What Do You See in the Near Term Future of Healthcare?

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I would separate the next two years from the next 5-10 years. The next two years is going to be profoundly chaotic, because of the sort of provisions of the Accountable Care Act becoming a reality. It's been this Obama-Care often the distance and now it's a reality. January 1 2014 many of the provisions of the act become real and the big things Medicaid expansion, the establishment of exchanges, the provisions on medical loss ratio, many of the taxes, some of this has been in play, but no it's full force, full board.

And it will be the subject of enormous media and political scrutiny over the next 2 years. Now I believe we are going see a very rocky implementation of some of those big things for obvious reasons, one is you've got over half the country governors saying we're not going to expand Medicaid that's not what we're about, and by the way we are not going to set up these insurance exchanges you do it, smarty pants.

If you think you can run this thing from Washington you do it, so it's kind of a passive aggressive approach to all that. Now I think there is a lot blustering and so forth, and I think that will sort itself out over the next two years one way or another. Either the states that are the early pioneers California being an example, pulled us off instead of showing the country that yeah it can be done and then we sort of pressure, and people will gradually fold into accepting that Medicaid expansion and exchanges are sort of viable things to do and maybe some states pull the exchange back to the state level where it will be more culturally compatible quite honestly.

So that's the happy scenario, that we get over to this sort of interregnum period of two years and then we think about the longer term mature alternative or second. The other scenario of short term is this is a disaster in implementation, and it's seen to be such by the electorate, and by the long working policy community and we need to make major course adjustments and I'm personally hoping that is not where we end up but it's a non-zero probability.

It could be go horribly wrong for a whole bunch of different reasons, so that's the short run, the next two years. Beyond that I think we have a very serious issue that we have to address which is this longer run affordability question. I'm quite encouraged in the short run that we're seeing a slowing in the rate of growth in cost quite dramatic to be honest in aggregate even though individual insurance premiums can be scalerly[sp?] escalating for a bunch of weird reasons we could talk about, the general trend is a slowing of the rate of growth in health cost.

Which is a good thing, but in the long run we have to confront the fact that we have an aging society and in particular we are going to see substantial increases in the proportion of people over 65. And that is the Medicare program and that's the big [UNKNOWN] when it comes to budget deficit problems, we go from roughly 5% of GNP spent on public programs for health including Medicare and Medicate, to about 7%.of GNP It doesn't sound like a lot, but that's a 50% increase in the relative burden borne by the federal government, so we got to do something about that and we don't have a good idea.

Quite yet, we have two competing ideas neither of which are smart, do nothing, versus make the consumer pay and I don't think either of those are workable so we need to figure something out. And I think that's a big challenge going forward, it's the overall affordability of Medicare and that in turn is about how do you redesign the delivery system to be sustainable and higher performing.

That's the work that we have over the next decade.