What Does Health Reform Mean for California’s Economy?

National health reform, a brick of a bill at over one thousand pages, took a year of bruising negotiations to become law. As the country waits for its measures to kick in – the promise of lower-cost care, broader coverage, and tighter insurer regulations – Zócalo asked five local health care advocates and doctors, what does health reform mean for the future of California’s economy? Read their answers below, and join us on July 15 to learn more about what the law means for small businesses, insurers, doctors, and all Californians.

It’s about security

Anthony WrightFor our health care system, it’s the best of times, and the worst of times. Celebration over the new federal health reform law has been muted because of the crisis of the moment – our economic recession and resulting budget crisis. Governor Schwarzenegger has proposed health cuts that would not just imperil lives and harm our health care system, but would undermine our efforts at an economic recovery. The health cuts would be magnified due to the loss of federal matching funds, and would lead to the loss of over 42,000 jobs in both our health system and our wider communities. Most tax and revenue solutions would have less economic impact, and allow us to preserve these jobs along with basic health and human services.

Thankfully, the new federal law does provide some help. It prevents the state from making the worst of the cuts, and has already started providing new federal dollars in a variety of areas: tax credits to help small businesses cover their workers, $250 checks to seniors trying to afford prescription drugs, grant programs for community clinics, public health efforts, and medical professional training.

Over the next 10 years, California will see over $124 billion from the new law, much of it going directly to low- and moderate-income families to help them afford health care. This not only protects so many of our families from medical debt and bankruptcy, but provides funding and stability to our health system – which is one of our state’s major employers.

The new law will provide new energy for our economy. By preventing health insurers from denying care for pre-existing conditions, we allow a new generation of solo entrepreneurs to start their own businesses without worrying if they can’t get coverage.

At its core, the new law is less about health and more about providing economic security. It guarantees that families can get coverage without having to pay more than a percentage of their income in premiums. And it promises that such coverage will be there when we need it – without loopholes, rescission practices, or annual and lifetime caps that leave people with huge medical debt. This assurance will have profound benefits not just for our families and communities, but provides a stronger basis for economic growth moving forward.

Anthony Wright is the Executive Director for Health Access California.


Local policy can help L.A.

Carolina BrionesHealth reform is central to building a California economy that works for everyone. The vast number of uninsured or underinsured Californians has put a heavy strain on local and state government at a time when public resources are stretched to the limit. Health reform that ensures medical coverage for all Californians will reduce this pressure, while at the same time helping the overall economy by stabilizing the workforce and providing consumers with a greater degree of economic security. Affordable, high-quality health care that leads to healthy communities is essential to an economy that leaves no one behind.

While national healthcare reform is a great step in the right direction, innovative local policy solutions are also crucial. Here in Los Angeles, the city council approved a policy last fall that has resulted in new healthcare coverage for an estimated 5,500 airport workers and family members. The policy sets requirements for companies operating at Los Angeles International Airport, which is one of the city’s largest publicly owned facilities and a major economic engine for the L.A. region. Because thousands of low-wage workers now have health benefits on the job, they no longer have to rely on government programs for their care, saving the public an estimated $30 million over five years. Families now have access to life-saving medical care, and have more financial resources available to cover their daily needs. With family health benefits, thousands of working families have gained greater financial stability in a time of economic crisis, strengthening the economy for us all.

Carolina Briones does research and policy work for Los Angeles Alliance for a New Economy.


Keep doctors in good financial shape

Dev Gnanadev at ZócaloHealth reform has the potential to be a boon to California’s workforce and economy, but for that to happen, the state and federal governments must follow through on their initial commitments and provide stable funding to ensure patients get access to care.
Reform will generate $124 billion in federal support for California’s health care system, according to a House committee analysis, and it will save the state $13 billion in health care costs over the next 10 years, the Congressional Budget Office estimates.

A lot more Californians – about 6.5 million to be exact – will have insurance coverage and be able to see a doctor regularly. The key to reform’s success is backing it up with enough support to keep physicians economically viable and participating.

Without reasonable reimbursement rates, as we have seen in Medi-Cal, physicians can’t afford to participate, and that hinders patients’ access to care. Indeed, many Medi-Cal patients struggle to find a doctor to treat them, and some have to wait months to see a specialist.

Fortunately, one element of federal reform includes significantly increasing Medi-Cal’s physician rates – but only for two years. Access must be maintained, if we want to optimize the benefits of reform.

By covering 80 percent of California’s uninsured, health reform will keep more of the state’s workforce healthy and productive. This will reduce the burdens on emergency rooms, which today are overcrowded with uninsured patients. That will save taxpayers money because it’s much cheaper to treat patients at doctors’ offices than in the ER – and it’s more effective to treat them when problems first arise instead of later, after conditions worsen.

Overall, reform offers enormous opportunity, but to maximize its economic benefits – and deliver effective preventive care – the government must live up to its promise and ensure patients can get access to physicians.

Dev GnanaDev is a former President of the California Medical Association and Chief Medical Officer at Arrowhead Regional Medical Center.


We’ll see broad benefits in the long-run

E. Richard BrownThe new health care reform law brings immediate benefits to many California residents and businesses, and in the long run it will help stabilize health care costs that currently burden working families, business, and government.

For starters, the new law immediately provides $250 to seniors to offset the Medicare Part D prescription drug program’s “donut hole,” the coverage gap that 380,000 California seniors fall into. The prescription drug cost protection will fully close the donut hole by 2020. In addition, many very small businesses can receive tax credits to make health insurance for their workers a little more affordable.

The financial benefits of the reforms will actually grow over time, as tighter regulations over health insurance companies’ rates and benefits kick in and subsidies begin to help moderate-income families purchase health insurance. At the same time, expansion of Medi-Cal and increased Medi-Cal payments to doctors and other providers will increase access to care and financial security for low-income families and individuals.

The reforms also begin a long process of lowering health care’s ever rising cost curve. The reforms will change provider reimbursement to encourage greater productivity, incentivize providers to achieve and share in savings, and establish “accountable care organizations” to promote coordinated, higher quality and less costly care – small steps, but they are an important beginning. The reforms will create more pressure for better quality, safer health care, and more effective and less wasteful health care services — which eventually will bring broad economic benefits to California.

Health care reform also gives needed attention to investments in individual wellness and community prevention to reduce the growing burden of chronic disease that saps health and diverts economic resources to deal with diseases that are preventable. The new health care reform law is a beginning, not an end point, and its economic benefits for California will grow.

E. Richard Brown is Director of the UCLA Center for Health Policy Research.


No more desperate measures

Michael WilkesI recently cared for a woman at a free clinic who was diagnosed with breast cancer while serving time in prison for a relatively minor offense. Immediately after she was diagnosed, the prison released her to fend for herself in the California medical jungles filled with many hospitals, but little care. After months of trying to find a cancer doctor to treat her, and a surgeon to operate, she was left with only one choice. If she wanted to live, she would need to commit a crime that would return her to prison where she would receive the life-saving care she needed. This is exactly what she did.

For some, health care is to our economy what fresh water is to life. Without it we are left to fend for ourselves, to try to make do and to hope that what we get is high enough quality to keep us alive.

Illness can tear a family apart not only by fear, infirmity, and sadness but by economics. Nearly half of Californians have had serious burdens placed on them as a result of medical bills. Without access to affordable health care, Californians will delay seeking needed medical care, skip medical tests or procedures, not fill prescriptions or cut pills in half. The result is that people become less healthy and less fit to work and thus less able to access health care – a vicious cycle. Is it fair that sick people without adequate health insurance who decide to seek care are hounded by collection agencies, use up all their life savings, have to sell their homes, go without heat or food, or are forced to declare bankruptcy?

Health care reform will help make California economically competitive, healthy, and compassionate. Reform will increase quality through the elimination of waste and the application of “best practice” to health delivery. Once a drug, surgery, or treatment is proven to work, it will become the standard of care. Doctors will no longer choose drugs or surgical devices based on gifts and favors provided by pharmaceutical companies or device manufacturers. Treatments will be evidence-based, and doctors will need to know which treatments work and which don’t. Economics can play a large role in providing incentives for doctors and hospitals to play ball fairly. Given a level playing field, those who perform best will get paid more and people, being seasoned consumers, will select doctors and hospitals that have better outcomes.

Health care reform means a healthier, more equitable, more compassionate, and more economically sound California.

Michael Wilkes is Vice Dean of Medical Education at UC Davis.


Uneven impact

Leif HasseHealth care is big business, accounting for over 20 percent of U.S. GDP. It makes up a similar percentage of California’s economy. Medicine is mostly practiced, however, at the local level. Consequently, the impact of reform is likely to be felt unevenly. Health reform in itself won’t dramatically increase the amount of money spent on health care, but the way it is distributed within the system will change. Reform’s early effects in California will be felt on a sector by sector and even on a hospital-by-hospital basis. Large private urban hospitals, which will probably consolidate, should do well. So will clinics, which receive a new boost of federal funding under federal legislation. Public hospitals are likely to struggle as their patients move into private coverage and their reimbursements may decline. Device makers, whose products will be taxed to help pay for the cost of the bill, may have their wings clipped.

The “heart” of health care reform was and remains increasing insurance coverage and making it affordable. This should translate into relief, at the household level, for those Californians, especially childless adults, who have been struggling to afford insurance on the individual market and previously haven’t qualified for Medi-Cal, California’s Medicaid program.

The “brains” of the bill, so to speak, are about changing the way we pay for and deliver care over time. Current fee-for-service payment policies tend to encourage a high volume of treatments and not necessarily those that will most benefit a patient at the lowest cost. Scores of demonstration projects, pilot programs, and innovation centers funded through federal reform seek to reverse this practice. However, health care is a source of well-paying jobs in hard times; medical “waste” is, famously, always someone’s income. But should the “value for spending” bandwagon gain momentum, it should especially benefit California’s integrated health systems (like Kaiser Permanente) and medical groups that been leaders in this effort.

Leif Wellington Haase is Director of the California Program of the New America Foundation, and author of A New Deal For Health.

*Photos of Dev GnanaDev and Michael Wilkes by Aaron Salcido. Photos courtesy Anthony Wright, Carolina Briones, and E. Richard Brown. Photo of President Obama courtesy The White House.