JACR: Can legislation cure the ailing healthcare system?

For decades, attempts at U.S. healthcare legislation have been plagued by unintended consequences, evidenced by ballooning Medicare and Medicaid costs that gobbled nearly 25 percent of federal spending this year. Policymakers have not yet learned from the past and may be doomed to repeat and amplify those mistakes unless politicians, physicians, patients and payors can compromise on future healthcare legislation, according to an article published in this month's Journal of American College of Radiology.

Will history repeat itself?
James H. Thrall, MD, chair of radiology at Massachusetts General Hospital in Boston, reviewed previous healthcare legislation and its unintended consequences.

The Social Security Amendments Act of 1965, which was conceived as a way to reduce health disparities, cost less than $3 billion—less than 2 percent of federal spending—in 1967. Medicare costs were projected to increase to $12 billion by 1990. However, Congress continued to expand eligibility and covered services. By 1990, Medicare costs had mushroomed to $98.1 billion, with Medicaid tacking on another $145.7 billion. Total Medicare and Medicaid reached $841.3 billion in 2011.

Recent legislation also has been subject to unintended consequences, according to Thrall. The Stark laws passed in 1989 and 1993 were intended to reduce self-referral and curb unnecessary Medicare costs. “Instead of preventing self-referral, the laws created a bulletproof safe harbor through the ancillary services exception. With the Stark laws in place, what had been regarded as an unethical and shady practice suddenly became clearly defined as legal,” he wrote.

Similarly, the Balanced Budget Act of 1997, which introduced the sustainable growth rate (SGR) formula, has failed to achieve its intended goal of reasonable and sustainable growth in Medicare Part B spending. “Flaws in the SGR formula include its linkage to the gross domestic product, failure to account for changes in medical practice and the inclusion of cost categories that are not physician services, such as costs for certain drugs.” Consequently, Congress has intervened annually to prevent “increasingly draconian SGR-based reductions” in physicians’ fees for Medicare, but has avoided a long-term fix.

PPACA: More of the same?
The Patient Protection and Affordable Care Act (PPACA) was aimed at reining in costs, however, Thrall predicted unintended consequences based on how the legislation was written.

Thrall cited Massachusetts as an example. The state has observed a trend in consumers purchasing short-term insurance policies and filing relatively high claims during the coverage period. “Clearly, people are buying insurance opportunistically when they need it,” he wrote. That’s because the $93 penalty for not buying insurance is much less than the cost of a policy. The trend will be repeated nationally, Thrall wrote, as PPACA contains a similar provision.

Causes, solutions and political will
Thrall cautioned against other unintended consequences of PPACA and offered a list of reasons for their existence. These are:

1. Issues are incredibly complex and difficult for Congress to understand.
2. Medical practice has advanced and life expectancy has risen, opening the door to a tempting tsunami of technologies, treatments and costs.
3. Legislation has changed behavior. For example, prior to Medicaid, families took care of the elderly. Now, Medicare and Medicaid cover 60 percent of nursing home care.
4. Neither Medicare beneficiaries nor providers have been incentivized to rein in utilization or spending.

The math clearly illustrates the unsustainable nature of Medicare spending. “In 2000, there were four workers per Medicare beneficiary. In 2030, the number of beneficiaries is projected to equal 80 million people, with just 2.3 workers per beneficiary.”

Thrall suggested a multi-pronged fix.

The U.S. needs to recognize it cannot prevent future problems via legislation and instead develop plans to address unintended consequences by “building in timelines or milestone events that trigger automatic review or even sun-setting of legislation so that it is forced to address issues more definitively and in a more timely fashion in the future.”

Policymakers also must learn to accept the input of medical practitioners. Physicians are not swayed by unacceptable conflicts of interests, but rather bring crucial knowledge about how medical practice works, according to Thrall. Professional organizations need to band together, he continued, to share information and ideas with policymakers and stakeholders.

In addition, Thrall urged the medical profession to focus on reducing unnecessary care, calling it “the single greatest opportunity to reduce costs." He listed five reasons for unnecessary care: financially motivated self-referral, fear of malpractice, lack of knowledge by providers, lack of care coordination and outright fraud and self-abuse.

Thrall called on medical professional societies and politicians to take meaningful steps toward addressing unnecessary care through anti-self-referral policies, tort reform, appropriateness criteria and Medicare audits to detect fraud.

He concluded, “It is crystal clear that to get the healthcare genie back in the bottle, all stakeholders are going to have to give up something and take some risks.” Politicians will have to spend political capital and risk rebuke at the polls. Patients will have to pay more for less choice. Providers will see decreased reimbursement and reduced autonomy. Insurers will face standards to medical loss ratios.

Thrall concluded with an apt Winston Churchill observation about the U.S. “Americans can always be counted on to do the right thing … after they have exhausted all other possibilities.”