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Fears balloon over reform
But benefits of healthcare overhaul likely to gain momentum

By Merrill Goozner
Posted: June 15, 2013 - 12:01 am ET

As it gets closer to the launch of the insurance expansion under healthcare reform, the voices of doom grow louder.

The exchanges won't be up and running on time. Small businesses will get hit with skyrocketing rates. Most individuals who buy coverage for the first time will choose the most affordable option—the “bronze” plans—and walk away from their copays and deductibles. Millions will simply pay the penalties.

On the Medicaid front, recalcitrant legislatures in a number of Republican-run states continue to balk at passing legislation allowing people earning slightly above the poverty line to participate. They prefer to just say no, the option given them by the U.S. Supreme Court's decision last June.

There's a similar doomsday chorus on the delivery system side of the reform package. The myriad experiments—accountable care organizations, medical homes, bundled payments and the like—will fail to bend the cost curve. The Physician Payment Sunshine Act, which will require every drug and device company to post payments made to physicians and other medical personnel, will become an administrative nightmare.

The revenue-raising side of the law also remains contentious. The device tax will choke off innovation and will simply be passed along to providers. The insurance premium tax will raise rates. The so-called Cadillac tax on high-cost insurance plans will lead to significant cutbacks in employer-provided healthcare benefits.

There is a common element running through all of these complaints: they are no different from the talking points raised by opponents of the law when it was up for consideration. In other words, many of those predictions are rooted in politics, not a sober assessment of the costs and benefits of healthcare reform.

Take the Medicaid expansion, for instance, where opposition defies any sober assessment of the underlying reality. A study that appeared in the most recent Health Affairs pointed out that if 14 states with staunch Republican opposition refuse to go along with the program, federal payments to those states would fall by $8.4 billion. Moreover, this refusal comes at substantial cost to local providers. Uncompensated care in those states would rise by a collective $1 billion, the study suggested.

Health insurance is complicated under any circumstances, and reform only made it more so. Of course rates go up for a plan that previously didn't offer preventive care but now must, or that once had an extremely high deductible but now can't because of the actuarial standards in the new law.

These were policy decisions made by the Democrats who controlled Congress at the time and the president who signed the bill into law.

It may be true that some of the newly insured will walk out on their copays because they aren't affordable. But under the old system, they would have walked out on the entire bill if they really needed the care. It's hard to consider that a loss from a provider perspective.

Meanwhile, on the delivery system side of reform, we hear repeatedly that providers will not be able to transform their systems into ones that can deliver higher quality and more affordable care. They explain the fact that healthcare costs have risen no faster than the rest of the economy for three straight years by saying it is a side effect of suppressed demand caused by the Great Recession and its aftermath.

Yet last week, we heard from a major insurer that its medical home experiment had lowered costs more in the second year than it had in the first. In other words, the financial benefits from medical homes were gaining momentum—not falling off after a burst of enthusiasm.

It's an apt metaphor for the entire reform effort.

Follow Merrill Goozner on Twitter: @MHgoozner


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