Dancing on the Grave of Obamacare: Questions

I hate to interrupt the festivities, but I have a few questions. There are one or two little unknowns here. The answers to these questions are matters of life and death to many in the industry, literal life and death to many thousands of patients, organizational life and death to thousands of companies, hospitals and systems. 

Tuesday’s extraordinary events obviously present an enormous challenge for anyone who wants to think about the future of healthcare. The challenge is far more than simply trying to imagine the healthcare industry without Obamacare, or under whatever Trumpcare will turn out to be. A much more powerful effect will be come into play far earlier: the uncertainty over that future will have reshape the industry before we even get to the actual “repeal and replace” part.

Here are just some of the questions:

For the immediate moment:

  • In what way will the new Congress repeal the ACA? Will it repeal “every line” as many Republicans have promised repeatedly? Or will the replacement laws contain any, some, or all of the parts of Obamacare that are uncontroversially popular, such as the reforms of such insurance company practices as rescission, denial for pre-existing conditions, and seriously low medical loss ratios?
  • How soon? Will they wait until they can put together a real replacement, and then phase out the ACA and phase in Trumpcare in, say, 2019? Or will they (as Trump and some Republican congressional leaders have promised) just pass a straight repeal on the first day of business and only then turn to a replacement package? Would such a repeal take effect immediately, or would it wait at least until 1/1/18?
  • What will happen to the revenue streams that the ACA has brought into healthcare through expanded Medicaid and through subsidized individual insurance?
  • How will the industry react to the impending repeal in the coming months (and possibly much longer) before we know both how this will happen and when it will happen?
  • Will the exchange insurance markets essentially collapse almost immediately as the concerns about the uncertainty of the future state of the ACA gets telegraphed forward to the business decisions of health plans and the financial decisions of those insured through the exchanges?
  • As a result, will we see a drop in revenues to hospital systems far in advance of the actual passage of any repeal and replace law (as early as 1/1/17 if the exchange markets do indeed collapse and millions do not sign up for the coming year)?
  • How much of the “volume to value” push from CMS is based entirely on the ACA? Would a repeal-and-replace law reverse all those initiatives and ban any further such attempts?
  • Independently of changes in the law, will the political appointees heading up HHS and CMS try to drive policy away from “volume to value”?
  • To what extent does the industry perceive that the entire “volume to value” shift is based on CMS policy and not on their commercial payers? Will this perception stiffen the industry’s slow-footed resistance to “volume to value” business model shifts? Since why should they change their business models to accommodate something that they think will disappear?
  • Will this on the other hand further embolden the self-funded purchasers of healthcare (employers, pension plans, unions) to get much better deals through the raft of new tools they are starting to use (such as reference pricing, medical tourism, bundled payments, direct pay primary care, etc.), driving the initiative to reduce healthcare costs through the commercial side, rather than just drafting along in the lee of the government initiatives?
  • Given how divided the industry is, with a few large aggressive systems actually doing very well, and many others running on a thin edge, will the uncertainty and possibly lower revenues greatly accelerate consolidation? Will we be driving rapidly in this period of uncertainty toward the landscape of “100 large systems” that Ian Morrison talks about?

The uncertainty of this coming political season is greatly heightened by:

  • The relative disunity of the new governing coalition, with a President who likes to punish disloyalty facing a Congress run by people who were as minimally supportive as they could possibly be during the campaign, and with Congressional leaders who cannot count on their caucuses to coalesce behind any particular plan.
  • The lack of any consensus on a clear, strong, active replacement plan (Yes, I know: HSAs, selling insurance across state lines, yadda yadda. These talking points do not a replacement for Obamacare make.)
  • The lack of any history by which to imagine just what Trump is going to attempt or settle for, coupled with expansive promises that would seem to contradict other Republican models for healthcare (such as promises not to touch entitlements like Medicare, and promises to “take care of everybody” coupled with promises to bring the cost way down).

And those are just some of the questions. We are looking at the minimum at several years of deeply disruptive uncertainty across the industry.

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8 replies »

  1. Medicare has zero cash and 100 percent debt
    Google the government wide budget scenario v the trust fund scenario and tell us which you think is more accurate

  2. Oh Leo, and this just in, “Trump transition team full of DC insiders”. So much for your “disruptive” change. Just another day in DC where it’s hooray for our side.

  3. “Survey: Patients happy with primary care docs, but worried about rising healthcare costs
    More than 90 percent of adult U.S. patients expressed satisfaction with their interactions with primary care doctors”


    Can’t wait for this “disruption” to lower patient costs – not coverage and costs, but same coverage and lower prices. Are you going to lead the way Leo?

  4. I realy like all your posts. I would like to start off this election cycle positively, after much negativity. Sometimes it takes this type of disruption to really get change. I think we have trusted people who “know” things for long enough. Despite much legacy “knowledge”, we have a health care system that is not serving people, and is accumulating obnoxious costs. Doctors are unhappy. Patients are unhappy. What is the next step? Is it comply…or is it revolt? We tried going with the flow, listening to thought leaders, becoming members of medical societies… Now what? People are desperate. That is how we got here. Now would be a great time to question the expansive roll of executive power, thought leaders, medical societies, and other forms of legacy power outside of the scope of legitimate democracy.

  5. This is indeed very concerning. On the other hand, Trump has specifically excoriated Ryan for being behind the attempt to privatize Medicare. He apparently thinks it is a political third rail. So we shall see.

  6. Of course he does. He knows more about ISIS than the generals, more about negotiating the nuclear deal with Iran than our best career diplomats. I love how, during one of the debates, Ben Carson proferred Health Savings Accounts as an alternative to Obamacare. The moderator asked Trump what he thought. He said, “Sounds like a great idea!” It sounded like he had never heard the idea before.

  7. Trump knows more about health care than you Joe – or so he’ll say. In video shoot in front of one of his resorts with employees (suspect illegals included) he said his staff had tremendous problems with Obamacare – this corrected by general manager who said all but a hand full had company insurance.

    Hate and ignorance is popular again.

  8. Yeah.

    More broadly, there is long-simmering GOP sentiment to eviscerate “entitlement” programs, e.g., by, among other measures, turning the two Biggies — Social Security and Medicare — into means-tested welfare programs. Paul Ryan is now positively giddy at the prospect.

    A good long read on the topic is at Harper’s, by Trudy Lieberman:

    “Don’t Touch My Medicare!”
    Is the beloved program on its last legs?

    “…The Medicare Modernization Act poked yet another hole in Lyndon Johnson’s fraying compact. It called for wealthier beneficiaries—people with incomes above $85,000 if single or $170,000 if married—to pay higher premiums for Part B benefits. The provision moved through Congress with “unexpected support from some Democrats,” the New York Times reported. As the law neared final approval, though, the Times noted that AARP, the UAW, and liberal Democrats, including Senator Edward Kennedy, viewed some of its proposals as a “dangerous first step in turning Medicare from a universal social insurance program into a welfare program.”

    In a sense, the conservative assault on Medicare is two-pronged. On the one hand, there is a drive to privatize. On the other, critics hope to rebrand Medicare as a variety of welfare. The former Hill staffer says that the Republicans have “been on a very consistent march for decades now. They basically want to get rid of the entitlement and want everything means-tested.” Means-testing—that is, basing eligibility for benefits on whether a person has the means to do without that help—saves billions for the government. But it would also make Medicare into the equivalent of food stamps or Medicaid. And that, of course, is the objective.

    So far, privatization remains the more politically correct solution for Medicare’s financial shortfalls. These are real, at least potentially. In large part, they have been caused by the lack of serious cost controls, and exacerbated by the influx of millions of baby boomers needing medical services. Even the government’s attempts at cost control introduced during the Reagan era failed to permanently curb medical inflation. Indeed, containing the prices charged by the doctors, hospitals, drug makers, nursing homes, and home-care agencies that rely on the Washington gravy train has been an almost impossible task. The 2003 prescription-drug law, for example, prohibits Medicare from negotiating the prices it pays for drugs. “There are obstacles statutorily and politically,” says former Medicare administrator Don Berwick. “We can’t negotiate for purchasing, in one of the largest insurance systems in the world. The moneyed interests are calling the shots.”

    Many of those moneyed interests sell health-care technology, which has long been a major cause of exploding costs. Richard Foster, who was Medicare’s chief actuary from 1994 to 2013, describes the situation: “As long as there’s an automatic market for new technology, even if it’s not any more effective, cost growth will keep going up.” In fact, Medicare has historically not considered cost effectiveness when deciding whether to cover new drugs and technologies…”


    Paywalled, but I think non-subscribers get one free read.