(This is the third installation of the three-part series The Health Policy Disrupter’s Dilemmas. See Part I and Part II)
The ways and means of closing political deals to disrupt health policy by market-based mechanisms and then implementing and administering them through government channels are treacherous, if not self-contradictory, but they resist simple bypasses. Mustering sufficient support to level the playing field for new entrants, but not succumb to picking a newly-favored group of political winners, will be hard enough.
Enacting major, transformative health policy legislation usually requires large majorities, either on a bipartisan basis or after “wave” elections that produce partisan supermajority control that can overpower procedural barriers and wear down incumbent interest-group resistance. Regulatory changes through administrative action by the executive branch is tempting because it suggests a route for quicker, through less sweeping, changes that might overcome legislative inertia and political gridlock in Congress. However, this alternative is limited in scope and permanence. Substantial redirections in funding flows still need congressional approval. The ping pong of creative rulemaking and regulatory guidance by different administrations over recent decades, notably in health policy, has made long-term planning and reliance more difficult. Yet the prospect of further judicial tightening of so-called Chevron deference to executive branch interpretations of arguably ambiguous statutory text may limit the ability of future administrations to re-stretch the law in new, more disruptive directions.
In the particular case of defined-contribution-style health policy disruption, three particularly vexing administrative challenges stand out. First, neither simply averaging the distribution of those individual contributions within the budgets of Medicare and Medicaid, or even employer-sponsored insurance plans, nor trying to adapt them to different health risk cohorts will suffice, even within the better versions of risk adjustment at more aggregated levels. Either those beneficiaries most in need will come up short, or the larger, healthier majorities of those covered and subsidized will object to getting less.
Second, strategic behavior and simple misbehavior by individual recipients of defined contributions, such as in neglecting purchase of sufficient catastrophic risk protection insurance or ignoring investment in other basis health care prevention and maintenance, will be difficult to deter or sanction after the fact. Hypothetical recoupment remedies are politically distasteful and will arrive too late and too limited, at best, to be effective.
Third, any major restructuring of financial assistance for health needs from defined benefits to defined contributions—whether attempted through legislative or administrative means—will need to coordinate the execution, timing, and phasing of multiple moving pieces of new implementation infrastructure.
The biggest political problem with disruptive innovation, particularly in health policy, is that it is disruptive. Officeholders do not like being blamed for that. Political markets clear differently (and certainly more slowly) than economic ones.
Despite all of the above challenges and dilemmas facing this particular flavor of health policy disruption, there remain possible pathways toward more modest versions of the defined contribution model that could improve its odds. Starting with smaller subpopulation groups that are more likely to benefit from any such switch in health care financing is always wiser, provided that it can reach sufficient scale soon enough to embed constituencies insisting on keeping their new benefits. Spending more upfront, with any promised savings much longer term and renegotiable, is a standard ploy for initiating structural changes. It is vital to offer tangible hopes of upside gains rather than defensive rationales for “it could be worse” loss reduction. Of course, health policy reform rhetoric always outpaces its accomplishments, because the marketing department rarely listens to the service and repair team. (That can happen to the best of us!)
Initially incremental changes still can sow the seeds of future disruptive innovation that evolves beyond the political arena. We might dream of product and service innovation through truly disruptive technology that bypasses conventional regulatory categories as a more promising path to entry. Or increased pressure to redirect resources elsewhere to meet other valued purposes beyond more health care services. In the meantime, more likely alternatives offer much less in effective results. On the one hand, another round of competing slogans that rarely intersect. On the other hand, a different kind of disruptive innovation—immense “big bang” legislative explosions that leave unconnected wiring and incompatible pieces behind for others to reinvent and reassemble administratively.
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