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Think Tank

Promises, Challenges of Health Reform in California

Some are thrilled. Some are worried. Some say health reform doesn’t go far enough. Some say it goes too far.

There is no shortage of diverse opinions about health care reform, but there’s one area of general agreement: Health care reform will change things for nearly everyone in the country, particularly for those involved in the everyday workings of health care.

Because many provisions of the new national law will be carried out differently in different states, stakeholders and policy makers in each state will play a key part in how the law is put into action.

We asked a few broad-stroke questions of California stakeholders in an attempt to get a sense of how health care reform might unfold here. The questions:

  • What part of the health reform package holds the greatest promise for success?
  • What unintended consequences are possible?
  • How will we know when we’re succeeding? Is there one set of data or one indicator that rises above others in importance?
  • Who’s still left out?
  • What remains to be done?

We got responses from:

Old Laws Need To Be Changed for Reform To Work

Hospitals are committed to implementing comprehensive health care reform and providing equitable access to affordable, safe, medically necessary, high-quality care. The Patient Protection and Affordable Care Act will cover millions of Californians and is a strong foundation on which to build lasting reform. However, California hospitals continue to face challenges due to payment shortfalls, labor supply, unfunded state mandates and the growing costs of adopting health information technology. With the cost of providing care exceeding Medicare and Medicaid payments, hospitals — particularly safety-net hospitals — are concerned about their ability to continue to support communities and implement reforms.

In light of the history of payment shortfalls, as well as increasing demands on California’s hospitals due to state laws such as seismic compliance, health care reform must be implemented with great caution. In 2009, California hospitals provided $12.2 billion in uncompensated care. Included in that figure is more than $3.6 billion in Medicare payment shortfalls and $4.6 billion in losses due to the difference in the cost of caring for Medi-Cal patients and what the program pays hospitals for those services.

California’s hospitals must have the resources necessary to meet the needs of their communities and provide high-quality care to all who need it, particularly as they embrace the goals of health care reform. Several provisions in PPACA, including payment reductions for Medicare and Medicaid safety-net hospitals, geographic variation and re-admissions policies, along with barriers to clinical integration, must be addressed in order to ensure hospitals are well-positioned to fully participate in reforming health care.  Delivering care that is more efficient, effective and patient-centered requires a team effort. That effort has been stymied by underpayments and various state and federal legal barriers. Over the years, many hospitals have made tremendous strides in improving coordination throughout the care continuum, while others have struggled; many have focused their efforts on privately insured patients to avoid the legal entanglements associated with government reimbursement.

Hospitals seeking greater clinical integration first need to overcome federal and state statutory and legal hurdles. These laws must be changed to support clinical integration, coordination of care and case management. Accountable Care Organizations and other delivery system models authorized in PPACA cannot realize their full potential unless the barriers are removed.

Guard Against Barriers to Coverage

1. What part of the health reform package holds the greatest promise for success?

After decades of trying, we finally have the chance to create a genuine culture of coverage — an expectation that every Californian will “carry” health coverage and that we all have a role to play in ensuring that everyone can, in fact, access this coverage. To succeed, we need to put in place simple enrollment procedures and affordable cost-sharing arrangements that enable children and parents to get into the coverage plan that is right for them.

2. What unintended consequences are possible?

An excessive focus on enrollment fraud, immigration, cost containment and/or financing battles between state and federal governments could have the “unintended” consequence of hindering enrollment, as happens today, by placing unnecessary paperwork and other bureaucratic barriers between Californians and the coverage they need and are qualified for.     

3. How will we know when we’re succeeding?

Since the goal is straightforward — making health coverage available and affordable to everyone — the measure of success is straightforward, too. We need to track regularly how many people do and do not have coverage and then concentrate efforts on removing the barriers — whatever they turn out to be — for those still lacking coverage.  Success should also be measured by whether kids and families actually receive the health care they need and whether they get it early, when it is most effective and cost efficient. This will require consumer information and support because, for so long, we have instilled a culture of non-coverage that has led to an inappropriate use of services.

4. Is there one set of data or one indicator that rises above others in importance?

The number and percentage of Californians who have insurance should be the most basic measure of our success.

5. Who’s still left out?

Two groups of people are likely to be left out: those who still can’t afford coverage because it’s too expensive; and those whose immigration status disqualifies them from receiving federal subsidies. There could also be a third group: those who are eligible for coverage, but who don’t get it because of overly complex barriers to enrollment or to staying insured. If we don’t get the basic procedures right, we will end up essentially where we are today — where the majority of uninsured children are in fact eligible for free or low-cost coverage.

6. What remains to be done?

Pretty much everything. Every element of health care reform still needs to be designed and put in place. We also need to educate the public about what reform does for them and how to use it properly. And we need to make sure there are enough medical specialists, dentists and other needed providers in the right places so a coverage card actually leads to getting needed care. Many generations of kids and families are depending on us to get this right — and we can.

Don't Lose Sight of Those Already Insured

Federal health reform offers coverage for millions of the uninsured. The elements of the new law include: expansion of  Medi-Cal; a guarantee that everyone can purchase coverage regardless of pre-existing conditions; mandatory purchase of health insurance for those who can afford it; tax breaks for small businesses; and subsidies for people with modest incomes to buy coverage.

With many elements of reform taking effect this year, some health plans and insurers are fast-tracking implementation ahead of federal deadlines.  Some plans and insurers started offering dependent coverage for children under 26 years and met new restrictions on rescissions prior to the government’s September deadline.

As we make great strides in covering the uninsured we must also keep in mind the tens of millions of Californians who already have health coverage.  Health plans and insurers have a duty to ensure that our current enrollees are taken care of and that their coverage remains as affordable as possible. 

As state lawmakers contemplate how best to implement several elements of reform, it is important they consider all the different approaches — some of which can and will have major impacts on people who already have insurance. 

One of the biggest issues the state will tackle is establishing the insurance exchange by 2014.  The exchange will be regulated by the state and offer subsidized health coverage to individuals and some employees of small businesses.  Health plans will provide the coverage offered in the exchange. 

Today, millions of Californians have health insurance through a small business or they buy it on their own.  As California crafts its exchange we must consider what happens to those folks.  Clearly some will qualify for subsidies in the exchange; however, others won’t.  Policymakers will have to decide how to treat those inside and outside the exchange.  They will need to consider the implications for premiums, coverage and affordability of health coverage with each decision they make.

No one wants to see health coverage premiums continue to escalate at the same pace we’ve seen over the past decade, with costs increasing two-to-three times faster than the rate of inflation. Lawmakers have to be thoughtful about the choices they make in the coming months and years that will affect those who already have insurance.

Health plans and insurers intend to be a constructive voice in the implementation of health reform.  Along the way, we will be providing input on the smooth implementation of different reform elements, presenting solutions to thorny problems and also warning policy makers when decisions could lead to unintended consequences.

Beware of Backward Budget Cuts

Health reform was an urgent need in most states, but an imperative in California, given the state of our health care crisis. Californians are more likely than residents of all but a handful of states to be uninsured. Californians are less likely to get coverage on the job, and more likely to be denied for a “pre-existing condition.” Even those who have access to coverage may not be able to afford it, especially since California has a higher cost of living while at the same time a higher percentage of low-wage workers. Thankfully, health reform makes significant progress in these areas.

The work that needs to be done at the federal level, especially at the Department of Health and Human Services, is immense. But much of the action will also shift to the states, which have traditionally taken the lead on two central components of health reform: insurance regulation and the administration of public coverage programs. In essence, the bill spurs 50 different health reforms. While some state politicians grabbed some headlines in filing suit against reform with the mantra of “repeal and replace,” California is preparing to lead in the effort to “implement and improve.”

Legislators have already begun consideration of more than a dozen specific bills to implement and improve aspects of health reform. Some of these bills seek to implement some of the consumer protections and coverage options that become available this year. Other bills would require California to move more quickly and aggressively, especially in the area of insurance regulation. California has a “wild, wild west” insurance market, and we need to start phasing-in new standards and regulations as soon as possible.

For example, we can start standardizing health insurance products and improving the minimum benefit package to include maternity and other coverage to align with the federal floor in 2014 — not just to provide these consumer protections earlier, but to prevent insurers from gaming the market in the meantime. We should go beyond federal law on issues to keep insurers accountable, from rate regulation to encouraging a state version of a public health insurance option.

Medi-Cal, our safety-net coverage program that covers seven million Californians, will need not only to expand to cover two million more people, but to transform. That’s why it’s important to watch the negotiations around the Medicaid waiver. The Schwarzenegger administration just released a new draft of a plan for the waiver, which will govern the next five years of this critical safety-net program.

There’s a lot of work to do, but one key caveat: In all this exciting progress, California can’t go backwards, especially with budget cuts that strike at the foundation of health programs that we want to build on. So we must continue to prevent the worst, while also planning for the best.

Unfinished Business of Reform: Patient Safety

With the explosions that killed 29 miners in West Virginia and spilled oil off the Louisiana coast, we saw intensive media coverage, congressional hearings on lax safety standards and calls for new federal action.

But you don’t have to travel to Appalachia or the Gulf Coast to see evidence of lax safety standards. Just walk into any hospital across America where every day, away from the media spotlight, patients die partly as a result of similarly inadequate safety standards. Despite enactment of the national health care reform law this spring, safety standards remain a national scandal.

Nurses and others who have advocated for comprehensive reform of our dysfunctional health care system have long said the main failings fall into three broad categories — access, cost and quality, the three areas that have dropped the U.S. below other industrial countries in how we care for our citizenry. Those are key barometers that we’ve long said would be best fixed by moving to a national system, such as expanding and updating Medicare to cover everyone.

Despite passage of the most comprehensive health bill in decades, the job remains unfinished. Despite some important regulatory interventions on abuses of the insurance industry, the insurers’ chokehold on the system remains intact. Most notably, the new law fails to rein in the predatory pricing practices on the giant insurers, exposed in California by Anthem Blue Cross’ outrageous planned premium increases or the routine denials of claims. California Nurses Association research documented that routine denials amount to more than one-fifth of all claims according to data the insurers themselves submit to the state.

Quality is another arena where the report card must read incomplete. That starts with safe nursing care. We can begin the repair process by enacting two follow-up reforms now in Congress:

  • S 1031/HR 2133, which would, among other components, establish minimum ratios of nurses to patients for all U.S. hospitals, modeled after our enormously successful California law; and
  • S 1788/HR 2381, which would promote nurse retention and reduce patient accidents and injuries by establishing safe patient lifting and handling policies.

We have reason to be proud of what the CNA-sponsored ratio law in California has accomplished. According to a study by University of Pennsylvania researchers published last month, post-surgical patient deaths could have been reduced by 14% in New Jersey and 11% in Pennsylvania, if those states matched California’s nurse-to-patient staffing ratios.

As Sen. Barbara Boxer (D-Calif.) said to a conference of 1,000 registered nurses from across the nation in Washington, D.C., May 12, “We know that nurse-to-patient ratios work, and it is time to enact them around the nation. California was the testing ground and it’s working.” 

The president and his supporters insist the reform legislation is just a start. Its passage proved that Congress can pass major health care legislation, and we should complete that work with life-saving patient safety protections, then on to guaranteeing a single standard of quality care for all.