State of the Union: Time To Trim the Regulatory Fat in Health Care?

State of the Union: Time To Trim the Regulatory Fat in Health Care?

President Obama scarcely mentioned health care in last night's speech -- and perhaps that's more of a metaphor than the president intended. In keeping with the Obama administration's efforts to cut through "red tape," efforts are growing to rein in federal health care regulations.

As president, Barack Obama has presided over the largest expansion of U.S. health care services since the creation of Medicare.

But that doesn’t mean the president is immune to cutting back, too.

As Obama continues to shift away from touting the Affordable Care Act and focus on its implementation, it’s clear that streamlining federal regulations will be a top priority for the White House this year.

And as one of the nation’s most heavily regulated sectors, health care stands to be significantly affected.

How To Interpret Last Night’s Address

Don’t overweight the State of the Union’s importance.

Brendan Nyhan, a Dartmouth University professor and political scientist, offered a reminder this week that the address is more political theatre than actual strategic plan.

But what Obama did or didn’t stress is an interesting barometer of his priorities, or at least a good metaphor for health care’s relative importance.

Two years ago, the president spoke for several minutes — a total of 570 words — in urging Congress to pass the Affordable Care Act.

Last night, Obama devoted just 44 words to his health reforms — never once touting the law’s actual impact, like 2.5 million young Americans gaining coverage through the ACA.

In comparison, the president spent more than 130 words on his renewed cause of streamlining the government.

Obama twice referenced the need to do away with federal “red tape,” a term he never used in his first three addresses to Congress.

Health Care’s Regulatory Burden

Few sectors have more regulatory red tape than health care.

Just ask a doctor.

U.S. physicians already spend nearly four times as much as their Canadian counterparts on administrative tasks, such as filing claims and billing for patient care, according to a recent Health Affairs study.

One study takeaway: the sheer volume of insurance-related paperwork. Staff for U.S. physicians spent 53.1 hours per physician on administrative tasks each week, compared with 15.9 hours for physicians in Ontario. The study also found that time spent on administrative tasks costs each U.S. physician $82,975 annually, compared with $22,205 each for Canadian physicians

And new laws may not necessarily help. The ACA’s Physician Payments Sunshine Act — designed to shine a light on industry contributions — “will benefit only accountants, bureaucrats and lawyers,” a Harvard Medical School physician grumbled this week in a Wall Street Journal editorial.

There’s also the inherent inertia that keeps regulatory burdens in place, from hard-to-overturn government restrictions to outside interest groups that seek to preserve the status quo.

Speaking to “Road to Reform” last month, Princeton University professor Uwe Reinhardt warned that health care is plagued by a “politically powerful constituency for waste” that helps inflate spending and boost bureaucracy.

What’s Already Underway

Obama last night discussed his executive order that federal agencies must “eliminate rules that don’t make sense. … We’ve already announced over 500 reforms, and just a fraction of them will save business and citizens more than $10 billion over the next five years.”

Here’s how that effort is playing out in health care.

CMS three months ago nixed several federal regulations for health care providers and debuted new rules that allow:

According to HHS Secretary Kathleen Sebelius, the changes “eliminate unnecessary and obsolete standards and free up resources” for providers to focus on patient care. HHS also added that the changes will save the industry $1.1 billion next year and $5 billion over five years.

More streamlining is likely on the way, too.

In an important development, the administration official who oversaw the White House’s regulatory brush-clearing — Jeff Zients, the nation’s first Chief Performance Officer — has been announced as the new head of the White House’s Office of Management and Budget.

(Zients previously served as CEO of the Advisory Board Company, which produces California Healthline for the California HealthCare Foundation.)

In his new role, Zients’ explicit responsibility will be to advise the White House on ways to cut spending, reduce duplication and stay within the federal budget. It’s a powerful perch, and OMB directors have a habit of shaping presidential spending priorities.

For example, Obama’s first OMB head was Peter Orszag, who had made controlling health care costs the centerpiece of his work as the Congressional Budget Office’s director. His counsel was crucial in spurring the president to prioritize health reform as a strategy to boost the flagging U.S. economy.

Will the White House’s attempt to rein in regulations ultimately help patients and providers? “Road to Reform” will keep an eye on the state of the health care union across 2012.

Here’s what else is happening across the nation.

Administration Actions

Challenges to Reform

Effects on Businesses

Eye on the Courts

In the States

On the Hill

Rolling Out Reform

Promoting Reform

Studying Its Effects

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