Tuesday, August 21, 2012

The "Coporatization" of U.S. Health Care: Why the Good Prognosis for Health Insurers & ACOs May Be Guaranteed

The Disease Management Care Blog is ashamed to admit it, but it's reading Edward Klein's The Amateur. While much of the book is a conservative-partisan rehash of Mr. Obama's alleged personal and political shortcomings, it did raise one issue that intrigued the DMCB:

"Corporatization."   It seems this White House likes it.

As the DMCB understands it, this is a policy agenda that favors the formation of huge corporate organizations that dominate the national business climate. Its argument is that, thanks to their size and scope, these gigantic private, public and not-for profit corporations are better able to marshal the resources it takes to launch transformative programs, achieve efficiencies, take risks and make profits that are beyond the normal reach of traditional commerce. Think about the hundreds of billions-of-dollars-approaches to housing, financial services, battery operated cars, high speed rail, solar power, privatized space travel and, last but not least, health care insurance and delivery.

A key ingredient of corporatization is "partnering" with government in a way that blurs the line between private enterprise and the public interest. Ingredients include government-backed financing, special tax breaks, loans, grants, mixed Boards of Directors and sovereign investment funds.  The downsides are quite familiar also: crony capitalism and too-big-to-fail status 

The best example of corporatization is China. Beijing centrally orchestrates many of its key economic sectors including finance, banking, housing, public transportation and heavy industry with an opaque mix of public and private companies. While political reforms and respect for human rights have been found wanting, the prospect that China could eclipse the United States in the next 25 years has prompted many in the U.S. to admire China and reexamine the merits of old fashioned capitalism and unfettered markets. For an interesting example of that thinking, see this editorial by Andy Stern that recently appeared in the Wall Street Journal.

What could this explain and what are the implications?

1. The abandonment of the government-run "public option" early in the course of creating the Affordable Care Act. Despite his hostile anti-insurer rhetoric, Mr. Obama's ultimate belief in large mega-insurance corporations, a) regulations and b) public subsidies that bind the behemoth insurers to D.C. won the day.  And it ain't going away anytime soon.

2. The near ideological support by this Administration for Accountable Care Organizations. Despite little track record that ACOs offer a viable business model, the notion of large regional providers partnering with and led by CMS is fully consistent with a belief in corporatization.  This makes the DMCB wonder if Mr. Obama's intent is to assure that ACOs succeed, no matter what.

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