States Hurting, But Outlook Still Bright

Economist James Glassman knew it sounded funny. While he was speaking at the annual Health Care Forecast Conference at UC Irvine last week, the California Legislature was in the process of cutting another $12 billion out of its budget — half of that from health-related programs.

But the current bad news in health care and gloomy economic prognostications will not continue, he said.

“In my mind,” Glassman said, “you have to balance what you’re hearing with what’s happening in the market. If it really was so dire, for instance, the bond market would be a disaster.”

Glassman is a managing director with J.P. Morgan Chase & Co. He said it’s likely that some economic predictions — like arguments in the debate over health care reform — may be politically motivated. When you just look at the national economic charts, he said, the curves almost all swing upwards.

“We’re back to where we were before, in terms of GDP. The tide is coming back in. Consumer spending is setting new records,” Glassman said. “The market sees what’s going on here, and that’s why the conversation is shifting to what’s ahead of us.”

What’s ahead for California health care could be really good in the near future, according to health care consultant Peter Harbage.

“States at this point have the lead role in health reform, and that comes with a lot of flexibility,” Harbage said. “I do like how health care reform is going. As a society, we don’t want a single big system. All health care is local.”

As the reality of health care reform sets in, he said, it will become clear to states just what they stand to gain.

“States can set their own priorities, and implement slowly or quickly,” Harbage said. “States can choose to object. It’s not something to be feared, it’s how it should be. The key thing is, you have to balance your ideology and pragmatism.”

And in pragmatic terms that everyone can understand, the federal government has committed about $3 billion in health care reform dollars to states in just the last year, he said.

But health care reform is based on setting up systems that save money and improve care over the long haul, and that’s endangered by the current fiscal crises in states across the country, according to Alan Weil, executive director of the National Academy for State Health Policy.

“In a period where budgets are so tight,” Weil said, “what you’re pulling away are efficient systems of care.”

It’s relatively easy to identify crisis care, and to fund that as your baseline level of care, he said. “But community-based systems are optional,” Weil said, “so you get rid of it. Because you can.”