Mendoza School of Business

Federal health law would lead to rationing, predicts health system CEO

Published: April 19, 2012 / Author: Ed Cohen

If the Obama administration’s health-care legislation survives the U.S. Supreme Court’s review, the United States can expect an eventual government takeover of the health-care system and rationing of care, the head of the nonprofit Mercy Health System of southern Wisconsin and northern Illinois said.

Speaking to business students at the University of Notre Dame on April 13, 2012, Mercy Health President and CEO Javon Bea said such changes would be bad for society. But the legislation under review – the Patient Protection and Affordable Care Act – would actually benefit his vertically integrated organization, he said.

“People say, ‘How do you really feel about the Affordable Care Act?’ As CEO of Mercy Health, I like it because there no one really is … better positioned.”

Bea said that’s because the act would revise the way government programs such as Medicare pay for service into a more bundled model tied to patient outcomes. The idea would be to encourage groups including hospitals and doctors’ offices to coordinate efforts.  

Mercy Health doesn’t have to become more coordinated because it already includes hospitals, doctor’s offices and even a health-insurance provider. The system, which sees a million-plus patients annually, employs more than 4,000 people, 385 of them physicians.

Bea said that fears of the law’s repercussions already have led three big health systems in Illinois, including one larger than Mercy, to approach Mercy about potential merger.  If the Supreme Court allows the legislation to stand, he predicted, those discussions “will move forward quickly.”

Bea, who has led Mercy Health since 1989, teaches as an adjunct faculty member in the MBA program of Notre Dame’s Mendoza College of Business. He talk was part of the College’s The Ten Years Hence lecture series, which explores issues, ideas and trends likely to affect business and society over the next decade.

“The potential with the Affordable Care Act, 10 years hence, is really the potential for rationing of care,” declared Bea.

The problems would start because the law forbids insurance carriers from charging higher premiums to sick people than healthier people. That will lead to higher premiums for all, he said.  

“Very quickly,” he said, employers will find it less expensive to pay the government penalty for not offering health insurance than to pay the escalated premiums. That will “automatically” result in people choosing the government-sponsored health insurance plan from the state-level insurance exchanges called for under the act. That will produce a “single-payer” or government-run health system, he said.

Under a single-payer system, he said, the government will end up paying physicians a fixed salary to care for the population. That will cause them to become much less productive, resulting in longer wait times for medical care and, eventually, rationing.

“A doctor is not going to work 16 hours a day and do eight operations a day when he’s being paid a fixed sum,” Bea said. “He’s going to do the bare minimum at that fixed government salary, and then he’s going to be out seeing whatever individuals have the means that he can do a private procedure for.”

Bea said the better alternative would be for the government to encourage the various sectors of the health-care industry to form vertically integrated systems similar to Mercy Health and be held financially accountable for patient outcomes.

The Ten Years Hence series is sponsored by the O’Brien-Smith Leadership Program, made possible by a generous endowment from William H. O’Brien (ND ’40) and his wife, Dee. The O’Brien-Smith Program endowment provides an opportunity for students and faculty to interact with distinguished leaders from business, government and nonprofit sectors.


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