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Health Care's Challenges Beyond the SCOTUS Ruling

University of Pennyslvania Health System Chief Ralph Muller Weighs In

Companion article: Insurance, Health Care and The SCOTUS Decision: A Penn Panel of Experts Looks Ahead

PHILADELPHIA -- At the same time the Supreme Court ruling upholding the Affordable Care Act clears the way for the full implementation of health reform, it also brings into focus many of the obstacles to that goal, according to Ralph Muller, CEO of the University of
Ralph Muller
Photo: Hoag Levins

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Appearing at a round table discussion convened by the LDI Health Economist, Ralph Muller, CEO of the $4 billion-a-year University of Pennsylvania Health System, detailed the challenges facing full implementation of the health care law.
Pennsylvania Health System.

Muller, who oversees a $4 billion-a-year sprawl of academic hospitals and health care services, spoke on a panel convened by Penn's Leonard Davis Institute of Health Economics to discuss the implications of the U.S. Supreme Court's decision upholding the health reform law.

"I am very glad the justices upheld the act because otherwise, there would have been chaos," said Muller, also the former CEO of the University of Chicago Hospitals and Health System and, earlier in his career, Deputy Commissioner of the Massachusetts Department of Public Welfare where he oversaw the state's Medicaid program.

Law's shortcomings
Speaking from a dais that included five other top Penn health policy research experts at the Leonard Davis Institute of Health Economics, Muller said his sense of relief was tempered by his understanding of the size and complexity of what ultimately had to be accomplished -- as well as by some of the shortcomings of the reform law and heavily entrenched practices of current health care delivery systems.

"High costs are one of the common criticisms of the American health care system," Muller continued, "And one of the reasons administrative costs are so high is that everyone tries to figure out how to pass the hot potato. There are too many incentives to take the well-insured and not provide care to people who are less well insured at the same time you have hospitals expanding in the suburbs and closing in the inner cities. That's the craziness of the American health care system, and one of the things the ACA was intended to resolve, or, at least mitigate."

"Secondly," said Muller, "The ACA does not take on the fee-for-service system we have in this country that lends itself to a focus on doing more services rather than taking care of populations wisely," he said. "Until there is a more significant change in the payment system, some of the issues that bedevil everybody in the American health care system will continue."

Political realities
He also pointed to the political realities that directly define the policies and economics of so much of U.S. health care. "An issue that continues to dominate the U.S. is how much money you put into the public sector," Muller said. "That issue may not be in front of the Supreme Court but it certainly is in front of the electorate. Health care's next big decision will be who wins the November Presidential election."

"For that reason," he said, "I prefer that Mr. Obama gets reelected. We should look to other countries like the UK to understand why. There was one set of reforms under Mrs. Thatcher. Then Mr. Blair arrived and flipped the switch again. Mr. Cameron followed with another switch. You can't run health care, which is so complex, by switching policies every four or five years. You've got to let it run out twenty years at a time and let these things work themselves out."

Medicare Advantage
"I'm a fan of the Affordable Care Act," said Muller, "but wish that instead of doing ACOs and bundled care, they would have fixed Medicare Advantage."

That program, which enables beneficiaries to get their Medicare coverage administrated through private insurance plans, was launched in 1997 and significantly overhauled in 2003.

"The politics of that," said Muller, "was that a Democratic administration comes in and they want to reject everything that Mr. Bush did. They should have just fixed Medicare Advantage. That program allows for managed care, which may not have worked so well in recent years but could really be modified in a powerful way. As we look forward, that's the kind of experiments we'll have: Let's put a certain amount of money into health care and figure out how to get the doctors and nurses more involved in allocating that care."

"There is academic literature from 2003 and 2010 on how to fix Medicare Advantage," he said. "That allows for local involvement; Medicare Advantage plans can be in Philadelphia and Allentown and Lancaster. They don't have to be state wide. And, therefore, you get the benefit of all health care being, in a sense, local at the same time you put a boundary around how much you are willing to spend."

Private market
Muller predicted a "real spiking" in the popularity of Medicare Advantage plans in the next four years. "We have to somehow figure out how to harness managed care to what doctors and nurses know best, whether you call that 'accountable care' or 'population based' care. That's the direction we have to go in. Let the health care professionals work within an overall budget and use the private market in 50 states or 300 hospital referral regions to figure out how much we're willing to spend," he said.

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Hoag Levins is the managing editor of The LDI Health Economist.

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