Reprint Of "Healthcare Reform Is Risky And Scary" Post

The following is a reprint of a post I published on this blog 4 years ago in 2009. It was wriiten prior to the passage of the Affordable Care Act and is still appropriate.

Monday, September 21, 2009

Healthcare Reform Is Risky And Scary: Every Healthcare Proposal Needs Measurable Milestones And A Sunset Provision

Posted By Milton Recht

Healthcare reform is risky and any legislation needs measurable milestones at a fixed time interval, e.g. five years after passage, with an automatic sunset provision if the independently measured milestones are not met. There are known health related and cost reasons for passing health reform legislation so let us write these reasons into the legislation as measurable numerical target milestones. Milestones can be many different targets, such as reduction in the number of uninsured to a predetermined level, a reduction in costs by a preset amount or percentage, etc. If the goals of the legislation turn out to be overly optimistic and not achievable, then let us have Congress reconsider the need for the legislation by having them actively vote for the continuation of the program at some later date. An automatic sunset provision in the legislation will require Congress to stand up and voice their reasons for voting on the continuation of the law that is not achieving its original intended goals.

Anyone who has ever read or prepared a business, strategic or operating plan for a new product, business or division knows, despite the best attempts and intentions, there is a lot of risk and uncertainty about the success of a new endeavor. There is also uncertainty about the accuracy of the projections of future sales, revenues, customers, market share, costs, profits, etc. Additionally, most new business ventures fails despite planning.

Despite the best intentions of the President, Congress and all their advisors, making significant changes to the current healthcare system and insurance entails a lot of uncertainty and risk. We have some idea of the strengths and weaknesses of the current healthcare arrangement in the US, but we only have conjectures about the effects of the changes that will occur by healthcare reform legislation. There is a chance that health reform legislation will pass but fail to achieve any of its goals and possibly make health care and insurance costs worse in the US.

Business mitigates its risks in new endeavors by pacing its roll out and evaluating successfulness. It might open a few stores to see how they do before it rolls out all the stores, or it might put a new product in a few areas to see if it sells well before it does a nationwide rollout. If things are not working as planned, a business might abandon the whole concept. Unfortunately, that is not how new legislation generally works. It is usually all at once, a regional rollout without reevaluation, or nothing. Legislative passage does not usually allow for abandonment after a law is passed because it is not working as planned. In business, investors and creditors stop putting new money into losing ventures and businesses cease to exist.

Healthcare is about 17 percent of US GDP. The healthcare industry is also hiring and growing during this period of high unemployment and recession. There is a lot at risk to the US economy, workforce and the public's healthiness if Congress unintentionally mucks things up.

I do not get any sense from the President's speeches or from Congress that there is general awareness of the risk involved to the US economy, healthcare industry, and the US workforce if passed health reform legislation does not work as planned.

A business is constantly evaluating the success of its endeavors through the measurement of profit. If the activities fail to be profitable, business will either close the activity down or make significant changes, such as cut costs, change product offerings, modify pricing, etc. to attempt to make it successful. Government programs are not measured by profit and are rarely shut down or responsively modified quickly to changes in strategy or the environment.

Putting a sunset provision in the law with realistic measurable metrics will, at least show that Congress and the President understand that despite good intentions there is a lot of risk and uncertainty about how new healthcare reform legislation will play out if it is passed. A sunset provision will also minimize the damage that a mistake could cause to the US economy, workforce and the health insurance and healthcare of US residents.