News/Commentary

On matters of public policy, theNew England Journal of Medicine often publishes full, free articles on major issues with the goal of stimulating public debate. The extensive excerpt below is from a perspective piece in the current issue on health care reform by an expert, Michael E. Porter, Ph.D., a professor in the Harvard Business School.

This is a the right piece at the right time, thanks to this influential journal, on health care reform.

This topic, the gritty details of how health care reform actually would have to work on a daily basis, is made understandable even for people who first want to flee when they hear the words, “health policy.”

The professor’s five requirements add up to reform that can work and work well for everybody, which leads up to how the money would come in.

The author concludes: “The big question is whether we can move beyond a reactive and piecemeal approach to a true national health care strategy centered on value. This undertaking is complex, but the only real solution is to align everyone in the system around a common goal: doing what’s right for patients. (Emphasis added)

Most people start with the money pot and work backwards, paring here and slashing there, to see how health care can be paid for. This is why it fails every time. This is why, even had it passed before, it would have failed in practice.

Refreshingly, Dr. Porter starts where everyone else should start—-the patient—-and defines a value-based reform plan which everyone ought to be able to align with. He also states how he would make it work on the money side. Practical and appropriate.

We urge you to read every word of this. We urge you to go to the journal website and read the whole article. This could be the plan, if people will only listen to him.

New England Journal of Medicine

“How can we achieve universal coverage in a way that will support, rather than impede, a fundamental reorientation of the delivery system around value for patients? There are a series of critical steps.

“First, we must change the nature of health insurance competition. Insurers, whether private or public, should prosper only if they improve their subscribers’ health. Today, health plans compete by selecting healthier subscribers, denying services, negotiating deeper discounts, and shifting more costs to subscribers. This zero-sum approach has given competition — and health insurers — a bad name. Instead, health plans must compete on value. We must introduce regulations to end coverage and price discrimination based on health risks or existing health problems. In addition, health plans should be required to measure and report their subscribers’ health outcomes, starting with a group of important medical conditions. Such reporting will help consumers choose health plans on the basis of value and discourage insurers from skimping on high-value services, such as preventive care. Health insurers that compete this way will drive value in the system far more effectively than government monopolies can.

“Second, we must keep employers in the insurance system. Employers have a vested interest in their employees’ health. Daily interactions with their workforce enable employers to create value by developing a culture of wellness, enabling effective prevention and screening, and directing employees to high-value providers. Employers can also foster competition and drive broader system improvement in ways that are difficult for government entities to replicate. To motivate employers to stay in the system, we must reduce the extra amount they now pay through higher insurance costs to cover the uninsured and subsidize government programs. We must also create a level playing field for employers that offer coverage by penalizing employers that are free riders.

“Third, we need to address the unfair burden on people who have no access to employer-based coverage, who therefore face higher premiums and greater difficulty securing coverage. This means first equalizing the tax deductibility of insurance purchased by individuals and through employers.

“Fourth, to make individual insurance affordable, we need large statewide or multistate insurance pools, like the Massachusetts Health Insurance Connector, to spread risk and enable contracting for coverage and premiums equivalent to or better than those of the largest employer-based plans. Regional pools, instead of a national pool, will result in greater accountability to subscribers and closer interaction with regional provider networks, fostering value-based competition. We also need a reinsurance system that equitably spreads the cost of insuring Americans with very expensive health problems across both regional pools and employers.

“Fifth, income-based subsidies will be needed to help lower-income people buy insurance. These subsidies can be partially offset through payments from employers that do not provide coverage but whose employees require public assistance.

Finally, once a value-based insurance market has been established, everyone must be required to purchase health insurance so that younger and healthier people cannot opt out. This will bring substantial new revenues into the system, lowering premiums for everyone and reducing the need for subsidies. (Emphasis added)

Citation: New England Journal of Medicine, Online edition, June 3, 2009