February 20, 2009

VUSN Centennial lecturer sees challenges for health reform

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Tom Scully, J.D., former head of the Centers for Medicare and Medicaid Services, talks about health care reform at last week’s VUSN Centennial Lecture. (photo by Susan Urmy)

VUSN Centennial lecturer sees challenges for health reform

Tom Scully, J.D., former head of the Centers for Medicare and Medicaid Services, said universal health care coverage is “probably a long way off.”

Scully, who spoke at Vanderbilt University School of Nursing last week as part of the school's Centennial Lecture Series, began working with the Senate in 1981 and was a chief health care strategist in President George H. Bush's cabinet.

He believes today's problems are the result of “an amalgam of well-intentioned programs that don't fit together very well” and that reforming commercial insurance is the best chance of making it work. “Health care is a giant pod of quicksand for any politician,” he said.

Most elected officials do want to get involved in what has been a losing battle since President Harry Truman was in office. “Good political advice is to run the other way.”

To illustrate partisan differences, Scully used Vanderbilt as an example.

The Medical Center receives the majority of its income from Medicare and Medicaid payments at fixed prices. Since the payment is fixed, Republicans believe there is little financial incentive to improve quality or treat greater numbers of patients; however, Democrats do not like giving insurance companies more power.

“These are huge philosophical differences that divide the parties and make reform so difficult to reach,” said Scully.

One possible new approach is a plan in which state or regional pools would be mandated.

The basic health plan would require a standard $750 per person deductible. The economically disadvantaged would receive subsidized care, while people with additional benefits would have those benefits taxed as income. Large employers could opt out of this program, but would pay a fee to do so.

Scully estimates the cost of this plan would be $100 billion per year and would involve redistributing monies already available.

For this approach to work, hospitals would have to give up subsidies currently received from Medicare and Medicaid, such as disproportionate share and graduate medical education payments.

“There is something for everybody to hate about this plan,” he said.

Some other potential solutions include a plan in which everyone would get Medicare, one with vouchers and tax credits and a program modeled after Federal Employee Health Benefits Plan (FEHBP). U.S. Sen. Ron Wyden's plan, which is like FEHBP, “is absolutely philosophically the correct thing to do but is also never going to happen,” he said.