President Obama personalized health care reform during his campaign when he shared his mother died of cancer at 53 and confided, “In those last painful months, she was more worried about paying her medical bills than getting well.” He made the issue a central tenant of his campaign and put forth a lengthy list of proposals designed to make health insurance more accessible and affordable for all Americans.

“Obama’s been clear and upfront that he’s going to push health care reform,” says Leo Brideau, chief executive at Columbia St. Mary’s in Milwaukee.

Though Tom Daschle removed himself from consideration as health reform czar and secretary of Health and Human Services last month, that appointment initially solidified Brideau’s hopes for the current administration to accomplish meaningful reform.

“Daschle had presented some relatively radical but sound approaches,” he says. “He’s a pragmatist who understands that over-reaching will get you nowhere.”

Brideau predicts the federal government will favor a piecemeal approach to health care reform, which currently includes promises to:

• Provide insurance for all, even those with pre-existing conditions;

• Require large employers to provide health benefits for employees or pay a payroll tax;

• Offer tax credits to help small businesses pay for health insurance; and

• Build an electronic health information technology (IT) system that simplifies coordination of care, incorporates quality measures and reduces medical errors.

But what do these proposals, currently in their infancy, mean to the state of Wisconsin — a state known for its advances in health care delivery and reform, and its high numbers of covered residents?

Pie-in-the-sky predictions

While the Obama administration pledges to begin work toward comprehensive health care reform this spring — and has included significant funding for some of the efforts as part of the recent stimulus actions — what actually transpires remains a moving target, admits Robert Kraig, programs director for Citizen Action of Wisconsin, a state organization focused on reform.

“I think health care reform — even though it would help the economy — is going to get pushed back,” he predicts. “It really depends on how bad the economic crisis gets.”

If health care reform forges ahead in spite of current economic woes, Kraig expects Wisconsin government to adopt a “wait and see” approach to its own health care initiatives. He believes state administration will not pass reform legislation until after Washington charts its course, and he purports a debate at the federal level gives the new Wisconsin State Assembly majority time to develop its reform position. That being said, Wisconsin State Senate Majority Leader Russ Decker and Sen. Jon Erpenbach already announced plans to reorganize Healthy Wisconsin before presenting the bill to the state Senate this spring, which may shorten the time frame the Assembly has to solidify its position.

No matter what happens federally, Kraig contends Wisconsin government must ready itself for action. If the Obama administration fails to negotiate comprehensive reform, this issue will return to the states. “Now is the time for state leaders to develop their position and build a stronger consensus for a bill that fulfills all the goals of Healthy Wisconsin, but has more widespread support,” he asserts.

“We need the state plan as backup if it’s not possible to proceed at the federal level,” agrees David Newby, president of the Wisconsin State AFL-CIO, a federation of more than 1,000 local unions representing approximately 250,000 Wisconsin workers. He says the state’s AFL-CIO promotes a two-track strategy where Healthy Wisconsin moves forward while state officials also invest efforts in the national universal health care debate.

Even if a universal health care plan does win federal favor, Newby stresses state government will need to examine resulting legislation to ensure it adequately meets Wisconsin’s needs and possibly enact additional strategies to plug holes in the federal plan.

Plugging holes

Gaps are likely in national legislation, Newby contends, explaining that while effective reform must ensure coverage for all and give citizens choices in their own health care, reform that only addresses insurance issues and does not tackle skyrocketing health care costs is short-sighted.

Estimates show that 93 to 97 percent of all Wisconsin residents carry health insurance of some kind, making the state’s uninsured rate among the lowest in the nation, reports Jon Rauser, president of The Rauser Agency, a Milwaukee firm offering insurance solutions for small businesses.

Brideau warns costs in the Midwest continue to rise, which can make businesses in these areas less competitive. With businesses shouldering 80 percent of these costs and health care expenses predicted to double again nationally within the next eight years, Newby warns it’s critical something be done on multiple levels.

Dr. John Toussaint, CEO of Fox Valley’s Thedacare Center for Healthcare Value, cautions lack of coverage may not be the most pressing concern, in Wisconsin or nationally. He believes massive cost increases in administering Medicare and Medicaid programs and escalating health care costs are sinking the ship.

Brideau expects a state-level Hospital Assessment Bill to pass this year, and predicts this legislation will generate additional funding that increases Medicaid payments to health care providers. Currently state hospitals receive less than 50 cents for every dollar of care provided to Medicaid or Medicare patients. If this legislation passes, he predicts reimbursement may rise to 75 or 80 percent.

“When government-funded programs underpay, the private sector makes up the difference,” he says, underscoring the impact this measure will have on Wisconsin businesses. “These costs are passed on to employers through higher premiums.”

Rauser adds if government-funded programs pay more of the health care expenses providers incur, state businesses may see a drop in their insurance premiums, which average around $6,000 annually per employee. “That cost might drop or at least level off and stabilize,” he says.

Waste and incentives

According to Toussaint, addressing two primary issues will help drive down health care costs. These include the need to:
(1) Remove waste in the current health care system, and
(2) Put proper incentives in place, so that health care focuses on keeping people healthy rather than treating them once they become ill.

Insurance companies presently pay based on claims submitted for medical treatment; the more tests and procedures a person has, the more health care providers receive. Toussaint says this encourages doctors to perform more tests and procedures, and notes he believes basing pay how well providers manage a specific health issue to be a more effective approach.

“We need incentives around improved efficiency of care,” he says. “Right now, if one hospital is twice as efficient as another, it doesn’t matter — both are paid the same.”

However, he adds that many providers do not understand how to remove waste and thus cannot lower their cost structure. “What we need is a revolution in the way we deliver care to remove waste,” he says. “It is the only way we will lower cost.”

Improving efficiency, however, begins with releasing data on physician and hospital performance, Toussaint adds. The Wisconsin Collaborative for Health Care Quality (www.wchq.org) has begun collecting this information to drive improvements in the state’s health care system. Information on total resource utilization of physicians will soon be available through this system so comparisons can be made between physician groups treating a specific diagnosis.

Standardizing records

The Obama-Biden reform plan also proposes standardizing health care IT systems. Standardizing records technology makes sense, says Rauser, because it improves efficiencies and eliminates unnecessary tests and medical mistakes. For example, say a Wisconsinite has a heart attack while vacationing in Arizona his or her physician can quickly transfer medical records to Arizona physicians. “They don’t have to repeat tests, scans or develop histories,” he says.

The question then becomes how the government plans to fund this initiative, which packs a hefty price tag not only for hardware and software but in implementation. Interoperability also becomes an issue, with multiple vendors producing systems that cannot communicate with each other.

“Standardizing IT systems is being touted as the multi-billion dollar Holy Grail to reducing health care costs,” Brideau says. “It is a great tool, but it won’t reduce costs – at least not right away.”

No silver bullet

“There is so much pressure to find the silver bullet, but there is no silver bullet in terms of reform,” Rauser warns.

But Newby calls health care reform, whether at the state or federal level, critical at this juncture. He shares a story about a friend who lacked health insurance and did not receive medical care until cancer ravaged his body. “He’s dead now because he didn’t have health insurance. That’s barbaric and it needs to stop.”

The last time health care reform made the federal docket was in 1993, when a national reform proposal crashed and burned. The big difference between then and now is the deepening health care crisis. Costs have skyrocketed and health insurance premiums have risen 119 percent nationally and 149 percent in Wisconsin since then, Kraig says.

Kraig encourages state business owners to engage in the reform debate — the outcome will have a huge impact on their economic competitiveness. He recommends joining forces with health care coalitions to ensure their opinions and desires are known.

“The current system is completely unsustainable for Wisconsin businesses and workers,” he says. “State business owners need to be proactive in driving a solution that gets a handle on health care hyper-inflation and keeps our businesses competitive. The question is no longer ‘Ought we to have fundamental reform?’ It is, ‘What shape should this reform take?’”

By Ronnie Garrett

Ronnie Garrett is the Editor of Corporate Report Wisconsin.

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