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14 Health Care Reform: Some Reflections on Technology SUSAN BARTLETT FOOTE Coverage and adoption decisions about medical technology fundamentally affect the pace of innovation in medicine. The papers in this volume discuss how these decisions are presently made by a variety of public and private payers. But there is a broader context for those decisions. There are, for example, enormous implications for medical technology in the current movement to reform the deliv- ery of health care in the United States. Indeed, just as innovation is a dynamic process, so too is the health policy environment. Health care reform was a major issue throughout the course of the 1992 presidential campaign and President Clinton has made health care reform a cornerstone of his administration's policy agenda. This paper provides (1) a discussion of the legislative background for reform, (2) a model for analyzing the implications of health care reform propos- als on decisionmaking about medical technologies, and (3) some reflections on medical technology policy. LEGISLATIVE BACKGROUND The legislative process over the last few years has provided an illuminating lesson on how issues emerge on the national agenda. Although health policy experts have long debated issues of access, cost, and quality, until recently com- prehensive health care reform was only sporadically addressed in Congress. True, there has been some activity in the Senate, chiefly on Medicare and Medic- aid policy in the Finance Committee and on public health issues in the Labor and Human Resources Committee. Similarly, in the House, the Ways and Means Committee and the Energy and Commerce Committee have also addressed these issues. But these efforts were discrete, relatively modest events. 193
94 SUSAN BARTLETT FOOTE From 1989 to 1990, a major breakthrough occurred. The bipartisan Pepper Commission (named after its first chair, Representative Claude Pepper), recom- mended legislation to ensure that all Americans had coverage for health care and long term care. The Commission's final report, released in September of 1990, made quite detailed recommendations about access issues, but gave few specifics on how to finance its recommendations. Because of the flaws in identifying financing mechanisms, the commissioners were divided in their support for the recommendations (Pepper Commission, 1990~. While Congress mulled over the problems of access and financing, health care remained in the minds of the American public. The special election in Pennsylvania to fill the Senate seat of the deceased Senator John Heinz con- firmed that health care remained a pressing public concern. The success of Democrat Harris Wofford, who ran a campaign focused on the need for health care reform, convinced politicians that the issue of health care had to be ad- dressed. A spate of legislative proposals quickly followed, joining many that were already under consideration. In response to the Wofford victory, a group of Senate Republicans quickly introduced a reform package that a task force of their party had been discussing for many months (S. 1936~. House Republicans produced a somewhat similar proposal later in the summer (H.R. 53251. There was considerable diversity among the Democratic health care reform plans in Congress. Democratic bills ranged from a single-payer Canadian-style system (Wellstone, S. 3207) to the Conservative Democratic Forum's managed competition, market-based model (H.R. 5936~. Perhaps in consequence, few plans drew more than a handful of cosponsors in either chamber. Even the Democratic leadership proposal, commonly known as "pay-or-play" and drafted by key Democratic leaders (Senators Edward Kennedy, George Mitchell, Jay Rockefeller, Donald Riegle), failed to draw more than nine cosponsors (S. 12271. The presidential candidates also weighed in. President Bush gave what was billed as a major health address in the early spring of 1992, circulated a white paper entitled "The President's Comprehensive Health Reform Program," which contained his market-based reforms, and introduced some of his proposals in legislative form soon thereafter (President's Program, 1992~. The Democratic presidential nominee, Governor Bill Clinton, also presented a plan. In defining fundamental reform, Mr. Clinton called for "an appropriate and revised govern- mental role with a reliance on the private sector" (Clinton, 1992~. Few of these early plans, however, whether Democratic or Republican, came to terms with the intractable issue of financing. Not until June of 1992 did bills with clear and explicit cost-containment appear. In the controversial Stark- Gephart proposal, the Health Care Cost Reduction Act (H.R. 5502), a national health budget (or global budget) would be established to control spending. States could impose cost-containment programs if they came in under the projected budget. Otherwise the federal government would set maximum rates for hospi
HEALTH CARE REFORM: SOME REFLECTIONS ON TECHNOLOGY 195 tat, physician, pharmaceutical, and other services. In the same month, the Din- gell-Waxman "Health Choice" plan was introduced. It proposed to control spending by relying on overall limits on expenditure growth (or "inflation") that would be overseen by a quasi-public (Federal Reserve-type) board with represen- tation from consumers and providers (H.R. 5514~. Despite the rash of legislative activity, no major health care reform passed in the 102nd Congress before it adjourned in October of 1992. Why? The Democratic majority in Congress remained deeply divided philosophi- cally on how to create a reform proposal. Unable to pass comprehensive reform, some Democrats resisted efforts to address specific problems in health care, such as the small group insurance market. Although the Senate managed to pass the bipartisan Bentsen-Durenberger bill to reform the insurance market for small employers (S. 1872) twice, the proposal never emerged from the conference committee. President Clinton put health care reform at the top of his agenda during the transition period following the election. His selection of First Lady Hillary Rodham Clinton to supervise the effort symbolized his personal commitment to reform. Throughout the spring and summer of 1993, hundreds of members of a White House Task Force put together volumes of option papers for the adminis- tration. By the fall, the president and his administration began to market his plan in earnest. In addition to the president's proposal, the supporters of a Canadian- style plan reintroduced their bill, and the conservative Democrats and moderate Republicans supported market-based reform plans. Immediately before the Christmas recess, a series of major bills was intro- duced. Prominent among them was Clinton's Health Security Act (S. 1757), introduced on November 22, 1993. Primary competitors included the Managed Competition Act, introduced by Representatives Cooper and Grandy in the House (H.R. 3222) and Senators Breaux and Durenberger in the Senate (S. 1579), and the Senate Republican task force's Health Equity and Access Reform Today (HEART) Act of 1993, led by John Chafee (S. 1770) and sponsored in the House by Representative Thomas (H.R. 3704~. Nineteen ninety-four will be the year in which these approaches are debated and voted upon. AN ANALYTIC MODEL The key issue that distinguishes various approaches to health care reform is the role of government in the newly designed system. A public regulator model concentrates health care policy decisions in the hands of government. These policy decisions could include the setting and enforcing of global budgets, deter- mining prices for services, and allocating buying responsibility to public agen- cies. The most extreme version of the public regulator model is a Canadian-style system. In it, government becomes the single payer and every citizen is a partici
196 Public regulator (government) SUSAN BARTLETT FOOTE Private sector - (market) Canadian-style single payer plans Clinton plan Managed competition (bipartisan) plans FIGURE 14-1 Health care reform spectrum: Government versus the market models. The figure shows how the various health care plans discussed in the paper fall within the range of public and private models. pant in the public program. In contrast, the private regulator model relies on the private sector to finance and deliver health care. Government retains two roles. First, it sets the rules for the marketplace through such measures as insurance reforms to guarantee policy issuance (e.g., elimination of experience rating) and portability, mandated disclosure of information on cost and quality, and assis- tance for individual purchasing decisions through the certification of private- sector group purchasing arrangements. Second, government can also guarantee financial access for those who can- not afford to purchase health care. In these market-based proposals, government provides vouchers or other forms of cash assistance and eligible individuals pur- chase health plans through purchasing groups. The Jackson Hole Group, a loose collection of health policy experts and health care providers, inspired the "man- aged competition" model that is premised on this limited role for government (Enthoven and Kronick, 19891. The president's reform plan, which circulated in health policy circles in the fall of 1993, tried to merge the market-based approach of managed competition with some of the tools of government control. The bill included references to a competitive marketplace, but also added global budgets and premium price con- trols, state-run monopolistic purchasing groups (called health alliances), and reg- ulatory powers in the hands of a National Health Board and the states. IMPLICATIONS FOR MEDICAL TECHNOLOGY POLICY In the early stages of the debate on reform, medical technology issues have taken a back seat to system reform. This situation stems from the erroneous premise that medical technology is separate from health care services. Technolo- gy is often perceived as an independent, cost-raising feature, a problem that one would turn to after the fundamental work of health care reform has been done. But medical technology, of course, is not separate from health care: it is health care. Health care reform plans must consider how the interrelationships of tech- nology and the provision of health services will affect the form of the health care system.
HEALTH CARE REFORM: SOME REFLECTIONS ON TECHNOLOGY 197 At a minimum, the approach to medical technology must be consistent with the overall philosophy of health care reform. Ideally, it will try to anticipate the longer-term effects of policies affecting technology on the health care system as a whole. For example, some supporters of a market-based model of health care reform have assumed that a federal regulatory board should control technology. This assumption epitomizes the erroneous view of technology as separate from health care services and is furthermore inconsistent with a market approach. It is hard to see how competition could thrive if government regulated all the tools of the trade. Some advocates of a government model also assume that a public regulator will control most of the decisions made about health care services. Among these decisions are when and how a technology becomes available and the price that can be charged for it (Wellstone-McDermott American Health Security Act of 1993~. These approaches illustrate a strong distrust of the private sector, and that attitude spills over into technology decisions at all levels. The managed competition model will likely be the starting place for discus- sions of technology policy in health care reform. Managed competition rests on a careful mix of market forces and government direction. The challenge is to design a system that ensures the proper balance between government and the private sector. How can that balance be struck? The analysis is made easier by using a categorization developed by Blumenthal in which medical technology issues can be divided into three distinct categories: (1) knowledge development, such as clinical trials, analyses of cost effectiveness, and quality of life assess- ments, (2) knowledge processing, such as systems for gathering, validating, in- terpreting, and disseminating information, and (3) decisionmaking, which in- cludes questions about who has the power to make decisions on coverage and payment for the use of a particular technology (Blumenthal, 1983~. The roles of government and the private sector vary in each of these three categories. For example, start first with the focus of this volume: coverage and adoption decisionmaking. In a managed competition model, the health plans are the appropriate locus of decisionmaking. Each health plan will determine which specific procedures are appropriate to treat the conditions of individual enrollees. However, plans must be able to articulate defensible, scientific principles for their decision to exclude a new technology. Health plans are in the best position to respond to consumers and their deci- sions are more accessible to them. Decentralization allows for greater experi- mentation and diversity, which will result in data that inform further develop- ments and improvements. Skeptics may argue that the economic incentives in health plans will lead to decisions to deny coverage (and save money) at the expense of patients' health. In response, it can be argued that government, par- ticularly when it is the payer, is in no position to be more generous. The experi- ence of technology assessment for Medicare beneficiaries is a telling case in point.
198 SUSAN BARTLETT FOOTE To a certain extent, then, one must decide who to trust-government or the market a decision that divides the health care reform debate. How one answers that question depends upon one's personal values and experience. Uwe Rein- hardt (1989) has commented that, in general, Americans tend to trust the private sector more than government and tend to forgive mistakes more readily when they occur on the private side. Even in market-based models, there remains a critical role for government in technology policy. Government can play a role in assisting decisionmaking. The National Health Board, or whatever central body is established, could provide a safety valve for challenges to coverage decisions made by private sector health plans. Thus, the board could issue explicit, uniform decisions based on scientif- ic, expert judgments if there were disruptive and contentious variations from plan to plan or if new, expensive, and highly beneficial technologies were being ex- cluded on cost grounds alone. Information is key to the success of any market-based managed competition model. This requires knowledge development. The current public and private efforts in technology assessment and effectiveness research the knowledge de- velopment stage are too decentralized and disorganized to provide the informa- tion that health care providers and patients need. When a practitioner seeks information needed to make an important decision, most of the time the neces- sary information is simply not available. We cannot improve the quality of care, or potentially reduce the inappropriate use of services, unless we first generate knowledge. Government can play an important role in facilitating the development of knowledge about health care technologies. It can fund and direct clinical trials, identify areas where additional research is necessary, and coordinate public- and private-sector cooperation. Many health care plans have developed sophisticated technology assessment programs. These private-sector activities should be pro- moted and supported. Unfortunately, to date the federal government's track record in supporting technology assessment activities has been mixed. It has generally been reluctant to invest in expenses associated with information devel- opment. In fact, the politics of government's technology assessment efforts are sobering (Foote, 1987; Garber, this volume). Thus, medical technology policy in health care reform plans must include efforts to reorganize the federal government's many disparate sources of know- ledge development including the National Institutes of Health, the Food and Drug Administration, the Agency for Health Care Policy and Research, the Na- tional Center for Health Statistics, and the Office of Research and Demonstra- tions at the Health Care Financing Administration. Finally, government can also play a role in knowledge processing. Informa- tion about the efficacy, effectiveness, and outcomes of health care services will help improve decisionmaking at all levels. This activity would require a highly sophisticated ability to acquire and analyze large databases. Government has
HEALTH CARE REFORM: SOME REFLECTIONS ON TECHNOLOGY 199 demonstrated some expertise in this regard processing millions upon millions of Medicare claims, for example. It has also undertaken new efforts to dissemi- nate this information to providers and patients. It is essential that the government maintains, and perhaps expands, its contribution to the planning and implementa- tion of knowledge processing activities. We must ensure that a dynamic and innovative medical technology industry will continue to thrive no matter how the health care system changes. The industry carrot thrive if we do not understand its contribution to the cost and the quality of health care. We cannot ignore basic issues of technology coverage and payment that are essential to the design of reform. The design of health care tools and institutions will necessarily depend upon the underlying philosophy of the health care reform plan that is adopted. It is likely that a mix of government and pr~vate-sector markets will emerge. As we move closer to adopting a reform plan, it is essential that we carefully consider the desired formulation of this mix. In 1934, Lewis Mumford described the challenge that we face today: The gains of technics are never registered automatically in society; they require equally adroit inventions and adaptations in politics; . . . the machine itself makes no demands and holds out no promises: it is the human spirit that makes demands and keeps promises. We must be as adroit inventing political and economic structures as we have been in producing technological gains. REFERENCES Blumenthal, D. 1983. Federal policy toward health care technology: The case of the National Center. Milbank Memorial Fund (2uarterlylHealth and Society 61:58= 613. Clinton, B. 1992. The Clinton health care plan. New England Journal of Medicine 327:80~806. Enthoven, A., and Kronick, R. 1989. A consumer-choice plan for the 1990s: Universal health insurance in a system designed to promote quality and economy. New En- gland Journal of Medicine 320:29-37, 9~101. Foote, S.B. 1987. Assessing medical technology assessment: Past, present and future. The Milbank Quarterly 65:59-80. Mumford, Lewis. 1934. Technics and Civilization. New York: Harcourt, Brace, lovanovich. Reinhardt, U. 1989. Respondent: What can Americans learn from Europeans? Health Care Financial Review (annual supplement): 97-104. The Pepper Commission: U.S. Bipartisan Commission on Comprehensive Health Care. 1990. A Callfor Action: Final Report. Washington, D.C.: Government Printing Office. The President's Comprehensive Reform Program. February 6, 1992.