By using this site, you agree to the Privacy Policy and Terms of Use.
Accept
Health Works CollectiveHealth Works CollectiveHealth Works Collective
  • Health
    • Mental Health
    Health
    Healthcare organizations are operating on slimmer profit margins than ever. One report in August showed that they are even lower than the beginning of the…
    Show More
    Top News
    HIPPA compliance
    How Medical Office Staff Can Make Your Practice HIPAA Compliant
    October 29, 2021
    Everything you need to know about hyaluronic acid treatment
    Everything you need to know about hyaluronic acid treatment
    February 10, 2022
    Which Mushroom Capsules Are Good for Your Health?
    May 5, 2022
    Latest News
    Biohazard Cleanup: The Importance of Proper Disposal and Containment
    December 2, 2023
    Medicare Helps Seniors, and People with Disabilities & ESRD
    November 27, 2023
    The Link Between Allergies and Sinusitis & Strategies for Relief
    November 27, 2023
    What Health Complications Can a Sunburn Cause?
    November 22, 2023
  • Policy and Law
    • Global Healthcare
    • Medical Ethics
    Policy and Law
    Get the latest updates about Insurance policies and Laws in the Healthcare industry for different geographical locations.
    Show More
    Top News
    Mobile Health Around the Globe: Good work in Africa; Cell Phones Improve Health Education in Family Planning.
    August 20, 2012
    ambulance fraud
    Ambulances: CMS Goes After a Major Fraud Area
    July 31, 2013
    Image
    Mobile Health Around the Globe: IRC Uses Mobile to Track Mortality in Africa
    December 24, 2012
    Latest News
    Automation in Pharmacovigilance: A Double-Edged Sword
    November 15, 2023
    What Does Science Say About Modern Health Practices?
    November 12, 2023
    Harnessing the Power of Email Marketing in Healthcare
    October 26, 2023
    10 Proven Strategies to Level Up Your Health Business
    October 25, 2023
  • Medical Innovations
  • News
  • Wellness
  • Tech
Search
© 2023 HealthWorks Collective. All Rights Reserved.
Reading: The Global Budget in Your Future
Share
Sign In
Notification Show More
Font ResizerAa
Health Works CollectiveHealth Works Collective
Font ResizerAa
Search
Have an existing account? Sign In
Follow US
  • About
  • Contact
  • Privacy
© 2023 HealthWorks Collective. All Rights Reserved.
Health Works Collective > Policy & Law > Health Reform > The Global Budget in Your Future
BusinessHealth Reform

The Global Budget in Your Future

JohnCGoodman
Last updated: 2011/05/23 at 5:28 PM
JohnCGoodman
Share
6 Min Read
SHARE

There were two announcements last week that I hope you paid attention to:

There were two announcements last week that I hope you paid attention to:

  • The American Medical Group Association, representing medical groups that provide care for roughly 1 in 3 Americans, said that 90% of its members would not participate in the new Accountable Care Organization (ACO) model the Obama administration wants to impose on Medicare providers.
  • Secretary of Health and Human Services Kathleen Sebelius, exercising new powers conferred upon her by health reform (ObamaCare), said insurers would have to justify any rate increases greater than 10%.

So what does one announcement have to do with the other? A lot. I’ll connect the dots below the fold.

Here’s the bottom line. The administration uses the rhetoric of choice and competition and some isolated souls within it may actually think competitive pressures can reduce health care costs. But if that doesn’t work out, it’s goodbye to volunteerism and hello to another way of constraining costs: global budgets.

 

If it don’t work out
Then you can tell me goodbye

 

The core of Obama administration health reform is managed competition, instituted through a health insurance exchange. In embracing this reform, the administration is following the lead of Mitt Romney in Massachusetts and before that Hillary Clinton’s failed attempt in 1993/94. But the idea really harks back to a book written by Stanford professor Alain Enthoven in the early 1980s. Enthoven argued that the entire health care system should be patterned after the Federal Employees Health Benefits system. (See a brief history and analysis.)

Here’s the difference. Enthoven believed (and still does believe) that competition in health insurance can actually work. Mitt Romney believed that as well. Maybe Hillary Clinton did too. But almost no one in the Obama administration believes that. When is the last time you heard any federal official praising the virtues of a competitive market for any good or service?

For Obama, the purpose of the health insurance exchange is not to bring needed competition to an imperfectly competitive market. The purpose is to exert control over the industry. If you believe in competition, then you want lots of competitors. But the administration is imposing rules and regulations that are driving insurers from the market, as we have previously reported here, here and here. In fact, some careful observers believe that by the time the exchanges become operational (in 2014) there will be only one or two insurers left in most markets.

This same attitude is reflected in the administration’s approach to ACOs. The original idea was that providers of care would be encouraged to compete on value, not just on the quantity of services they provide. Those that succeed in producing higher-quality care for lower costs would be rewarded with higher profits. Or at least that’s what everyone thought until the administration produced its 200-page book of rules that ACOs will be governed by.

Among the organizations balking at the administration’s top-down, regulatory approach are the Mayo Clinic, the Cleveland Clinic, Intermountain Healthcare in Utah, Geisinger Health System in Pennsylvania and others viewed as the vanguard for accountable care. These include organizations President Obama has singled out as exemplary examples of high quality care!

As in the health insurance industry, the Obama administration is taking actions that are forcing consolidation among the providers of care. (See our previous reports here and here.) Again, if competition were good, you would want lots of competitors. But if regulation is the goal, consolidation makes regulation easier. No government entity can effectively regulate the medical practice of 800,000 independent doctors. The regulatory approach almost requires doctors and hospitals to be merged into a few organizations.

So if competition is not the vehicle for controlling costs, what is? Global budgets. ObamaCare will force health plans to provide a nonnegotiable package of benefits, but will hold premiums at a level that will make it impossible to meet the full demand for that care. Instead, costs will be controlled by squeezing provider incomes and delaying access to care — just as it is in other countries.

When I attended a conference on ACOs at the Brookings Institution last fall, I was surprised by how many people took for granted that rationing through global budgets was necessary and inevitable. Everybody there seemed to know something I didn’t know. At least everybody else seemed to take the Obama administration’s rhetoric with a grain of salt.

   

TAGGED: health care business, health care reform

Sign Up For Daily Newsletter

Be keep up! Get the latest breaking news delivered straight to your inbox.
By signing up, you agree to our Terms of Use and acknowledge the data practices in our Privacy Policy. You may unsubscribe at any time.
JohnCGoodman May 23, 2011 May 23, 2011
Share This Article
Facebook Twitter Copy Link Print
Share
Previous Article FDA Approves Hepatitis C Drug Incivek from Vertex
Next Article Posner: Use Research Dollars to Make Life Better, But Not Longer

Stay Connected

1.5k Followers Like
4.5k Followers Follow
2.8k Followers Pin
136k Subscribers Subscribe

Latest News

Invasive Dentistry
Precision And Comfort: The Role Of Lasers In Minimally Invasive Dentistry
Dental health Specialties December 4, 2023
sublingual immunotherapy
Sublingual Immunotherapy: A Safe and Effective Alternative to Allergy Shots
Allergy Specialties December 2, 2023
Biohazard Cleanup: The Importance of Proper Disposal and Containment
Biohazard Cleanup: The Importance of Proper Disposal and Containment
Health December 2, 2023
Medical Device Concept Development Paving the Way for Healthcare Innovations
Medical Device Concept Development: Paving the Way for Healthcare Innovations
Medical Devices December 2, 2023

You Might also Like

email marketing in healthcare
Marketing

Harnessing the Power of Email Marketing in Healthcare

October 26, 2023
healthcare business tips
BusinessHealth care

10 Proven Strategies to Level Up Your Health Business

October 25, 2023
medical billing training
Medicare

Navigating Through the Essentials: Medical Billing Training for Beginners

September 12, 2023
healthcare providers
Hospital Administration

How Revenue Lifecycle Management Helps Healthcare Providers to Optimize Business Operations

September 6, 2023
Subscribe

Subscribe to our newsletter to get our newest articles instantly!

Follow US
© 2008-2023 HealthWorks Collective. All Rights Reserved.
  • About
  • Contact
  • Privacy
Welcome Back!

Sign in to your account

Lost your password?