The BCRA Is An Improvement Over Obamacare. Here’s Why..

The BCRA Is An Improvement Over Obamacare. Here’s Why..

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Dr. Jha writes on these pages in typically stirring fashion about his views on the recent health care kerfuffle and rightly so fingers what the real focus of our efforts should be: Cost.  He ends by slaying both sides because of their refusal to confront the hospital chargemonster – the fee schedule hospitals make that remarkably only really applies to the uninsured.

Unfortunately, the solution proposed ensures hospital fee schedules for the uninsured are no greater than Medicare reimbursements, which is far from perfect.  Consider that the Medicare reimbursement for a stent placed to an ischemic limb is in the range of $15,000.  While this makes for a less daunting bill for the uninsured, in reality for the vast majority of folks that are uninsured $15,000 is about as far away as $150,000.

But my major disagreement with the good Dr. Jha relates not to his attempt to slay the chargemaster, but his underappreciation for the attempts made in the GOP bill to control health care spending.  A conservative mantra about the why of health care costs focuses on the existence of deep pocketed third party payers that make costs opaque to patients.  Attempting to have patients understand what they’re being charged has been conservative dogma, and there are a number of studies that suggest patients with health saving accounts are more cost conscious when they interact with the health care system.  Dr. Jha glosses over this important point – This is the Republican attempt to bend the cost curve!  And at least to this physician who’s lived through the last eight years, a plan that has a considerably greater chance of success than any number of failed acronyms designed so far by enlightened theorists from the Acela corridor.

HSA chart

The policy experts are hard to convince about HSAs, and point to the above chart as evidence of the uselessness of HSAs.

Our major problem clearly relates to the small number of patients (5%!) that account for 50% of all healthcare spending.  Patients that spend within their deductibles, I am told, aren’t why health care is expensive.  But this argument seems to imply that that the low lying fruit lies in the sick 5%, rather than the relatively healthy 95%.  This is bass ackwards – looking for cost efficiency gains is certainly possible for the 42 year old man who walked into my office today, a full year after dying while shopping at a PETCO.  He had no medical history prior to falling flat on his face in aisle 3.  A nurse who happened to be nearby started CPR, a police officer responding to the 911 call happened to have an defibrillator which found a shockable rhythm and delivered a shock which allowed the patient to make it to a neurointensive care unit where he was cooled to limit injury to his brain.  On waking, multiple incessant bouts of a ventricular arrhythmia – an electrical storm – followed that required not one, but two emergent procedures performed after hours on separate days.  A team lead by electrophysiologists finally mapped the source of his electrical storm and extinguished it.  The intensity of care that was delivered in this case is matched only by the cost of all of this care.  This is care that won’t be seen in life expectancy or infant mortality comparisons that would give you the false impression that Cuba or Chile are more appealing countries to get sick in.

Critics of the current system will point out that even if overall life expectancy and mortality statistics are blunt instruments, a more granular look at mortality rates for conditions that should be preventable – so called amenable mortality – also do not give favorable reviews to American health care.  A recent Lancet analysis that accounts for amenable health care conditions still ranks the United States behind the usual cast of European countries but also finds itself tied with Estonia, and behind Qatar and Kuwait.

Those puzzling over a model that finds Andorra and Iceland(#1 & #2) as countries that are ostensibly the best at preventing disease, won’t be surprised to hear that I think the methodology used to generate this list borders on useless.  Simply assigning cause to mortality can be difficult.  Attempting to ascertain which deaths may have been preventable with societal intervention with some degree of certainty would seem to be a tall task.  But there is no amount of complexity that seems beyond the data scientists of the 21st century.  Take ischemic heart disease – a disease that accounts for 7 million deaths world wide.  The WHO takes the stance – largely based on correlative studies – that a large percentage of cardiovascular mortality is preventable.  The actual percent preventable is again more feelings based on correlation with some experts stating 50% of deaths may be prevented with increased attention to diet and exercise.  Never mind that we don’t know what a good diet is, and the evidence from randomized control trials of diet would suggest at most a modest effect of diet on cardiovascular events.

Diet-effect-CVdeath

Even if we were to agree about the strength of the link between diet and cardiovascular mortality, is it reasonable to think that cheesesteak-loving Philadelphia will be amenable to cheesesteak reduction strategies?

Perhaps even more importantly, the diseases that are amenable to reductions in mortality change over time.  Chronic Myelogenous Leukemia (CML) used to be a diagnosis associated with a 5 year survival of 31%.  The discovery of Gleevec – a daily pill – revolutionized the treatment of this disease. Five year survival now stands at 69%.  Andorra and Iceland, by dint of size and economic scale, contribute little to the development of the next generation of wonder drugs and therapies but do accrue all the benefits of such a system.

The cost of such innovation is not cheap.  The cost of care delivered to all out of hospital cardiac arrests in the hopes that one 38 year old will walk out are massive.   It is easy to see why we spend so much on so few.  But should we be looking for savings in those with the greatest potential for improvement?

I’d argue strongly that it is the remaining 50% of care provided to 95% of the population – statins for primary prevention using a calculator that overestimates risk and would expand the pool of statin takers inappropriately by millions, ER visits for chest pain that take a test first, ask questions later policy, and 90% of MRIs for back pain.  This is the type of care that desperately needs primary care physicians with time to parse and avoid this type of low yield, expensive utilization of health care resources.  And it is with this in mind that I get on my obligatory soapbox whenever anyone asks to suggest that the Direct Primary Care movement (which involves direct flat monthly payments between patients and physicians to cover the vast majority of outpatient care needs) is an important part of the solution.  I’ve written before about how Obamacare doesn’t work particularly well with the DPC movement because the generous essential health benefits and the individual mandate results in physicians having to convince patients to pay $50-$100/month on top of the $400/month they are already paying for that wonderful high deductible bronze plan.  The BCRA is a win for DPC because it takes away the individual mandate, allows skinnier catastrophic only plans and allows for HSA’s to be used for monthly subscription type payments to physicians.  For those without the income to fully fund HSAs. state subsidized HSAs with nominal $5-$20/month patient payments would prove to be a cost efficient way of delivering high value care to those who need it the most.

The biggest issue Democrats have with the GOP attempts to reform health care as it exists relates to federal subsidies.  Support from the federal government in the House version for buying health insurance was in the form of flat tax credit based on age.  This happened ostensibly because small government conservatives like Paul Ryan, and Rand Paul believe any federal subsidy to insurance companies or patients raises the cost of health care.  Market-based proponents of universal health care are supportive of expanded subsidies to provide a safety net and the Senate Bill is reflective of these concerns.  The Senate version of the health care bill (BCRA) simply builds on the ACA infrastructure to provide premium tax credits that are less generous but (like the ACA) are based on age, income, and cost of insurance plans in the local market.

At 100% of the FPL ($11,880) premium payments would be capped at 2% of income –  ~$23/month.  If a plan with a premium less than the median value of plans locally were chosen, the monthly cost would be even less.  Someone in their 20s at 350% of the FPL ($41,580/year) would pay no more than 6.4% of their income in premiums ($260/month), while someone in their 60s at 350% of their FPL would pay a maximum of 16.2% of their income in premiums ($655/month).

High risk individuals with pre-existing problems have always been a tough lift for the individual market, and the ACA dealt with this by not allowing insurance companies to risk adjust – a so called community rating.  This had the effect of raising insurance costs greatly and saddled young, healthy individuals in the pool with higher costs – a fact not lost on the healthy insured who saw entering the market as a bad deal, and stayed out of the marketplace – choosing instead to pay a fine for not having insurance.  This was the problem of adverse selection that the BCRA hopes to solve by creating high risk pools and allocating fairly large sums of money specifically to help states lower the out of pocket cost of care for these individuals. The hope is that these direct federal subsidies for high risk patients will protect and stabilize the larger individual market. (Alaska appears to have done this successfully, funding the plan through a tax on health insurance companies).  The BCRA would allocate $50 billion in the first 4 years and another $60 billion over the course of 8 years for this same purpose.  It is hard to decide if these are appropriate amounts, but scale and context is provided by the national high risk pool that existed under the Obama administration prior to the ACA coming online in 2014.  At its peak enrollment, ~100,000 patients were enrolled in this plan with an average premium of ~$32,000.  Even tripling the number of currently high risk uninsured patients to 300,000 would still mean that the proposed funding would be greater than what was allocated per patient in the national high risk pre-ACA pool.

The CBO thinks little of any of these machinations – the coverage numbers change little whether there was a flat tax credit or expanded tax credits as present in the senate bill.  It would seem that the only way to get a good CBO score would be to impose a strong individual mandate with heavy subsidies for insurance companies, which effectively doubles down on the ACA approach, and does nothing to actually lower the cost of healthcare.

The current debate about the GOP bill, which looks and smells a lot like the ACA, misses the point  as it is designed to do by those having the debate.  The goal of those on either side is to win at all costs – and in this case the party under siege, the Democrats, have weaponized the debate in order to provoke moral outrage.  It is virtually impossible to discuss Medicaid reform at this point because anyone supporting alternative paths that don’t involve greater federal subsidies for insurance companies is guilty of manslaughter.

The debate we should be having should focus on how to make the Medicaid program financially sustainable, expand access, and improve the quality of healthcare.  The only way to achieve this is to decrease the cost of health care – a goal that won’t be achieved by simply making hospitals charge medicare rates to the uninsured.  The Senate Bill attempts to create a robust individual market that safeguards patients from catastrophic medical bills, expands individual choice and personal responsibility with HSAs, and expands subsidies for those that need it.  There will be losers in an alternative path, and it should come as little surprise that organized medicine, the American Hospital Association and health insurance plans,are vehemently opposed to any plans that would threaten their stranglehold on the nation’s wallet.  I think we can do better, and current reform efforts that put patients in charge of their healthcare dollars with additional help for those that need it seems a reasonable step forward.

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48 Comments on "The BCRA Is An Improvement Over Obamacare. Here’s Why.."


Member
Jul 11, 2017

Any aspect of financial reform in medicine has to realistically include not just the hospital “chargemonsters” but all aspects of the healthcare value chain. One can not seriously argue that there are not ample profits when hospitals are buying the newest and technology to put in their freshly constructed buildings, insurance companies are sponsoring sporting teams, and surgeons are driving McLaren sports cars.

The time is long overdue to sort this out by following the dollar and finding where it goes.

Member
Barry Carol
Jul 10, 2017

Anish, I try to make it clear to doctors who treat me that I care about costs even when insurers or taxpayers are paying the bill. I know most people don’t do that but they should. Health insurance is expensive because healthcare is expensive. It’s as simple as that.

I wonder to what extent medical practice patterns are developed by the specialty societies with the reality of our litigious society in mind. Defensive medicine baked into the system reflects the reality of litigation risk in this country that is probably not present to nearly the same degree in most other developed countries in Western Europe, Canada, Japan and Australia.

Emergency room doctors are treating mostly patients they don’t know, never met, and may have no idea of what their medical histories are especially if the patient can’t communicate and no family member is present who can do it for him. It’s quite probable that the natural bias will be to order all the tests the doctor thinks are necessary, especially for complaints like chest pain to rule out a heart attack.

The biggest problem with the ACA and the republican replacement bill is that it doesn’t come close to adequately dealing with the high risk patients, especially those with already known expensive to treat medical conditions. I’ve heard insurance experts suggest that if the 150 million lives currently covered by an employer plan had to go into the underwritten insurance market to buy a policy, as many as 30% would be declined outright or be subject to a rate-up of 25%-100% above the standard rate for their age. It’s probably that 10%-15% would be declined outright and would need high risk pool coverage. It could easily cost $15,000-$20,000 per covered life to cover these high risk individuals. That’s serious money that no politician appears willing to step up and vote to raise taxes enough to make these policies work for the people who need them at a cost they can afford. I don’t see that attitude changing anytime soon unfortunately.

Finally, there is lots of futile or marginally useful care delivered at the end of life in the U.S.. Experts in other countries claim that we just don’t know when to stop treatment. Most people still don’t have a living will or advance directive. Maybe there is more that we could do to change that such as making it part of the process of signing up for Medicare and Medicaid. Litigiousness and end of life care attitudes are cultural realities in this country that may easily make our healthcare costs 20%-30% higher than they would be if we were significantly less litigious and more sensible and realistic about end of life care choices. A Medicare for all single payer system would do absolutely nothing about either of those issues.

Member
Jul 10, 2017

My crummy little graphic on UTIL risk: http://tinyurl.com/y6uhyznx

And one I did on “Everyone Claims to be Losing Money.” http://tinyurl.com/yat9p7hu

Member
Jul 10, 2017

HHS Secretary Tom Price is on record as favoring “balance billing” (specifically w/respect to Medicare benes, but we know there will be payor “mission creep” on that).

http://regionalextensioncenter.blogspot.com/2017/03/rationing-by-price.html

Where are you on that?