Health Reform Myths and Facts: Part One

I spend most of my days trying to help healthcare communications and government relations specialists work together. You could say that my professional life is like a sixth grade dance hall—boys on one side and girls on the other. Each side is more or less aware of the other but is at various stages of engagement. 

The reasons for the separation date back to the days when the roles of communications and government relations were quite different. But the two specialties can also work together.

For example, when President Obama was sworn into office and the health reform debate heated up, communicators knew that corporations had to engage in the debate, and government relations specialists provided the information to develop the communications strategy. When that bill (now known as the Patient Protection and Affordable Care Act, or PPACA) was signed, however, the partners stopped dancing and went back to the wall. Why?

I believe it’s because communications professionals have fallen victim to three major myths about what PPACA means to their businesses.

Myth #1: PPACA strengthened the government’s position as an important audience.

Fact: PPACA tipped the scales, making the government THE most important audience.

In the realm of healthcare, your most influential stakeholder is government. Period. Recent data from the Centers for Medicaid and Medicare Services’ (CMS) actuarial report of national health expenditure projections released in January irrefutably demonstrated this.

  1. Federal and state government pays for half of  U.S tamiflu over the counter. health spending.
  2. Of insured spending, government programs pay 57 percent of healthcare costs, compared to 43 percent by employers and private health plans.
  3. In any healthcare market segment, Medicare and Medicaid are #1 or #2. Medicare is the largest payor of hospitals, physicians, and prescription drugs. Medicaid is the second largest.
  4. Medicaid is the largest payor of home care and nursing homes, ten times larger than all private insurers combined.

Mere spending levels fail to fully demonstrate the extraordinary market power and influence of the government.  Government’s sheer size drives provider behavior, as does its immense regulatory authority over how providers operate and deliver care. Other payors quickly follow government coverage and payment methods. Increasingly, government programs such as Medicare and Medicaid are regulating prices through mandatory rebates, payment caps and similar mechanisms. These, in turn, drive pricing practices across the private sector.

And all this was happening before the passage PPACA.

PPACA makes the government’s role as a payer even bigger. Medicaid is expected to grow by at least 25%, to over 75 million beneficiaries. The government will be subsidizing coverage to an estimated 25 million people as well as creating an entirely new, government-run marketplace – called insurance exchanges — where individuals will buy insurance. This will give the government more authority to regulate private healthcare plans benefits, premiums, competition and spending. In essence, PPACA gives the government the power to define healthcare benefit packages for the vast majority of Americans.

Clearly, with this kind of purchasing power, government audiences should command the top of any healthcare business or organization’s stakeholder list.

Read the full article, including myths 2 and 3, as it appeared in Communiqué magazine.