Industry execs diagnose health care bills' effectiveness

The nation’s health care system needs reform, say local health care executives, even though last week’s  election of Massachusetts Republican Scott Brown  to the U.S. Senate threw a wrench in Democrats’ plans.

There are, however, elements in the bills passed in partisan votes late last year  that local officials would like to see eliminated, changed or at least discussed more, including plans for Medicaid and cost containment.

“Many of the concepts of the reform are certainly things that it would be hard not to be optimistic or positive about,” said Jim Dahling,  president and CEO of Children’s Hospital of The King’s Daughters.

But, many said, the devil is in the details.

“I have not seen a good plan that doesn’t hurt the physicians and other providers,” said Dr. L.D. Britt,  chairman of the department of surgery  at Eastern Virginia Medical School.

Britt, who is also president-elect  of the American College of Surgeons,  said he’d like to see the reform effort begin again from scratch. He may get his wish now that Republicans will have more voice in the debate over health care reform.

Here’s a look at some of the key issues in health care reform and what local health care providers and insurance company executives had to say about them.

Mandatory coverage

Both the Senate and House bills require that most individuals carry a minimum level of health insurance and that most employers contribute to the cost of coverage.

The legislation outlines penalties for opting out of coverage and tax credits to help some individuals and small businesses pay for the insurance.

Vicky Gray,  a senior vice president  with Sentara Healthcare,  worried that the penalties for opting out of insurance weren’t high enough. “People would wait 'until their house is on fire’ to buy insurance,” she said.

Mandatory coverage would work only if healthy people have incentives to enter the insurance pool to balance the cost of caring for older and less healthy people, local officials said.

They welcomed the inclusion of tax credits – for businesses and individuals – that help defray the cost of coverage.

“Anything that encourages people to be insured is a good thing,” said Michael Corcoran,  chief financial officer  at Chesapeake Regional Medical Center.

Medicaid

Local officials worry that a proposed expansion of Medicaid would strain local hospital facilities and finances.

Under plans by congressional Democrats, up to 15  million people who are currently uninsured would gain Medicaid coverage through changes to income guidelines and provisions to include more adults.

But providers say they already are not reimbursed adequately by Medicaid, which insures low-income families and the disabled. Medicaid funding comes from federal and state budgets, both of which are under increasing pressure.

“The Medicaid program in Virginia is very, very lean,” Corcoran said.  “Expanding that program would not be positive from a financial point of view for the hospitals.”

Some worry that expansion coupled with further cuts in reimbursement could prompt more doctors to stop treating people in the program.

Another Medicaid-related proposal troubles CHKD.  Both the Senate and the House recommended cutting so-called “disproportionate share hospital” payments.  That money goes to hospitals to counterbalance losses from treating a large number of uninsured patients and patients insured by Medicaid, which has lower reimbursement rates than private plans. Under the plan, hospitals theoretically would make up the difference since more patients would be insured due to reform.

However, CHKD depends on those payments because a large percentage of its payments for patient services comes from Medicaid. CHKD currently receives about $19 million a year in disproportionate share money, Dahling said.

And, unlike other hospitals, CHKD couldn’t make up the loss with payments from newly insured patients. Almost all of the hospital’s patients already are insured through either private plans or a government program.

“No one really wants to say, 'Our intent was to harm children,’” Dahling said,  “yet, that’s what’s happening.”

Insurance regulation and taxes

Both the House and Senate bills recommend that the government establish a minimum level of coverage that all health benefits plans must follow.

Officials from local insurance companies opposed that measure.

“The needs of the marketplace should be what directs how insurance benefits are designed,” said Burke King,  president of Anthem Blue Cross and Blue Shield in Virginia.

However, emergency physicians would support the concept if it would include a mandate that  insurance plans  cover all emergency services, said Dr. Carl Wentzel,   emergency department medical director  at Bon Secours Health Center at Harbour View.

“It would sort of bring everybody around to accept that this is what people expect of health care,” said Wentzel, who is also a board member of the Virginia College of Emergency Physicians.

One provision of the Senate bill dictates that up to 85  percent of an insurance company’s revenue from premiums be spent on medical claims.

Another imposes an annual fee on insurance companies that would raise billions of dollars a year.

Such regulation could be fair, local health care providers said.

“If the insurance companies are making profits that would be considered well in excess of what they need to do what they do, it’s very hard to defend that,” said Michael K. Kerner,  CEO  of Bon Secours Hampton Roads.

But Virginia insurance leaders opposed the ideas.

A law limiting non-medical expenditures amounts to “micro managing,” said Michael Dudley,  president and CEO of Optima Health,  the insurance arm of Sentara Healthcare.  It also could stifle efforts at innovation and keep insurance companies from investing in more efficient technologies.

The proposed annual fee, Dudley said, “is extraordinary and could be devastating.”

Said King: “There’s no question that this tax will get passed on to health insurance purchasers.”

Cost containment

In the Senate and House bills, most efforts to stem the rising costs of health care come as proposed changes to Medicare and Medicaid.

A group of Senate Democrats, including Virginia’s Mark  Warner, succeeded in amending the bill to include measures to reduce cost through public-private arrangements and improvements to the Medicare system for insuring the nation’s senior citizens.

Among those measures, Sentara’s Gray and Optima’s Dudley said they liked “accountable care organizations.”  Under the proposal for Medicare, a group of doctors and hospitals would take care of the health needs of thousands of individuals and be paid based on whether they meet quality and cost-saving targets.

“Higher quality care can actually be very cost-effective,” Gray said.

The Senate bill also provides for grants to states to develop more effective medical liability systems.  But officials with local providers and insurance companies said they would have liked to see more attention to “tort reform” – limiting malpractice awards to lower the cost of malpractice insurance for doctors and other health care providers.

They say current laws encourage costly “defensive medicine,” in which physicians or providers order medical tests and procedures to protect themselves from possible litigation.

“We do think that some of the rise and the increase in health care costs can be addressed by doing some significant liability reform,” said Michael Jurgensen,  senior vice president of health policy and planning  for the Medical Society of Virginia.

Local health care leaders said that, overall, they didn’t believe the bills now pending in Congress would bring down costs.
“The legislation as it stands would actually lead to higher health insurance premiums,” King said.

Amy Jeter, (757) 446-2730, amy.jeter@pilotonline.com