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Experiments in Health Care Reform Require Nimble Learning

HMS policy expert Richard Frank discusses how we will find our way on the path to sustainable health care

July 17, 2012

Following June’s historic U.S. Supreme Court decision upholding the constitutionality of the Affordable Care Act, Richard Frank, the Margaret T. Morris Professor of Health Economics in the Department of Health Care Policy, discusses the challenges of getting health care reform right for our most vulnerable citizens.

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Why did we need health care reform? What was broken? 

So many things.

Before the reforms in the Affordable Care Act began to take effect, we had 50 million uninsured people. Of those uninsured who will be covered by the Medicaid expansion, almost half are extremely poor, with incomes under 50 percent of the federal poverty rate.  While most of the uninsured are working, they are disproportionately minorities, people with mental-health problems and people with lower levels of education.

Then there's also the cost problem, which is critical.

ACA has huge savings for the government in Medicare, and starts to put us on a healthier path, financially. It doesn't do the whole job, but it does a variety of things to improve matters, such as eliminating various forms of overpayment from Medicare, reduced readmission and putting more money under budgets that are allocated to and controlled by overarching clinical entities.

Under these new systems, providers have incentives not to shift costs and play games. They manage a chunk of money in the patient's interest. There’s a great deal of experimentation in these bundling efforts in the ACA—things like patient-centered medical homes, health homes and accountable care organizations. 

If you tally up all those things, they are aimed at taking a lot of money out of the projected growth of Medicare.

Meanwhile, outside of the ACA, many of the big private players are starting their own ACOs and other bundling experiments, because they want to control costs and rationalize care in their networks.

Richard Frank. Photo byJake Miller

How are we going to know which experiments are working?

You need people who are close to the ground, who can say, “Wow, when we try to save money on these frail, older adults who've been racking up lots of bills for emergency care and critical care, it turns out that it's not just about their clinical management. We have to do something about their housing, because if they're in a place where they can't get out, or it's not safe for them to move around, they’re going to have problems no matter how good their clinical care is.” 

We need to focus on the people whose care is really expensive, because we're not managing their care right—they're coming to the hospital too often, they're getting bounced back and forth between nursing homes and hospitals.

One classic example is falls among elders. Falls cause huge amounts of really expensive care. It turns out that going to the house and checking out the floors is pretty important, to make sure there aren’t carpets that are tripping hazards, for example. It’s also important to go to their primary care doc and say, "Are the 11 meds that you put this person on causing equilibrium problems?”

Those are two very different things—one is looking at patients as people with lives outside the medical system, and the other is something that you could monitor with the right database of drug interactions. 

But both of them require going beyond what you see right in front of you in the clinic.

The nice thing about building bigger aggregates of accountability is that you now have organizations with a real stake in improving outcomes across the board for a given patient, and in cutting costs by limiting unnecessary care. And they have the resources to make it work. The trick is we need to learn how to organize all those resources and effectively put them to work.

Do you think the ACA will get us close to sustainable levels of spending?

I think the ACA takes a couple of big steps in that direction, but I don't think it gets us all the way there. One of the tricky issues is, what do people think is a sustainable growth path?

There are people who say that we should stay even with GDP growth, but we have a demographic problem. To ask that expenditures keep pace with growth in the economy seems unreasonable when you've got the population that’s over 85 growing way faster than the rest of the population, and when those over 85 are much more likely to use long-term care and to be hospitalized.

What remains to be fixed in the health care system?

There continue to be many challenges around fixing costs.

The ACA tried to do more about controlling spending than we did initially in our reform efforts in Massachusetts, partly because Congress saw that costs hadn’t been taken care of under Mass Health, and partly because of the economic circumstances that were in place when the ACA was being debated and passed, on the heels of the lowest point of the recession.

There are also still huge numbers of details that need to be figured out about how we’re going to implement ACA. Not small details, but big details.  There are design issues around the small-group insurance exchanges, questions about how Medicare expansion is going to be rolled out and about how to continue promoting the kinds of fiscal and organizational changes that bundling and ACOs are trying to promote, among many others.

Why is it so difficult to get these details right?

There is a high level of uncertainty in many of these experiments. We're trying out a lot of new things.  There's going to be a lot of learning here. The issue is that it's not costless to learn.

There are some people whose health care systems will get messed up because of failures and others who wind up in wonderful places that are much better than where they are today.

Right now, we don't know which is which.

The hope is that people are going to pay attention to this very carefully, and we'll become more nimble and able to switch paths as lessons are learned.

From 2009 to 2011 Richard Frank served as the Deputy Assistant Secretary for Planning and Evaluation at the U.S. Department of Health and Human Services directing the office of Disability, Aging and Long-Term Care Policy. He is also a Research Associate with the National Bureau of Economic Research.



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