Legislation is like the framing of a house. For example, the recent health care reforms the President signed into law provides the basic structure for a new way of doing business. But that’s all. Similarly, when a contractor puts up the frame of a house it provides a sense of where things are headed, giving a clear sense of the broad outline of what’s coming. But without the carpenters, plumbers, painters and other craftsmen, it’s not a home. Same with legislation. Without the regulators, judges, businesses and civilians interpreting, implementing and simply trying to figure out how things are supposed to work, the legislation is merely a law, not a part of life.
Nothing like an overwrought metaphor to start off a blog posting, but there you go. What got me thinking about this was coming across some material I wrote in the aftermath of California’s comprehensive small group health care reform. Best known as AB 1672 the law took effect in 1993. The legislation included guarantee issue for all small groups, limits on how carriers could rate for risk and a state-run purchasing pool. In short, AB 1672 changed the way small businesses shopped for, purchased and renewed their coverage. Immediately after the legislation was signed into law there was tremendous consternation among health insurance brokers, carriers, and others. Clients had questions. Entrepreneurs wondered about their future. Executives needed to figure out how to adapt their businesses to the new world. Eventually, they did and have prospered.
With the passage of HR 4872 and HR 3590 (the bills embodying President Barack Obama’s health care reform plan) the anxiety, fear and confusion is palpable in ways very similar to the early 90s in California. Which is reassuring. Because we too often forget that we’ve all survived tectonic shifts in the business before. All states enacted some version of health care reform in the past couple of decades. Yet, for the most part, the transition worked out. (There are exceptions. The state reforms in Washington and Tennessee, for example, needed to be dramatically rewritten when they proved impractical and ineffective. And they were).
There was also significant consternation when the Health Insurance Portability and Accountability Act (much better known as HIPAA) became law in 1996. And many were concerned about the Children’s Health Insurance Program. And let’s not even get started on the fear generated when Medicare was first enacted in the 60s. In the end, however, the insurance industry, business community and the public adapt and even prosper. In short, it’s a familiar drill. Markets change. Regulations change. Products change. Been there. Done that.
Yes, President Obama’s health care reform plan will have much greater consequences than state laws and even HIPAA. The new law touches upon more people and a greater part of the economy than Medicare and Medicaid. Yet, it is far from the government takeover of health care that some critics contend. The new law does not create a single payer system. Nor does it do away with private enterprise. As Howard Fineman wrote recently in Newsweek, “If this (health care reform) is socialism, then Warren Buffett is Karl Marx.” (Please note, this is not an invitation for a host of screeds on the Obama Administration, Republicans, Democrats, television pundits, the mainstream media or the state of American politics. We’ve had more than enough comments along those lines on this blog already. If you absolutely have to, go ahead, but please do not feel obliged to add to the heap).
Yes, the new laws will require change. But keep in mind, insurance companies, and health insurance companies in particular, have long been one of the most regulated industries in the country. Those regulations will change because of the new law. There will be more of them. But it’s not like regulations are being imposed for the first time.
Yesterday (well, in 2008) governments at all levels accounted for roughly 45 percent of health care spending. Tomorrow (let’s say 2014) it will be somewhat more. But it was going to be more even without reform.
Think of it this way, if the government was taking over health care and the health insurance industry, would there be so many people spending so much time figuring out how to deal with the reforms? Brick walls are pretty easy to identify and to deal with – find a new job. Instead we have a much more challenging task: we have to be ready to adapt the way we do our jobs to an uncertain future, but a future that includes a role for us.
And when I say “uncertain future,” I mean uncertain. That’s because, as in the stretched metaphor above, legislation is just the starting point, the framework, for defining that future. There’s a lot more to come. The good news is, for the most part, the regulations, court decisions, carrier policies, etc. will bring some clarity and certainty to the situation.
What will the exchanges look like? The law says there will be exchanges, they will be run by the states, and that nothing prevents brokers from selling their products. There’s more, but it’s more framework along these lines. How the exchanges actually work is unknown at this time, but we’ll be learning more over the next few years.
And even when the regulations come out there’s this nasty thing called reality that tends to make its presence known. The best laid plans of mice and regulators are no match for 300 million Americans. What will give health care reform shape and substance is how Americans use the new system; what parts they seize and what aspects they ignore.
Consider this: there’s nothing in the law that says doctors have to give up their private practices. Yet as the New York Times reports, fewer young physicians are opening up private practices, instead preferring to become salaried employees of hospitals and health systems. The article notes older doctors are following suit. These doctors are reacting to regulations (and to the economy and a host of other factors). But what they’re doing is beyond and besides what current laws require. Similarly doctors, insurers, brokers and consumers will make decisions beyond and besides the new laws.
People who know they are going to be impacted by the new law want to know what those impacts are. The anticipation of change, like the anticipation of a shot or dentist visit (or worse, a shot during a dentist’s visit) is usually worse than the actual shot and/or visit. But for now, anticipation is all we have. The framework is there. The details are not.
So what to do? Worrying simply adds to the stress. Fretting is non-productive. Nothing is going to come as a surprise. And nothing will come suddenly. So the smart thing to do is to prepare.
How to get prepared? I’ll offer my thoughts in upcoming posts.