaphor – you can’t add more people into the boat without fixing the leaks. The leaks, he says, are principally due to the current payment model.

“How do you fix the leaks? Well in a word, you make the physician groups of America accountable for cost and quality. That is where the responsibility and the accountability is best placed,” said Crane.

With a capitated model, the incentives change, says Crane. Keeping the covered population healthy is the new incentive.

“I mean, that becomes the primary goal, And it’s done by better care, more outreach, more data analytics, and more prevention,” he added.

US Rep. Earl Blumenauer described this conversation as “one of the most important concepts we need to deal with.” He stressed the importance of being able to capture savings and invest it into the social determinants of health.

“We know what works in health care, we just don’t have the capacity to be able to invest in those social determinants of health,” said Blumenauer. “We need to be able to invest in things that make a difference to be able to shift the investment from what is candidly a bloated health care system.”

The full conversation is available here.