Special Edition Health Care Reform Memo: November 7, 2012

Deloitte Center for Health Solutions publication

The health care reform memos are issued on a weekly basis, highlighting news from the previous week's activities in the administration and implications for the C-suite and various stakeholder groups.

My take: presidential election pushes us into Phase 3 of the U.S. health system transformation

From Paul Keckley, Executive Director, Deloitte Center for Health Solutions

As President of the Student Government Association in college, I ran against four qualified candidates and enjoyed the week-long race. I won. But then the work started, and for every moment of recognition, there were hours of behind the scenes consensus building and hard work. It seems a distant memory but the lessons learned stuck with me.

With the re-election of President Obama, and the party controls in the U.S. House and U.S. Senate unchanged, the work ahead is now the focus. And health reform, the issue second only to the economy in the $6 billion campaign, which ended yesterday, is at the top of the list.

The election marks the start of Phase Three in U.S. health system’s transformation:

Phase One: “Health reform legislated” (February 2009-March 2010) — Health reform legislation passed including the Affordable Care Act (ACA) and others sparking a vigorous national debate about the role, scope, and strategy of government in transforming the health system.

Phase Two: “Health reform validated” (March 2010-November 2012) —The Supreme Court ruled the ACA constitutional (June 28, 2012), and voters returned many lawmakers to Congress and the White House that support the law.

Phase Three: “Health Reform Tested” (November 2012-December 2016) — In this phase, the substantive changes of the ACA will be implemented against a backdrop of economic recovery and a divided electorate. At the top of the list:

Implementation of health insurance exchanges (HIX) by states.  States’ blueprint applications are due to HHS in 9 days and states must be fully capable of determining eligibility and handling enrollment in 11 months. In tandem, health plans must determine whether and how they’ll participate in HIXs. Key questions: will commercial plans play or pass? And will the federal government be prepared to step in if states aren’t ready?

Expansion of programs for those lacking health insurance.  For states, it’s a matter of math: are the costs associated with expanding the Medicaid program offset by other benefits? And for those eligible for federal health insurance subsidies: are the subsidies adequate to purchase coverage and do the penalties for lacking coverage create the desired outcomes?  Key questions: do the benefits of expansion outweigh the risks? What’s the best way to deliver appropriate health services to the poor and underserved? How should services be organized to optimize efficiency and long-term cost containment?

Transition from volume to value. The results of the plethora of demonstrations and pilot efforts authorized in the ACA including episode-based payments, avoidable readmissions, medical homes, accountable care, and value-based purchasing will be analyzed, and those most effective in bending the cost curve without compromising safety and quality will be institutionalized—that’s the intent. In many ways, Phase Three is the lab for hospitals, physicians, and commercial plans wherein new ways to organize and pay for health services will be tested against prior experience and strong sector resistance to change. It’s the analog to the “bench-to-bedside” pathway in clinical research that investigators follow in pursuit of therapeutic solutions. The transition from volume to value transcends every generation and health status cohort—from cradle to grave—and requires fresh thinking and a willingness to learn from mistakes. Key questions: as incentives change from traditional fee-for-service and volume to value and performance-based results, what gets lost in the transition? What are the unintended consequences? What is the optimal way to define “value”? How should the path from bench-to-bedside be paved to protect elements of the system that work well and eliminate (or replace) those that are not optimally aligned?

President Obama, Congress, and governors share enormous responsibility for the results of health reform in Phase Three. And with the fiscal cliff pending and an electorate seeking more solutions and less acrimony, the timing could not be more pressing.

The candidates in last night’s elections deserve our gratitude for running for public office; I ask myself frequently why anyone would want to serve given the scrutiny and lack of privacy that go with their jobs. Those who won deserve a moment to relish their successes.

The hard work in Phase Three of health reform requires our collective best efforts to fix the system —industry and government working together.

Paul Keckely

Paul Keckley, Ph.D., Executive Director, Deloitte Center for Health Solutions

PS – In nine days, states will submit initial plans for their HIXs. Next month, the physician pay formula and sequester cuts will get attention in the 21 day lame duck session. And the 113th Congress will face implementation of the ACA against a backdrop of the fiscal cliff and global economic uncertainty.

Join us this Friday, November 9, for a Special Edition Health Sciences Dbriefs webcast: After the Presidential Election: The Health Care Industry Response to discuss the election results and what they mean to health care industry stakeholders. To register click here.


“Our economy is recovering. A decade of war is ending. A long campaign is now over. And whether I earned your vote or not, I have listened to you. I have learned from you. And you’ve made me a better president…Tonight, you voted for action, not politics as usual. You elected us to focus on your jobs, not ours.” 

— President Barack Obama, “Transcript of President Obama’s Election Night Speech,” New York Times, November 6th, 2012

Fact file

  • Votes cast: 116,615,990
  • Popular vote: Obama, 59,623,643 (50 percent); Romney 56,992,347 (48 percent)
  • Electoral vote: Obama, 303; Romney 206. Note: Florida’s 29 electoral votes not included.

Results: U.S. Senate, U.S. House of Representatives, and Gubernatorial races*

 Election 2012 Composition 2010 Composition
U.S. Senate 51 Democrats
45 Republicans
2 Independent
51 Democrats
47 Republicans
2 Independent
U.S. House of Representatives 232 Republicans
189 Democrats
242 Republicans
193 Democrats
1 vacancy
Governors 30 Republican
19 Democrat
1 Independent
29 Republican
20 Democrat
1 Independent

*Two Senate, and 14 House races undecided as of 9:30 am EST, 11/7/2012

Source: Politico, results as of 9:30 am EST, 11/7/2012

National health reform: What now?




National health reform: What now?

National health reform is here. The health reform bills (HR3590 and HR4872) are now law and will trigger sweeping changes and disruptions – some rather quickly and some over many years. The industry is asking, “What now?” At Deloitte, we continue to explore and debate the key questions facing the industry, and we look forward to helping our clients find and implement the right answers for their organizations. To learn more, visit www.deloitte.com/us/healthreform/whatnow today.

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