Road to Reform: The Healthcare Regulatory Burden

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A recent article from California Healthline looked at some of the regulatory problems our health care system is facing and some of the solutions to those problems that are currently underway. 

The article started off by noting that although President Obama used 570 words to urge Congress to pass the Affordable Care Act in 2010, he barely used even 50 words to discuss health care reform in his State of the Union Address this year.  Perhaps this suggests that his administration realizes the controversy and regulatory burdens the ACA has created, particularly for small businesses. 

Consequently, “As Obama continues to shift away from touting the ACA and focus on its implementation, it’s clear that streamlining federal regulations will be a top priority for the White House this year.”  In fact, “the president spent more than 130 words on his renewed cause of streamlining the government.”  Obama twice referenced the need to do away with federal “red tape,” a term he never used in his first three addresses to Congress.

Health Care’s Regulatory Burden

Doctors in America find themselves cutting red tape or getting stuck in it almost every day.  U.S. physicians already spend nearly four times as much as their Canadian counterparts on administrative tasks, such as filing claims and billing for patient care, according to a recent Health Affairs study.

One study takeaway: the sheer volume of insurance-related paperwork. Staff for U.S. physicians spent 53.1 hours per physician on administrative tasks each week, compared with 15.9 hours for physicians in Ontario. The study also found that time spent on administrative tasks costs each U.S. physician $82,975 annually, compared with $22,205 each for Canadian physicians

And new laws may not necessarily help. The ACA’s Physician Payments Sunshine Act — designed to shine a light on industry contributions — “will benefit only accountants, bureaucrats and lawyers,” a Harvard Medical School physician argued in a Wall Street Journal editorial.

There’s also the inherent inertia that keeps regulatory burdens in place, from hard-to-overturn government restrictions to outside interest groups that seek to preserve the status quo.  However, Obama mentioned in his address this year his executive order that federal agencies must “eliminate rules that don’t make sense.”  He noted how the administration has “already announced over 500 reforms, and just a fraction of them will save business and citizens more than $10 billion over the next five years.”  Consequently, the article explained how these reforms are playing out in health care. 

CMS three months ago nixed several federal regulations for health care providers and debuted new rules that allow:

  • Hospitals in the same system to have their own governing boards;
  • Nurse practitioners and other non-physicians to have more responsibilities;
  • Smaller hospitals to outsource some lab tests and radiology tasks; and
  • Ambulatory surgery centers to eliminate time-consuming and unnecessary patient rights regulations.

According to HHS Secretary Kathleen Sebelius, the changes “eliminate unnecessary and obsolete standards and free up resources” for providers to focus on patient care. HHS also added that the changes will save the industry $1.1 billion next year and $5 billion over five years.

In addition, the article noted how another important development is that the administration official who oversaw the White House’s regulatory brush-clearing — Jeff Zients, the nation’s first Chief Performance Officer — has been announced as the new head of the White House’s Office of Management and Budget.  In his new role, Zients’ explicit responsibility will be to advise the White House on ways to cut spending, reduce duplication and stay within the federal budget.  Given how Obama’s first OMB head, Peter Orszag, had made controlling health care costs the centerpiece of his work as the Congressional Budget Office’s director, we may see more healthcare regulatory streamlining. 

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