The front page of the New York Times on Tuesday, October 18, 2011 stated that the Massachusetts Legislature, which previously mandates health insurance for all, has now moved into its next stage of attempting to contain the cost of healthcare. One way of containing the cost that has been applied around the globe is to regulate the rates charged by insurers, which forces insurers to regulate the rates paid to providers. Another way is to set an overall budget for healthcare as is done in Canada or certain European countries. As the Times describes the Massachusetts plan, the approach being considered there is a flat “global payment” to networks of providers for keeping patients well. All of these approaches alter the way providers are paid and attempt to shift the risks to the insurance companies or the providers. In my opinion, each of these approaches illustrates the use of the governmental power of coercion to alter the healthcare field.
This use of coercion is shown in various ways in the Affordable Care Act (ACA), by penalizing employers for not providing healthcare insurance so that employer provided healthcare is no longer “voluntary,” by penalizing individuals who do not obtain healthcare insurance, and by requiring the expansion by the states of the State Medicaid programs to cover a larger portion of the population.
Coercion is not new to the healthcare field. The federal government has long used its power of coercion to compel individuals and employers to pay the Medicare tax, and while Medicare Part B is voluntary, higher income individuals who select Part B are required to pay a higher premium than the vast majority of individuals participating in Part B. The Medicare and Medicaid programs, while “voluntary” for physicians but not for hospitals in New Jersey, sets the rates they pay.
One of the new approaches to cost control under the ACA is the creation of Accountable Care Organizations (ACO) in which some of the risk of patient outcomes is shifted to the providers.
What is missing so far in the discussion of ACOs and in the Massachusetts debate, is a general obligation on the part of the beneficiaries as to their compliance with medical instructions, as well as their election to live a healthy lifestyle. The government has exercised some coercion in this area, for instance, with significantly higher taxes on cigarettes as well as the numerous bans on smoking in various places. Society’s experience with Prohibition has made it clear that that is not the approach to take again, in the area of cigarettes, or quite frankly, in any other area. It should be noted that we are seeing calls for the legalization of marijuana and the taxation of marijuana rather than continuation of the current prohibition against the use of marijuana. A similar approach is being taken in the area of alcohol with higher taxes on alcohol.
Whether or not this coercive tool, taxation or in the case of smoking, prohibition in certain areas, will be extended to other activities or circumstances, such as obesity, which result in additional healthcare costs is yet to be seen. However, the changing of the paradigm in the healthcare delivery system, from payment to providers for the care they render to patients (whether or not the party is compliant with medical directions or the patients choose an unhealthy lifestyle) to shifting the risk resulting from bad patient conduct to the providers, is a giant step into the unknown. One question that will need to be addressed is what authority will providers have in this new paradigm to require patient compliance with both medical directives and with lifestyle changes.© 2013 Giordano, Halleran & Ciesla, P.C. All Rights Reserved