Waiting for Reform. Major Reform

October 1, 2007
Humphrey Taylor

Pharmaceutical Executive

Volume 0, Issue 0

As I work with pharma companies, I'm often asked "When will we get major reform of the healthcare system?" and "What will the reformed system look like?" And sometimes "How will we get there?" This is not the same as asking "How should we reform the system?" Or "What should a reformed system look like?"

As I work with pharma companies, I'm often asked "When will we get major reform of the healthcare system?" and "What will the reformed system look like?" And sometimes "How will we get there?" This is not the same as asking "How should we reform the system?" Or "What should a reformed system look like?"

Humphrey Taylor

Healthcare reform is already a major issue in the run-up to the 2008 elections; in our latest polls, it is second only to the war in Iraq. But the forces aligned against reform are so strong that it may be years before we see more than incremental changes.

The healthcare system is changing rapidly, with or without reform, as health information technology, evidence-based medicine, practice protocols, and pay-for-performance all play larger roles. Major healthcare reform is focused on more fundamental issues, primarily changes to insurance and reimbursement.

As a professional voyeur of healthcare, I feel confident in predicting what American healthcare will look like in 20 or 30 years. My confidence comes from my sense of the forces that will lead to the reform of the system, the forces that will restrain reform and affect the way the issue is debated by the public (as both consumers and taxpayers), physicians, employers, insurers, the healthcare industry, and opinion leaders on both the left and the right. What is impossible to predict is how quickly we will get there.

Tomorrow's Healthcare System

Eventually, I believe, we will get much closer to universal coverage, but it will come in the form of a complex, pluralistic, uniquely American system built on what we have now—not because that's the best option but because, politically, it will be the easiest to achieve.

Some predictions:

Coverage The system will cover most people but, as in many countries with universal coverage, not absolutely everyone.

Payers It will be a multipayer pluralistic system with federal and state governments, employers, and individuals all paying (a lot!). There will be group and individual insurance, with both for-profit and not-for-profit insurers and providers. There will be more mandates for employers and individuals, while some government programs (including Medicare, Medicaid, and the State Children's Health Insurance Program) will expand.

Tiers The insurance system will have multiple tiers and a modest safety net, with big differences in the quality of coverage in different tiers.

Management There will be major changes in reimbursement. Consumer choice will be emphasized—for those who can afford it. Incentives for providers will be based on new, better (but never perfect) measures of efficacy, safety, quality, and cost-effectiveness.

The new, reformed system will be even more complicated than it is now. Some parts of it will emphasize competition and the benefits of market forces, but there will still be substantial single-payer government programs.

If, after 2008, as seems likely now, we have a Democratic president and the Democrats control Congress, the ideological balance will tilt back to more emphasis on single-payer systems (but not one system) and away from market-driven systems and individual insurance markets. Democrats may be predisposed to punish the industry for its support of the Republicans over the last six years.

What Won't Happen

We will not get a national health service, the government employment of most physicians or ownership of most hospitals, or a single government health-insurance program. Politically, those would not be acceptable. We will not get anything looking remotely like the single-payer systems in Britain, Scandinavia, or Canada. But we may adopt elements of systems in Germany, the Netherlands, Australia, and Switzerland.

The devil, of course, is always in the details. And that is certainly true for drug pricing. I do not believe that the present system of pricing is sustainable indefinitely—domestically or internationally. The bigger the pharmaceutical share of healthcare spending, and the more visible those costs are (for example, through larger co-pays, higher deductibles, or coinsurance), the greater the political pressures will be to squeeze prices down. It will surely be a bumpy ride.

The Leadership Question

It's hard to pass major reforms. The more specific the proposals, the more opposition rises. Major reform legislation usually has passed when the nation has been led by a strong and popular president who commanded majorities in both House and Senate (the way Social Security passed under Franklin Roosevelt and Medicare/Medicaid under Lyndon Johnson). Even then, it probably took exceptional times (the Great Depression, the death of President Kennedy) to make reform possible. What might those exceptional times be in the future? The uninsured population reaching 60 million? The collapse of employer-provided insurance? A major recession?

When a president proposes major reform, he or she will need to be ready to deal with the criticism that opponents of the Clinton plan used successfully to undermine public support—that it would be too expensive, involve much higher taxes, damage the economy, create unemployment, require bigger government, necessitate rationing, and reduce quality and choice. This new president will also need to avoid the political mistakes made by the Clintons. The president must lead the charge, but Congressional leaders must be given substantial ownership of the proposal and be responsible for writing the bill.

One thing is certain, reform won't happen without the strong leadership of a skillful, persuasive president with job ratings high enough to get the Congressional support he or she will need.

When might this happen? Arguably, the easiest time to pass major reforms is after a landslide election for both the president and his or her party. Election years, presidential or midterm, are tougher, and lame-duck years even worse. Furthermore, most presidential parties lose seats in Congress in midterm elections. This suggests that major reforms are most likely to occur (depending, naturally, on the election results and who is president) in 2009, 2013, 2017, or 2021.

Of course, no single reform bill will solve all our problems. Even after implementing major reform, we will clamor for changes, and the debate will continue.

Humphrey Taylor is chairman of the Harris Poll, Harris Interactive. He can be reached at htaylor@harrisinteractive.com