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Analytics Magazine

Legislative Analysis: Health Care Reform Has Passed. Now What?

May/June 2010


Predicted outcomes: Guarded optimism for general public and patients; excellent prognosis for health care system analysts.

Douglas A. Samuelsonby Douglas A. Samuelson

Congress’ landmark health care reform legislation is just the beginning of the restructuring process. Now health care systems analysts will see huge opportunities, as everyone potentially affected will need help to figure out what the act actually provides and how to respond.

The act is more than 2,000 pages long, and it is overwhelmingly likely that there is not one person in the entire country who fully comprehends it. This is not an unusual situation for major legislation. Senators and representatives rely on analyses by the Congressional Budget Office, legislative counsel, committee staffs and, yes, trusted lobbyists to guide their votes. Even a highly experienced lawyer would have great difficulty reading such a law and interpreting it, as literally every word and clause has been or will be construed by multiple courts, often in conflicting ways.

Executive branch agencies will now write implementing regulations that will probably be several times as voluminous as the act, and these regulations, too, will be interpreted by numerous and varied court cases and administrative proceedings. Some provisions phase in over several years. In short, you should dismiss as a raving babbler or a liar anyone who assures you that he or she knows exactly what this act will do, good or bad.

Based on the Kaiser Family Foundation summary of the act, Alain Enthoven’s prior work, Tom Daschle’s book that many consider a blueprint for the health care legislation, a number of other sources and this reporter/analyst’s own considerable experience in the subject over the past 20 years (see references for all work cited above), some predictions seem reasonably solid:

Many but not all of the current uninsured will now be covered. The mandated coverage phases in over several years, and one major enforcement mechanism is that people will be compelled to enroll when they seek care. There are some exceptions to the mandate, and several states have filed lawsuits contesting the requirement.

People excluded from coverage because of pre-existing conditions will now have more and better choices. This provision takes effect immediately and is one of the clearest consequences of the act. Insurance companies will be intensively analyzing how this may affect them and what they can do about it.

People with good health insurance will see their premiums rise. Health care costs have been rising and will continue to do so; premiums reflect this. Some of the people who will now get coverage because of the new law are high-risk and will be put into a temporary high-risk pool, similar to the assigned risk pool for automobile insurance, cross-subsidized by other people, and insurance companies will want to increase their revenues accordingly.

Over time, premiums may rise more slowly than they would have without the new law. This is because, along with some high-risk people, a large group of young, relatively healthy people will also be pushed into the insured pool, lowering the average risk and cost. Economics predicts that insurance companies will compete for these desirable customers by offering more attractive rates. The creation of health insurance exchanges, basically purchasing pools that negotiate better deals for beneficiaries, will push the market toward lower rates — at least that’s what economic theory predicts. Some states, in particular California as a result of operations research analyst Enthoven’s efforts there, have reported success with this approach. Still, what will happen on a national scale remains to be seen.

Some taxes will rise, including some not yet specified. Again, this would also have happened without this legislation, and it will be difficult if not impossible to determine whether the new legislation decreases or increases the effect. As the economy improves, deficit reduction will become increasingly important and politically attractive, and Congress will respond.

There won’t be “death panels” making life-or-death decisions case by case, but there will be some rationing of care. Actually, this happens now, and it will continue to happen the same way: some expensive procedures simply won’t be covered unless and until their life-saving necessity can be clearly demonstrated. What will change is that some of these exclusions will become more visible and, therefore, potentially more widely debated and reviewed. People with more money will continue to have more choices — such as buying the care they want, perhaps even traveling outside the United States to do so — than other people.

With or without the public option, the nation will move toward a single set of rules and procedures for payment. The current hodge-podge of different requirements for claims processing is one of the big reasons that the American Medical Association and the American Hospital Association, among other providers’ groups, supported this legislation. Some hospitals have to pay claims specialists to file their claims with as many as 40 insurance carriers, all with different rules and procedures. Standardizing will save serious administrative costs. As with Medicare now, standardizing rules and procedures can occur while private insurance carriers continue to administer the claims.

Standardization of claims rules may ease the long-delayed transition to standard electronic patient records. This improvement in information support for medical decisions could, in turn, substantially reduce preventable deaths from system errors, principally bad hand-overs of information among providers. In 2000, the Institute of Medicine, part of the National Academy of Sciences, published a study estimating that medical errors accounted for nearly 100,000 preventable deaths per year in the United States, mostly attributable to system problems despite reasonable care by all the individuals providing care and related functions (such as labs and radiology). They followed up with a second publication in 2001, recommending system improvements to address these problems.

Another aspect of uncoordinated care is polypharmacy, the use of multiple prescription medications in combination, with too little attention to possible interactions. Polypharmacy is what killed Anna Nicole Smith and Michael Jackson, both of whom apparently took deliberate steps (multiple doctors, multiple pharmacies) to sidestep warnings. Polypharmacy also most likely killed Brittany Murphy, who does not appear to have received adequate warnings or to have ignored or evaded them. Safety testing is usually done one medication at a time, so interactions can take quite some time to become identified and publicized. This is a growing problem, and information technology offers a promising answer.

There will be much more research and assessment about comparative effectiveness of treatments. This is the big payoff for analysts who have taken the time to learn about medical outcomes evaluation, assessment of effectiveness and risk of new treatments, preventive care and other such topics. The act specifies that the federal government will fund more research in this area. Providers, regulators and insurers will want to know what really works. Litigation over “rationing” will hinge on this question. Employers will want to know how to tailor the health insurance packages they offer to get good perceived value for restrained cost.

National security will improve somewhat. The best defense against a pandemic is prompt detection, which requires the first people affected to seek treatment quickly from providers who are part of the reporting network. A delay of as little as a week in detecting an incipient epidemic can make a huge difference in the extent of its spread. The magnitude of the effect of having most people seek medical attention quickly in the event of infection is difficult to measure — another analytical challenge. By way of illustration, however, the Centers for Disease Control (CDC) estimates that, through Feb. 13, 2010, the 20092010, H1N1 “swine” flu had infected 42 million to 86 million Americans, mostly before an effective vaccine could be manufactured and distributed in sufficient quantity. This flu, fortunately, had unusually low lethality, killing less than .05 percent (8,520 to 17,620) of those infected. More serious pandemic influenzas within the last century have had lethality of 15 to 20 percent or more; according to the World Health Organization (WHO), the H5N1 “bird flu” a couple of years ago killed at least 292 of the small number (493) of people confirmed infected, mostly people handling birds in Asia — that is, 60 percent lethality. From these data, it is evident that a flu as infectious as the recent H1N1 but with 20 percent lethality is a real possibility, albeit improbable, and such a flu could kill 8 to 17 million people in the United States alone. No conceivable attack in the United States with a single thermonuclear weapon could kill nearly as many people. Earlier detection and response is the best defense against such a catastrophe.

There will probably be secondary and indirect economic benefits. Under the current situation, many people are forced to base job and business decisions heavily on availability and quality of health insurance for themselves and their family members. Removing this constraint should stimulate productivity. Again, measuring the actual effect will be a challenge.

Improved access to mental health care and in the effectiveness of such care will produce substantial benefits. The presidential commission that studied mental health care during the last administration was emphatic in concluding that parity between mental health claims and those for other ailments would improve health and lower costs. Among the probable benefits are lower costs in the criminal justice system: most serious mental health diagnoses are now made there, as the police and courts have to deal with large numbers of non-violent nuisance offenders who should be treated, not incarcerated.

One thing widespread early screening will not do is reduce violent crime, as the false positive rate of screening is higher than the incidence of the relevant disorders. On the other hand, more effective use of information to keep people with a known propensity to violence from acquiring weapons would make a big difference. The 2008 Virginia Tech shootings, for example, could have been prevented if the intent of the existing state law had been carried out: the shooter was omitted from the “no gun purchases permitted” database after a court finding that he was disposed to violence because of an ambiguity in the law specifying who had to be entered into the list.

Many of the commission’s recommendations were formally adopted but not funded to the recommended levels. The new legislation will direct more money to mental health, and removing the risk of losing insurance coverage may prompt some more people to seek treatment. Again, however, measuring actual effects and assessing policy alternatives will require quite a bit of analysis.

The Democrats will suffer a backlash in the 2010 elections, but the longer-term political consequences are yet to be determined. Many people in the country are palpably uneasy about this legislation. Recent polls have disapproval leading approval of the new health plan by margins ranging as high as 20 percent while overall disapproval of Congress is as high as 75 percent. However, even if the Democrats lose control of at least one house of Congress in 2010, the news for President Obama’s re-election campaign in 2012 is not necessarily bad. The same polls cited above show his approval and disapproval ratings about equal.

President Clinton was re-elected comfortably in 1996 despite failing to enact his health plan and losing both houses of Congress in 1994. According to one especially successful predictive model — political historian Allan Lichtman’s “Thirteen Keys” — having made a major policy change helps the incumbent, regardless of how popular the change is; just having had the clout and leadership skill to get it through is a favorable indicator. (Professor Lichtman’s model is admittedly controversial. It does have, however, the significant selling point of having predicted correctly, well in advance, every presidential election since 1980.)

If, by 2012, the health care legislation doesn’t look so bad, there is no serious challenge from within his own party or from a third party, the economy is out of recession, and there have been no major scandals, social upheavals, or major military or foreign policy setbacks, the Thirteen Keys model predicts President Obama’s re-election, and one can easily imagine him asking on the campaign trail, “So what was all that fuss about?” and gaining accordingly. By then, some astute congressmen and senators will have gained credit for good constituent service by helping people deal with the new system and will therefore campaign in support of the new law.

There will be much additional legislation “adjusting” and “correcting” features of this act, as its effects become clearer. This is what Congress does to all major legislation. This is most likely the safest prediction we can make.

Health care systems analysts will prosper. We all agree that the new law is complicated. Therefore, there’s a market for figuring out what it will do and how to deal with it — enough of a market to keep many of us employed for a long time.

Douglas A. Samuelson ( is a senior consulting analyst for IBM, focusing on national security and defense issues, and president of InfoLogix, a small consulting and R&D company in Annandale, Va. He is a frequent contributor to OR/MS Today and Analytics. He has a doctorate in operations research from George Washington University.


1. John M. Barry, “The Great Influenza: The Story of the Deadliest Pandemic in History,” Viking Penguin, 2004; Penguin paperback, 2005.
2. Donald Berwick, E. Blanton Godfrey and Jane Roessner, “Curing Health Care,” Jossey-Bass, 1990.
3. Centers for Disease Control, U. S. Department of Health and Human Services, , retrieved April 12, 2010.
4. Committee on Quality of Health Care, Institute of Medicine, “To Err Is Human: Building a Safer Health Care System,” Washington, D.C.: National Academy Press, 2000.
5. Committee on Quality of Health Care, Institute of Medicine, “Crossing the Quality Chasm: A New Health System for the 21st Century,” Washington, D.C.: National Academy Press, 2001.
6. Tom Daschle, with Scott Greenberger and Jeanne Lambrew, “Critical: What We Can Do About the Health-Care Crisis,” St. Martin’s Press, 2008.
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13. RealClearPolitics, various polling reports, especially , retrieved April 13, 2010.
14. Douglas A. Samuelson, “A Dose of O.R.: Analysts Explore Ways to Improve Quality and Productivity in Health Care,” OR/MS Today, December 1991.
15. Douglas A. Samuelson, “Diagnosing the Real Health Care Villain,” OR/MS Today, February 1995.
16. Douglas A. Samuelson, “A New Frontier? Health Services Research and Medical Informatics,” OR/MS Today, February 2000.
17. Douglas A. Samuelson, “Can Early Screening for Mental Disorders Reduce Criminal Justice Costs?” George Mason University Civil Rights Law Journal, 2001.
18. Douglas A. Samuelson, “Can O.R. Help Stop ‘The Invisible Plague’?” OR/MS Today, June 2004.
19. Douglas A. Samuelson, “Can We Detect ‘The Coming Plague’?: How Emerging Health Threats Are Sneaking Up on Us,” OR/MS Today, June 2008.
20. Jon Stewart, “Commentary: Alain Enthoven: An Outspoken Champion for the Prepaid Group Practice,” The Permanente Journal, Vol. 8, No. 3, Summer 2004.
21. E. Fuller Torrey, “The Invisible Plague: The Rise of Mental Illness from 1750 to the Present,” Free Press, 2002.
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