Overview

Marion Ein Lewin

The Richard and Hinda Rosenthal lecture proceedings included in this volume were presented at the Institute of Medicine during the height of the national debate on health care reform. Given the context, these contributions were always in jeopardy of seeming outdated or possibly irrelevant by the time they were published if federal health care reform failed, which, in fact, it did. Despite that failure, however, and not just by luck, the issues raised in this volume are perhaps more timely and pressing today than when they were originally presented, for two reasons. First, in planning this series, there was a conscious effort made to select themes and topics whose importance and relevance to the dialogue on health care restructuring transcended any specific legislation or proposal. Second, now that reform is primarily market-driven and a new Congress is placing major emphasis on a devolution of power from the federal government to states and localities, the topics presented in this book offer valuable insights and informed perspectives on issues central to those efforts. The future viability and role of traditional fee-for-service health insurance, the promise and areas of concern for the relation between managed care and vulnerable populations, and the capacity and limitations of states as leaders in health care reform will be critical components of any strategy aimed at improving the efficiency and effectiveness of our nation's health care system.



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Preparing for a Changing Healthcare Marketplace: Lessons from the Field Overview Marion Ein Lewin The Richard and Hinda Rosenthal lecture proceedings included in this volume were presented at the Institute of Medicine during the height of the national debate on health care reform. Given the context, these contributions were always in jeopardy of seeming outdated or possibly irrelevant by the time they were published if federal health care reform failed, which, in fact, it did. Despite that failure, however, and not just by luck, the issues raised in this volume are perhaps more timely and pressing today than when they were originally presented, for two reasons. First, in planning this series, there was a conscious effort made to select themes and topics whose importance and relevance to the dialogue on health care restructuring transcended any specific legislation or proposal. Second, now that reform is primarily market-driven and a new Congress is placing major emphasis on a devolution of power from the federal government to states and localities, the topics presented in this book offer valuable insights and informed perspectives on issues central to those efforts. The future viability and role of traditional fee-for-service health insurance, the promise and areas of concern for the relation between managed care and vulnerable populations, and the capacity and limitations of states as leaders in health care reform will be critical components of any strategy aimed at improving the efficiency and effectiveness of our nation's health care system.

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Preparing for a Changing Healthcare Marketplace: Lessons from the Field The dramatic swing to managed care as a major avenue of health care reform has brought with it a reassessment of the whole arena of health insurance coverage, particularly fee-for-service, employment-based insurance. Questions now of utmost interest include the future role and purpose of health insurance; how the industry has shaped medical are delivery; how benefits have been structured and priced; and to what degree health insurance as it now exists will need to be reformed, rebuilt, or replaced to respond to the new marketplace imperatives. In "The Evolution of Private Health Insurance: Past Issues, Future Challenges," Stanley B. Jones provides a useful historical overview of employment-based insurance coverage, with a particular focus on some of the structural limts that have become such a source of contention and debate in the dialogue on health care reform. Mr. Jones points out, for example, that insurance as we have known it was not intended to provide health care, but was primarily structured to protect people against the cost of health care. Coverage is mostly focused on illness-and injury-related conditions, with relatively meager coverage for chronic care and preventive services. Insurance coverage for most Americans is largely dependent on the vicissitudes of employment status and job markets. Traditional insurance is a transaction-based system; coverage is determined through the processing of countless pieces of paper and bills, characterized by an arms-length relationship between insurance companies and health care providers. The move to vertically integrated health care systems and capitation has major implications for the future viability of the insurance industry. Mr. Jones outlines some of the major issues that will have to be addressed by insurers and policymakers in the nation's search for improved and expanded coverage at a more affordable price. In responding to Stanley Jones, Thomas Chapman and Simeon Rubenstein focus a number of other critical perspectivs on insurance. Dr. Chapman underscores the importance of not necessarily equating insurance coverage with access to health care, since for many people, nonfinancial barriers are major impediments to the availability of appropriate and timely care. He reported his findings from a series of visits to four cities in which he talked with people about the major social and cultural problems they had accessing care. He found that for many underserved groups, the complexity and organization of the US health care system is a major barrier to access—the eligibility rules, the paperwork, the location of services and facilities, and other requirements.

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Preparing for a Changing Healthcare Marketplace: Lessons from the Field The sense of awe and powerlessness experienced by patients as they try to engage the medical establishment and the health care delivery system on its own professional turf also create discomfort and erect barriers. Dr. Chapman contends that the greater availability of primary care and the management of patients on a consistent, regular basis will determine the ultimate success or failure of health care reform. Looking beyond the traditional fee-for-service indemnity system, Simeon Rubenstein reports on the experiences of one of the country's leading HMOs, Group Health Cooperative of Puget Sound, and looks specifically at the issue of benefits design. As an integrated health care system, Group Health Cooperative is dedicated to managing health care, consumer satisfaction, as well as costs, factors that influence the design and structure of benefits. He points out that in order to be successful, integrated health care systems must develop a new paradigm for health care financing and delivery, one that moves away from each sector of "the system" working to optimize its own segment of the pie to a more cooperative and coordinated approach in which all segments work toward the goals of improved health and cost outcomes over time. He underscores that system design and system implementation, even more than benefits, are the major factors that need consideration in addressing the problem of managing health care costs. The challenges associated with caring for vulnerable populations under managed care have received widespread attention. David Snow, Jr., gives an optimistic report on the ability of managed care to effectively serve those on Medicaid, citing his experiences operating Medicaid managed care programs in Philadelphia and New York City. Mr. Snow suggests that Medicaid managed care can outperform the traditional fee-for-service system in fostering continuity of care; more cost-efficient delivery; improved access to appropriate, high-quality services; and better control of costs without reducing benefits. Mr. Snow contends that the best managed-care practices in this arena are the ones that can tailor their programs to the unique needs of the Medicaid population. Such programs focus on and respond to the nonfinancial barriers that often seriously impede access to care for people on Medicaid, for example, language, inadequate outreach, transportation, access to other social services, and assisting providers to set up viable practices in underserved areas.

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Preparing for a Changing Healthcare Marketplace: Lessons from the Field Lois Wattman addresses the issue of vulnerable populations and maanged care from her work with Medica, a large nonprofit independent practice association model HMO in Minnesota. Ms. Wattman speaks to the importance of recognizing the unique differences in caring for vulnerable populations in the context of managed care and agrees with Mr. Snow that most of the barriers to care for these populations have more to do with nonmedical issues that with health care. She also cautions that in talking about the needs of vulnerable populations it is important to recognize that one is not talking about a single population but multiple groups that access and use the health care system in different ways. Ms. Wattman argues for the value of improved coordination between social services and medical delivery systems, particularly as it relates to addressing the needs of vulnerable groups. Thomas Delbanco looks at the issue of managed care from the perspective of academic medicine. Dr. Delbanco expresses some concern about the rush to managed care given our limited and rather unsophisticated ability to do reliable risk and case mix adjustments for capitated ambulatory care. These issues have special relevance for physicians taking care of high-risk or chronically ill patients in academic outpatient settings, particularly in a capitated payment environment. Under these new arrangements, strong incentives may be placed on providers and institutions to market their services to healthier people and to avoid hard-to-serve populations or groups with special needs. The major themes of Mark Chassin's and Alan Weil's presentations on the role of states in health care reform focus on the different political, economic, and social orientation of states and how this diversity impacts on states' reform strategies. Dr. Chassin, speaking from his experience as Commissioner of Health for New York State, contends that health care reform on any level will require a blend of regulation, collaboration, and competition, and that the particular blend of these strategies is likely to differ from one part of the country to another. He suggests that the critical issues of cost containment and making health care more affordable should be addressed from a quality-of-care perspective. As an example, he cites the extensive literature available on the cost implications of overuse of common health care services and poorly evaluated new tests and treatments. States have the tools to address cost problems as quality problems, and he cites New York's successful efforts at improving outcomes of coronary artery bypass graft

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Preparing for a Changing Healthcare Marketplace: Lessons from the Field surgery, which began after the State Department of Health started to collect, analyze, and disseminate information regarding risk factors, mortality, and complications of such surgery. Alan Weil provides a provocative and informative assessment of five features of state capacity that are critical to the success of state-based reform strategies: fiscal capacity, technical capacity, regulatory capacity, political capacity (i.e., the willingness to effect change), and community capacity (i.e., the ability and willingness of communities to make tough trade-off decisions in a world of limited resources). Given these parameters, he outlines how a state like Colorado might develop a very different approach to health care reform than would New York State. The hope of the Rosenthal family and the Institute of Medicine is that the participants in these lecture programs and those who read this volume—whether or not they agree with the speakers' opinions—will be assisted to think in a more informed way about the possbilities and consequences of future actions to improve the effectiveness, organization, and financing of our health care system. In that spirit, the Institute of Medicine is pleased to make available the remarks of these distinguished lecture programs.