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What will future historians say about the Clinton health reform act.

This series of articles on the history of national health reform has focused on significant efforts to increase access to needed health services. With the imminent, if repeatedly delayed, arrival of President Clinton's health reform proposal, it is important to take stock of what will likely emerge and to assess its chances in light of what has occurred in past health reform efforts. It is likely that the Clinton health reform proposal will include:

* Universal coverage for all Americans, staged in over time. Lip service will be paid to coverage of long-term care.

* Provision of "health security" cards, enabling American to move their insurance from one job to the next.

* Encouragement of the development of health purchasing cooperatives or health alliances.

* Development of a report card approach to quality of care measurement to encourage consumers to shop for health care.

* Malpractice reform that emphasizes enterprise liability or the shift of liability from the provider of care to the insurer.

* Leaving up to the states many of the policy issues pertaining to health reform.

* Some form of global budgeting.

This final, purposefully opinionated, article in my series on the history of past efforts at national health reform will argue that:

* It is likely that a legislative effort to significantly increase health care access for the poor will suffer the fate of previous efforts.

* Any successful legislative effort will assist the middle class more than the poor. The middle class desires portability of health coverage from job to job and provider choice. One solution to both of these desires would be the opening of the Medicare program to all comers. Expanding Medicare to all Americans would provide government support to fee-for-service medicine while providing managed care with serious competition.

* Managed competition is the latest effort at cultural and historical compromise with the American preference for private sector solutions to cost containment. It will certainly fail if it is not enacted in tandem with a price-setting structure, such as that currently used in prospective payment for inpatient services.

* Enterprise liability, rather than a plus for physicians, represents a shift in power from organized medicine to the insurance industry.

* The current push toward integrated delivery systems represents the realization of the dream put forward more than 50 years ago in the reports penned by the Committee on the Costs of Medical Care.(1) I.S. Falk and other luminaries of that era might feel uncomfortable with the likely owners of these integrated delivery systems, such as Baxter and Prudential.

* For the first time in the history of national health reform, at least the verbiage of quality is entering the debate. It is likely to remain verbiage until it is truly tied into quality improvement. Unfortunately, the report card concept will be particularly useful for the free market aspect of managed competition and not for the effective implementation of CQI. That is, report cards are a snapshot at one point in time. They provide neither trends nor an indication of an organization's commitment to CQI.

* Until today, American have been much more comfortable with de facto rationing of care. With the recent approval of the Oregon program, American have indicated an unfortunate willingness to legislate rationing of care for the poor. It is unlikely that the middle class will be willing to do the same for itself. This reluctance merely postpones a fundamental issue in the debate on health reform--that is, Americans will need to engage in rationing for all.

* Health professionals continue to encourage American to believe that high-quality care will improve health status. This high-quality care is increasingly being driven by developments in technology. Improved technology

will inevitably lead to ever-rising health care costs. It is unlikely that this seminal issue will be touched by the Clinton health reform legislation. By touched I mean significant technology assessment with an approval process similar to that already in place at FDA.

Poor Will Continue to Suffer

There is a serious shortage of clinical reality when it comes to health care services for the poor. I intentionally use the word clinical to denote the Alice in Wonderland mentality of many Clinton advisors when they speak about improved health for low-income populations. With the exception of a brief period immediately after enactment of Medicaid during the Johnson Administration, the poor have always received, at best, second-class care. Despite promises to the contrary, this situation will almost certainly continue under the Clinton health reform package. There simply do not exist the requisite funds to increase access to appropriate health services for low-income populations.

What is worse, the faltering American economy will leave the poor further behind in terms of health status. Anyone who has been in clinical practice in low-income areas knows only too well the limited impact of health care on the status of their patients. Housing; job opportunities; education; and, yes, behavior change, all requiring substantial investments simply not available today, are more important to an individual's health (and more expensive to provide) than the clinical care that increased health insurance access would provide. A quality of care report card is irrelevant in the face of minimal job opportunities and poor housing options.

Satisfying Middle Class Voters

The most recent article in this series reviewed the enactment of Medicare, the only successful effort to increase access to health care.(2) It was legislated largely in response to pressure from the middle class. Medicaid was enacted as an afterthought, and it has largely continued to deteriorate in its level of coverage.

The middle class is primarily interested in two issues: portability of health care coverage and choice of provider. The natural, and politically conservative, solution to this twin desire would be to open enrollment in the Medicare program to any potential subscriber. Providing the option for all Americans to enroll in the Medicare program could provide the Administration with the "fee-for-service" option within Medicare that it is determined to pursue. Including Medicare, with prospective payment of both inpatient and outpatient services, would, once and for all, settle the long-standing argument between proponents of the single-payer versus competitive approaches to health care cost containment. At the time of this writing, these two camps are at a stand-off, with both firing verbal salvos indicating why the other's approach would not save money and would result in lower quality care. Only legislation that embodies significant compromise between the single-payer and managed competition approaches has a chance of passing both houses of Congress. With respect to the firestorm over which is the best approach to cost control, opening up the Medicare program to all comers could represent a reasonable compromise.(3) Within a health alliance, an enrollee could choose between a managed care organization and a fee-for-service alternative, run by Medicare. This is unlikely to happen. Clinton's academic experts are convinced that a reformed, and more efficient, fee-for-service system should not be put in place because enrollees might choose fee for service over managed care. The current fee-for-service system cannot compete with managed care. Only a reformed fee-for-service system can provide meaningful competition with managed care. Unfortunately, the Clinton administration is enamored with the dubious hypothesis that all Americans are in need of managed care. How many readers need managed (read as coordinated) care? Notice that I did not ask how many are enrolled in managed care organizations.

Managed Competition

"Managed competition is a purchasing strategy to obtain maximum value for money for employers and consumers. It uses rules for competition, derived from microeconomic principles, to reward with more subscribers and revenue those health plans that do the best job of improving quality, cutting costs, and satisfying patients."(4) While Enthoven, the managed competition idealogue, seeks to search for competition's roots as far back as the Ross Loos Plan of Los Angeles (1929), the current push in favor of managed competition reflects a confluence of several factors that have nothing in common with the free market(5):

* Americans have an innate disbelief in government efficiency. This despite the fact that administrative costs for the Medicare program are much lower than those of any private sector managed care organization (3 percent versus 12-18 percent).

* American have a strong faith in the virtues of individualism and competition.

* There is significant profit to be made in the health care sector, thus setting up an extremely strong set of lobbying interests against any majority role for the government in our health care system.

An integral part of managed competition is the use of capitation. The trumpeting of capitation as the new cure for exploding health care costs merely reflects American preferences for financial tools to solve intractable cost increases. This faith in capitation should be tempered by the realization that capitation merely shifts the financial risk from the insurer to the provider. The provider--hospital or physician--becomes the insurer. While capitation does result in cost savings, it represents a relatively minor brake on the inexorable rise in health care costs caused by other factors, such as technology.

Enterprise Liability

The latest fad in malpractice reform, enterprise liability, is essentially the reverse, from a risk shift perspective, of capitation. The risk is shifted from the provider to the insurer. The assumption is that the insurer (or health alliance) will have quality of care monitors in place that will enable it to screen out poor-quality physicians. Unfortunately, enterprise liability will be adapted to the needs of the party primarily responsible. That is, the health alliance, for marketing, financial, or political reasons, will likely settle cases that physicians might not have settled.

Integrated Delivery Systems

Without the intervention of any government entity, group practices tied to a variety of institutions are springing up around the country. Insurance companies, hospitals, and even health care supply companies are either purchasing practices outright or are providing management services to them. In response, many medical groups are banding together, particularly on the West Coast, in an effort to achieve economies of scale and to enable themselves to assume managed care contracts.

It will be most interesting to see whether President Clinton's health reform proposal includes language that facilitates or hinders the development of large medical groups dominated by physicians. While there are clear antitrust issues that need to be addressed, the development of these large medical groups may be one of the few remaining mechanisms for physicians to maintain professional independence. While this issue has not attracted the level of attention devoted to cost control and increased access for the poor, in the long term, the changing professional status of physicians is key to a successful health reform process. While we do not empirically know if there are any differences in practice patterns, the professional nature of physicians will be different if they become salaried for Baxter Laboratories as compared to the Friendly Hills Medical Group.

Quality in Health Reform

Past legislative experience has relatively little to offer on the evermore confusing role of quality measurement and management in the health reform process. It has been largely assumed that increased access will, ipso facto, result in better quality. Recent studies on the impact of availability of coronary artery bypass grafts on health outcomes in the poor and middle class populations reveal the problematic nature of this assertion.6 Where to place the quality piece in the health reform puzzle is further strained by two competing visions: total quality management and the competitive or report card mentality.

An eye-opening expression of the total quality management view of Nirvana comes from Chassin. "It is by now a truism that costs will be controlled. Our only choice is how-- by medically irrational means (such as large deductibles on insurance policies or severe restrictions on freedom of choice) or by clinically rational methods that selectively reduce costs and utilization for services that do not provide benefit to patients.(7)

While I share Dr. Chassin's belief in the importance of delivering high-quality care, there is no question in my mind that, in the aggregate, delivering high-quality care to all Americans will cost more money. If this were not the case, policymakers would not be gnashing their teeth in Washington over how to provide health insurance for all. I firmly believe that appropriate implementation of protocols will, in the aggregate, increase the nation's health care spending, as appropriate care will be provided to underserved populations.(8)

Thus, providing high-quality care is an important goal but one that needs to be placed in context. Rather than putting out a report card supposedly comparing quality of care of different institutions, physician executives should support the collection of the same data for the purpose of encouraging institutions to participate in serious quality improvement projects. As Dr. Chassin writes: "Risk-adjusted operative mortality data for CABG surgery are given regularly to each hospital so each program can see how well it is doing compared with its peers. Many hospitals with poorer than expected outcomes have undertaken specific quality improvement activities, changed processes of care, and witnessed improved results."(7) Such an approach is very different from that envisioned by Enthoven and the Clinton Administration, in which enrollees would compare CABG rates and decide on that basis which managed care organization to join.

The Next Wave of Cost Control

As extensively discussed in this series of articles, Americans have always been willing to ration care for the poor--under the table. Oregon has gone the next step and has proposed to explicitly ration health care for the poor. One of the developers of the Oregon program, John Kizhaber, a physician, defends it by saying that Oregon had to act in the absence of a federal program for comprehensive health insurance for all. It is extremely unlikely that there will be any such federal program.

All that will happen under the Oregon program is that health care costs will continue to rise for all and the list of services available to the poor will continue to shrink. Rationing would have a very different effect if it were. applied to all Americans. This is very unlikely to occur. Despite the fact that health insurance became available only in the past half century, the middle class has never needed to do without health care. To agree to explicit rationing for the entire population would require a major shift in American attitudes. It would imply a lack of faith in managed competition, something the Clinton Administration is not about to show.


Americans and the health care industry love the technological aspect of medicine. While local or statewide health reform efforts can have an impact on access to care for the uninsured, only the federal government can have a substantive impact on the introduction of new technologies. According to Newhouse, neither managed competition nor increased cost sharing will control rising health care costs.(6) Technology is the driver. To begin to mitigate this trend, the federal government would need to implement an FDA equivalent for new technology and insist that new technology be demonstrated to be both safe and effective. Even if this politically charged and unlikely step were taken, Newhouse amply demonstrates that there will be sufficient new technology that is safe and effective and that will continue to drive up health care costs.


As numerous studies have amply documented and as the eminent 19th Century German physician/politician Rudolf Virchow emphasized, the practice of medicine is merely a reflection of the political culture in which one lives. While I fervently hope I am wrong (I spend half my clinic time scrounging around for free medications to give my uninsured patients), middle class Americans are in no mood to significantly increase access to the uninsured (that is, to collectively pay in excess of $100 billion in new taxes). The middle class demands portability of health insurance coverage and may even protect freedom of choice. The latter will occur only if President Clinton can swallow his ill-placed faith in managed competition and extend Medicare to all comers.

Despite all the hoopla around health care reform, it is likely that the industry trend toward managed competition will merely be facilitated by the Clinton legislation. This is a reflection of the fact that the Administration has no mandate for a specific direction. Thus, it has been forced to provide general guidelines and leave many of the details up to the states. It is certainly possible that the Administration will propose access to care for all and a striking vision of health reform for the coming century. It is highly unlikely that the highly partisan division between proponents and opponents of the role of government in health care delivery can be resolved in a clear direction. The first domino to fall will be access to the poor. While lip service will be paid to the issue and there will likely be increased coverage for particularly vulnerable populations, such as pregnant women, systematic change in coverage will be deferred for a significant time.

One might conclude that a reading of our past efforts at national health reform have made me cynical, but I am skeptical, not cynical. Last week, for instance, I chaired the first meeting of a local group I helped initiate to expand health care coverage for the uninsured and assist business and unions in their efforts to control costs. But Americans do not believe that access to adequate health care is a right. While the failure of the health insurance system for some of the middle class has begun to modify attitudes, it is not a sufficient impetus for the passage of significant new taxes.

Until the middle class suffers greater loss in health coverage or exhibits greater dissatisfaction with the current health care system, it is unlikely that the Clinton health act will significantly affect vulnerable populations, those most in need of meaningful health reform. In the meantime, we will face more cacophony as different interest groups posture as preservers of the best of the American health care system. Maurice Sendak's Where the Wild Things Are represents an appropriate concluding metaphor for this type of health reform. As my children used to say, as they tried to avoid having to go to sleep: Let the Wild Rumpus Continue.


1. Goldfield, N. "The High Point of Efforts to Improve Access to Health Care by 'Documentation.'" Physician Executive 18(6):12-17, Nov.-Dec. 1992.

2. Goldfield, N. "Medicare and Medicaid: The First Successful Effort to Increase Access to Health Care." Physician Executive 19(4):6-11, July-Aug. 1993.

3. Averill, R., and Kalison, M. "Competition and Prospective Payment: A New Way to Control Health Costs." Journal of American Health Policy 3(2):22-8. March-April 1993.

4. Enthoven, A. "The History and Principles of Managed Competition." Health Affairs 12 Supplement:24-48, 1993.

5. Goldfield, N. "Why We Cannot Agree on the Direction of Health Reform: An Exploration of American Values." Physician Executive 18(4):16-22, July-Aug. 1992.

6. Newhouse, J. "An Iconoclastic View of Health Care Cost Containment." Health Affairs 12 Supplement: 152-71, 1993.

7. Chassin, M. "The Missing Ingredient in Health Reform: Quality of Care." JAMA 270(3):377-8, July 21, 1993.

8. Goldfield, N. "The Protocol Solution: A Mildly Acidic Commentary." Physician Executive 18(6):22-25, Nov.-Dec. 1992.

Norbert Goldfield, MD, is Medical Director, 3M/Health Information Systems, Walingford, Con.
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Author:Goldfield, Norbert
Publication:Physician Executive
Date:Sep 1, 1993
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