It is possible that in a few months from now, only Nate Silver’s prediction models will stand between Donald Trump and the White House. I will leave it to future anthropologists to write about the significance of that moment. For now, the question “What will President Trump be doing when he is not building a wall?” has assumed salience.
This is relatively easy to answer when it comes to health policy. Just ask what people want. Seniors don’t want Medicare rescinded. Even the free market fundamentalist group, the Tea Party, wants Medicare benefits as they stand. At one of their demonstrations against Obamacare a protester warned, without leaving a trace of irony, “Government, hands off my Medicare.”
Rest assured, Trump will protect Medicare. Even raising the eligibility age for Medicare may be off the cards as far as he is concerned. He has promised that no one will be left dying on the streets. That people no longer die on the streets, but in hospitals, because emergency rooms must treat patients regardless of their ability to pay, is irrelevant. The point is that Mr. Trump knows that the public values their healthcare. Trumpcare will show that Trump cares.
But it gets complicated. Yes, the public want top notch healthcare for themselves. No, the public don’t want to die on the streets. Yes, the public want a government which looks after them. The problem is that the public don’t really want to pay more for these services. Not much more at least.
How will Trump manage people’s contradictory desires? Trump recently released his healthcare manifesto. Here are its Seven Pillars:
Repeal Obamacare
Allow purchase of insurance across state lines
Allow people to deduct insurance from taxes
Expand Health Savings Accounts (HSAs)
Require price transparency for medical goods and services
Block-grant for Medicaid to the States
More free market for pharma
Trump’s first test will be repealing Obamacare. It is clear Mr. Trump doesn’t like Obamacare. He says about Obamacare that “people have had to suffer under the incredible economic burden.” What will he do about people with pre-existing conditions who insurers must cover by law thanks to Obamacare? Will we return to the days when insurers turn down patients because they have co-morbidities, or yank their premiums so high that they cannot afford insurance?
Trump wants to take care of everyone. To fund a system which takes care of everyone, without the insurance market imploding, he must a) raise taxes and/ or b) make people buy insurance. Raising taxes is not part of #MakeAmericaGreatAgain. And he says “no person should be required to buy insurance unless he or she wants to.” So Trump is on a sticky wicket with his first pillar. Alternatively, he could just erase “Obamacare” and write “Trumpcare.”
Trump wants a more market-driven system to lower costs and raise quality. He will let people buy insurance across state lines, so long as it complies with the laws of the state in which the person lives, which sort of defeats the point of buying cheaper insurance in another state. It’s like being able to buy stuff tax-free from Delaware only if I pay the taxes I would have had to pay in Pennsylvania.
It is important not to dismiss an idea just because Donald Trump likes it. For example, expanding tax benefits to those outside employer sponsored insurance is not as egregious as some say. It levels the playing field, and weakens the grip of employer-sponsored insurance, arguably the most potent force preserving status quo. And reigning in big pharma is a small idea whose time came a long time ago, and never left – I am amazed that left-leaning health economists or Clintophile health policy wonks are not pushing for more boots on pharma.
His idea of expanding health savings accounts (HSAs) is not new and has been proposed by economists such as John Goodman. HSAs encourage people to be thrifty with healthcare expenditure. This can lead people to do two things: skip necessary care and skip unnecessary care. Will there be net saving? It depends on the necessity of the care skipped, and the cost of the unnecessary care skipped. If you wait too long to seek medical attention you might not save costs for yourself or the system.
Trump wants people to be able to pass HSAs to their children. This is an interesting twist. Theoretically, this would motivate people to stay healthy so that more funds are available for their children. You can imagine a father saying to his son before going for his daily jog, “Son I’m running for your life, not mine.” But the flip side is that people may skip necessary treatment in their twilight, for fear of depriving their children of a financially secure future. Neither of these scenarios may occur, but you get the gist. For every positive in health policy, there’s an equal and opposite negative.
HSAs won’t last long if they’re decimated by high hospital charges. Hospitals are known for their mark-ups, which are so feral that they make price gouging water in the Sahara desert a noble endeavor in comparison. Obamacare has done precious little to control these charges. Trump says he will demand price transparency from providers. The theory is that when people know the prices of medical goods they will shop for the best care, and competition for patients will drive the prices down and quality up.
Price transparency is one of those policy suggestions that sounds so good that you have to ask why it hasn’t worked yet. It doesn’t comes under the genre of “hey, I have a great idea, let’s cure global poverty,” but it’s not too far from it.
There are caveats with price transparency. Optimism must be tempered. For instance, if you’re having a heart attack there isn’t much time to google prices. And there is so much in the care bundle to consider, such as the price of the stent to open the coronary artery, blood thinners to keep the stent opened, saline, oxygen and many more details such as the price, skill, industry relationship and conflict of interests of cardiologists, that it would be difficult to meaningfully shop for the best deal for “heart attack care” while your heart muscle is slowly melting, and fluid is filling your lungs, making it difficult for you to breathe.
Suffice it to say that when it matters the most, when the charges are the highest, which is when you’re acutely and seriously unwell, price transparency is rather useless. When you’re dying you will call the ambulance, not place a bid on Priceline. If you want a clever way of rephrasing this: healthcare is price inelastic when it matters most.
It will be difficult for the market to control the prices, even if Trump injects a dose of genuine capitalism in healthcare. That is unless the market rations care based on ability to pay, which happens in countries like India which has a robust free market healthcare. Government healthcare is abysmal in India. The rich get the best care because they can afford it, and the poor get the worst care because they can’t afford it. This is rationing by price. People die sooner because they don’t have enough dosh.
I doubt Americans will put up with explicit rationing of healthcare that an amoral free market may create. Imagine the headline on pro-market Fox News Network: “Patient expires because of expired credit card: 20 year old college student from Minnesota dies because of clot in lungs. Doctors refused to treat patient because her MasterCard had expired.” Then all the pro-market (and anti-market) people will run to the government for help. The government will enact regulations, making it compulsory for hospitals to treat patients regardless of their ability to pay, thus killing the market. Sorry, I forgot, that was EMTALA.
But the point is that genuine free market healthcare won’t last long in modern society which is now used to a certain level of security. Let’s accept that as a basic fact whether you think healthcare is a right or not.
Here’s my advice to Mr. Trump. Have an adult conversation with your supporters. Tell them some home truths. Tell them that it costs to make people live longer. Let no health economist, or Sarah Palin, tell you otherwise. This is why smokers are a bargain for a healthcare system. As medicine gets better at diagnosing and treating diseases, healthcare gets more, not less, expensive, because there are new diseases to treat. Equality costs. Fairness costs. Safety costs. Prevention costs. Being prepared for potential epidemics such as Ebola costs. New drugs cost. New discoveries cost. Reducing healthcare costs also cost – such is the cruel irony of healthcare.
Where are the savings? May be in the Kingdom of God. In the Kingdom of George, Barrack and Donald, it’s all costs, costs, costs, costs.
The market can reduce costs by rationing care by ability to pay. The government can reduce costs by refusing to pay for certain medical services, or for price fixing hospital charges, or by negotiating with pharma. Beware of using the government approach, Mr. Trump. Some of your supporters will call you a death panelist. Your more punctilious supporters, with a superficial understanding of Adam Smith, will say you’re abandoning the principles of the free market.
So ask your supporters not just what they want, but how much they are willing to pay for what they want. Then Mr. Trump, design Trumpcare.
About the Author
Saurabh Jha is a radiologist and contributing editor to Healthcare Blog. To abuse him you must follow him on Twitter @RogueRad
This piece originally appeared in 3 Quarks Daily
Categories: Uncategorized
Thank you for nice post. There is no reason getting better should cost more. There is no reason we can’t have a no deductible, no co-pay insurance. All we have to do is stop doing the stuff that adds nothing to people’s lives. Our problem is medical care provides interventions that dance on the head of a pin and we are unwilling to change because we make too much money from it. My 84 year old aunt with a non-treatable cancer just got 2 CT scans, a PET scan, a MRI and useless 4 months of high cost chemotherapy. In my view, no present insurance ideas can manage the stupidity of the present practice of medicine
I appreciate your comment ” As medicine gets better at diagnosing and treating diseases, healthcare gets more, not less, expensive, because there are new diseases to treat. Equality costs. Fairness costs. Safety costs. Prevention costs.”.
Trump is great at rallying troops based on comments such as “healthcare should take care of everyone!”. The problem is that he follows it up with statements like ““no person should be required to buy insurance unless he or she wants to.” How does this fix the healthcare system?? Not requiring people to have health insurance only make healthcare MORE expensive, not less expensive.
Your article gave me a big laugh with these words: “HSAs won’t last long if they’re decimated by high hospital charges. Hospitals are known for their mark-ups, which are so feral that they make price gouging water in the Sahara desert a noble endeavor in comparison.”
I liked you comment about smokers. In Europe they fully understand that smokers spend fewer health dollars over their lifetimes than non-smokers.
Further if all the prevention programs really worked, all it means is that Medicare will go broke sooner. Alas.
Cheers,
Tom
Allan: “not tomorrow’s risks that might never come.’
Peter:”Age and sickness will always come – same as death.”
Yes, these things occur, but the payments are made annually to cover an occurrence within the year not many years hence.
“in fact each year I can choose to join my wife’s company plan no questions asked.”
Yes that is true too, but the rules can change at any time the company chooses to do so and that includes changing the rates. Not only that, but should your wife get very sick she will likely lose her job and then her insurance. It is amazing that the no questions asked policy never led you down the road to ask a question, “what happens if my wife gets sick, and can’t work? Will she lose her insurance?” The answer is yes.
“That’s why insurance in mandatory.”
…And how well has that worked? Should it also be mandatory that your local grocery not sell junk food? Do you really want the federal government mandating what you do with your personal body and life? Do you want them in your bedroom?
We don’t disagree on our goals, only the methods being used. How does one back up a mandate? Eventually the storm troopers show up at your house and force you. Is that the type of federal government you want when the decisions you are making only involve your own body?
“not tomorrow’s risks that might never come.’
Age and sickness will always come – same as death.
“not be confused with risk based premiums.”
The ACA is based on age adjusted premiums. Employer group policies do not discriminate based on risk – in fact each year I can choose to join my wife’s company plan no questions asked.
“emphasis would be to get the young involved early and not scare them away.”
That’s why insurance in mandatory. How many young people do you know who consider the consequences bad behavior or of getting old?
“Risk sharing is what insurance is all about.”
That is absolutely correct, but not the risk sharing you are talking about. The risk sharing insurance companies talk about has to do with sharing today’s risks that are being paid for today, not tomorrow’s risks that might never come.
I understand your point about subsidies and am not arguing against them. However, the idea of subsidies should not be confused with risk based premiums. When you confuse the two we can see from our growing experience with the ACA that it leads to death spirals.
If we are really interested in everyone having insurance one would think we would make people want insurance for what it has to offer. By charging one set of potentially insured individuals premiums that cost more money than the insurance is worth you are incentivizing that group to find ways to avoid insuring themselves.
Looking at the long term goal of having as many people insured as possible one would think the emphasis would be to get the young involved early and not scare them away.
“The ACA didn’t solve the problem by placing those high costs on the young and healthy which has caused a new group though having insurance lacks the same access to healthcare they had earlier.”
Risk sharing is what insurance is all about. Yes, the young and healthy may pay for the old and sick – but one day the young and healthy will be old and sick. Every group plan wants a mix of young and healthy – but sometimes the young and healthy get sick, then they need the old and sick coverage.
The access the young and healthy had before the ACA was not to buy insurance. The access they have now is called a subsidy based on income. The larger the group the more the risk is spread, getting us all into Medicare would create a huge risk spreading group.
There are some really hard problems in health care: Moral hazard; provider induced demand; principal-agent problems; third-party payer and feeling costs and infinite demand; inexorable price increases; adverse selection and death spirals; loss of doctor autonomy; moving toward monopoly providers and monopsony payers; high costs in terminal patients; who pays for diseases of life-style; anti-kickback and self referral …..
Maybe we should pick just one tiny area amongst the hardest, most perplexing, services we render and see if we can make any progress in moving this one along. I think mental health or long term care or drug and rehab services are probably the most vexing. Perhaps obesity is in there.
The idea would be to simplify to the level where our brains can perform useful policy creation and not be distracted with a cloud of extraneous difficulties.
E.g. mental health. What would be the ideal level of care? For which group of diagnoses? What can we afford? Who should pay? How do we avoid moral hazard and provider-induced demand? How do we assess quality in care? Cost sharing level? What do other nations do?
By deconstructing, breaking apart and thinking like an engineer, maybe we can mave ahead on some of these problems.
Swords or pistols at 20 paces?
Please to take it out in the parking lot or do this on Twitter.
– The management.
You have degenerated the conversation into one where the size of body parts has become the question. That is all your doing. Par for the course, but you will note that if you made sounder arguments this type of conversation would never take place. (I refer to your initial comment and my reply, not the junk that followed.)
Flatter yourself, as always, “Allan.” I’lll put my intellect up against yours any day of the week. You just again took the bait. I rest my case.
Isn’t that why you are here? To be corrected when you prefer snark and error to intellect?
There are very few certainties in this life, but EVERYONE knows that, if I make some snarky allusion to the unfettered, beneficent (albeit mythical) “Free Market,” someone here will reflexively take the bait.
At least you won’t have to pay those huge premiums that can be more than $10,000 along with a $6,600 deductible (max OOP pay) to get back that $29.95.
“It is possible that in a few months from now, only Nate Silver’s prediction models will stand between Donald Trump and the White House.”
The problem with outliers is that they destroy models.
Donald Trump is a once-in-a-lifetime, once-in-a-generation outlier.
Models are good predictors of rational events in an orderly universe, they do not do well with once-in-a-generation, once-in-a-lifetime events.
EVERYONE knows that, if we just had the unfettered, beneficent (albeit mythical) “Free Market,” my $2,985 endo-rectal coil MRI last year would have been a mere $29.95 at Jiffy-Scan over at the strip mall.
“Will we return to the days when insurers turn down patients because they have co-morbidities”
The ACA didn’t solve the problem by placing those high costs on the young and healthy which has caused a new group though having insurance lacks the same access to healthcare they had earlier. It was a bad trade off and is one of the arrows that is killing the plan. Maybe Trump will find a better way. Maybe not. Remember, when premiums fall the number of uninsurable and uninsured falls.
“Trump wants to take care of everyone.”
No he doesn’t. It’s impossible to take care of everyone for when we see to one person’s needs there is a good chance that will negatively impact another persons needs and here in America we all want more healthcare than the GDP itself could provide.
“Trump wants a more market-driven system to lower costs and raise quality.”
On this particular principle he is completely correct.
“HSAs won’t last long if they’re decimated by high hospital charges.”
Since HSA’s only pay until insurance kicks in they are decimated only by the amount of the insurance deductible.
“Price transparency is one of those policy suggestions that sounds so good that you have to ask why it hasn’t worked yet.”
Because price transparency requires more of a marketplace than we presently have. That is something Trump said he wants more of (a marketplace)
You are a physician so you know that insurance doesn’t equal healthcare.