Opinions are flying. Opinionators with a plan to fix healthcare in America are suddenly as common as waiters with a script in Santa Monica. Few are worth a second glance. They fall into the “that’ll never pass” pile or the “that’ll never work” pile.
So why should we pay any attention to Christopher Ruddy’s idea? Because he’s a prominent conservative, the CEO of Newsmax, and a long-time friend and ally of Trump—and he is advocating for at least a “lite” version of universal coverage.
Most everyone is talking about Healthcare lately and I just can’t take it anymore and had to send out a primer, because there is so much bad information being floated. I don’t like the ACA replacement because the idea is still based on the premise that you can give-away insurance as an entitlement program. The problem is that you can’t “give-away” insurance, it’s an oxymoron, if there is no skin in the game for the insured they’ll never care.
I’m an insurance guy and Trump voter. I only point this because I want you to know that my healthcare recommendation is heartfelt and I offer it with no real bias other than offering my experience and expertise on the matter. My idea is just an independent thought and many Republicans, Libertarians and Democrats would hate it, but I think Trump (the Independent) would love it. And I feel it’s the only way for Trump to try and “solve” the healthcare problems in the U.S. and keep his commitment that “all” would be covered.
Imagine that a drug company released a “study” that claimed to find that if all 75 million Americans with high blood pressure took the drug company’s hypertension drug the nation’s annual medical expenditures would drop by $20 billion. Imagine as well that the “study” failed to take into account the $40 billion cost to patients and insurers of buying all those hypertension drugs. Such a study would be roundly criticized for failing to take into account an essential component of cost – the cost of the intervention that led to lower medical expenditures.
But studies like the hypothetical drug company study appear constantly in the health policy literature. Almost all peer-reviewed papers that examine managed-care interventions – HMOs, ACOs, “medical homes,” “value-based purchasing,” etc – fail to report the cost of the intervention. Instead, they measure only medical costs or medical utilization rates. If they find that costs or utilization rates fell, the vast majority of studies imply or come right out and claim that “costs“ went down. This unethical practice is so widespread and so chronic I propose we give it a name. I propose we call it the “free lunch syndrome.”
If you carve a huge chunk of revenue out of Obamacare and shift more subsidies to the middle class it should not be a surprise that the lower income folks will pay the price
The Congressional Budget Office (CBO) has estimated that 14 million people would lose coverage in 2018, 21 million in 2020, and 24 million in 2026 if the House Republican plan is allowed to significantly amend the Affordable Health Care Act (Obamacare).
In my last post, I called the House Republican bill “mind boggling” for the negative impact I believe it would have on the number of those uninsured and the viability of the individual insurance market. Guess the CBO agrees with me.
The CBO’s report came after the Brookings Institute estimated 15 million people would lose Medicaid and individual health insurance coverage at the end of ten years under the Republican plan. The arguably more business oriented S&P Global estimated between 6 million and 10 million people would lose coverage between 2020 and 2024.
Last Monday, as promised, House Speaker Paul Ryan fulfilled his pledge to offer up the GOP’s plan to replace the Affordable Care Act.
In reality, America’s Health Care Act (AHCA) is not a new plan. Rather, it’s an updated version of the “Restoring Americans’ Healthcare Freedom Reconciliation Act of 2015” that passed the 114th Congress October 23, 2015 before being vetoed by President Obama. Surrogates for this plan are quick to point out that their Repeal and Replace effort also encompasses administrative orders from HHS Secretary Tom Price, executive orders from President Trump and legislation to be passed through regular order (requiring 60 Senate votes). But the AHCA is unquestionably the first and most important of these elements: it signifies to Repeal and Replace proponents that the new Republican majority intends to make good on its promise to dismantle the Affordable Care Act.
Its status is this: the AHCA cleared the House Ways and Means and Energy and Commerce Committee votes last week. Later today, the Congressional Budget Office will render its assessment of the plan’s financial impact and its underlying assumptions about possible changes in insurance coverage. After passage in the House, it will go to the Senate where it will be modified and likely passed along party lines under the restrictions of reconciliation. Its sponsors hope it will be law within six weeks as their initial phase of Repeal and Replace.
Cancer is a devious and devastating disease. All it takes are a few bad cells to grow uncontrollably, first destroying organs, then an entire person. It can also lie dormant for years after supposedly being cured, then at some moment awaken from its remission slumber to resume its search-and-destroy mission. Even if cancer is controlled, it can still leave its victim in a weakened or debilitated condition, a shadow of its former robust self.
What if the Affordable Care Act, affectionately known as Obamacare, was unintentionally infected with cancer back in 2010 when it was voted into law? What if the cancer could be reactivated at any time? After all, we had to “pass the bill to find out what’s in it” according to one of its proponents. Surprise, the dormant cancer is already in the law.
Ideally, cancer is removed from the body entirely. A true cure. For Obamacare, this would mean repealing the bill entirely. Despite campaign promises of repeal, legislatively, this is a nonstarter. This is worth a brief review as many think a simple repeal bill from the House is possible.
The conversation our country is having about healthcare right now is not honest. It’s not just the Republicans, the Democrats are just as dishonest, in a different way. Republicans talk about government death panels denying care. Democrats talk about insurance company death panels. Both positions are intellectually dishonest. Both Republicans and Democrats know that a part of insurance is drawing boundaries around the care that would be paid for by the group. Any care outside that boundary doesn’t get paid for. You can frame it any way you want, but this is a critical part of any insurance.
Insurance, whether healthcare or auto, is a risk pool. A group of people pay into the pool and hope they don’t have to use it – hope they don’t have a wreck on their car, don’t have to go into the hospital. Those few that do have to use it consume most of the money in the pool – the risk pool spends tens of thousands on the people that have serious car accidents, or hundreds of thousands of dollars on someone that has cancer. That means that everybody else in the pool helps pay for the costs of the unlucky few. Healthy me pays for the costs of tripped and broke his leg Bob.
The worst part of the Affordable Care Act that nobody talks about is its removal of caps on annual and lifetime awards. There is no limit to the risk that the risk pool assumes. Before the ACA, an annual cap for an insurance plan might be $500,000, with a lifetime cap of $2 million to $5 million. Now those caps are gone – there is no limit to the amount of money a risk pool has to pay to keep someone alive.
Transparency – including price, quality, and effectiveness of medical services is a vital component to lowering costs and improving outcomes. However, it is imperative transparency go hand-in-hand with financial incentives for patients and consumers; otherwise the quest will be in vain. The single best way of reducing costs while not worsening health outcomes is to redistribute resources from less cost-effective health services to more cost-effective ones. Americans are extremely uncomfortable with the idea of making decisions based on cost but we must become fluent in the language of cost and more comfortable making decisions based on price information for healthcare expenditures to stabilize.
Legislators in more than 30 states have proposed legislation to promote price transparency, with most efforts focused around publishing average or median prices for hospital services. Some states already have price transparency policies in place. California requires hospitals to give patients cost estimates for the 25 most common outpatient procedures. Texas requires providers to disclose price information to patients upon request. Ohio passed price transparency legislation last year; however a lawsuit filed by the Ohio Hospital Association has delayed implementation. The cost of a knee replacement is $15,500 at the Surgery Center of Oklahoma, whereas the national average is $49,500.
This is a letter I sent to Gary Cohn, appointed by President Trump to head the National Economic Council and, among other things, come up with a plan for reforming healthcare. Formerly president of Goldman Sachs, Cohn may be a wizard at finance, but healthcare economics are wildly different and famously opaque. So I thought I would help him out.]
Subject: A brief on healthcare economics. (8 minutes)
o Why healthcare economics are different.
o Why the ACA is failing.
o What would work.
Who I am (credentials): Independent healthcare author and analyst since Jimmy Carter’s administration. Speaker, consultant across the industry at all levels, including insurers, hospitals, device manufacturers, employers, Veterans, pharma, World Health Organization, Department of Defense. Look me up: ImagineWhatIf.com. Books on Amazon.
Core problem: The core problem in healthcare reform is the actual cost of medical care.
o Healthcare in the U.S. by any measure costs about twice what it should.
o Medical prices are completely disconnected from the cost of production.
o Few medical providers even know the true cost of ownership of their products.
o By a number of analyses at least one third of that (well over $1 trillion this year) is waste, paying for things that we don’t need and that don’t help.
o Solving just the federal part of this would completely wipe out the deficit.
Trying to “take care of everybody” will always be impossible politically and economically as long as healthcare costs twice what it should and wastes trillions of dollars.
Solvable: This is a solvable problem. Change the relationship of the sector to its true customers by shifting the payment structure, prompting business model innovation. Stop paying for waste, and $1 trillion/year in unneeded overtreatment will disappear. Prices will drop to something like a true market price. This will not happen overnight, but it could happen over five years with vigorous implementation.
Why does it cost so much?
No price signals: The structure of the U.S. healthcare market since the early 1980s has made it opaque to price signals. Customers in healthcare ask a different question than customers in most markets. Whether hospitals (as customers of suppliers) or individuals needing an operation, healthcare customers mostly don’t ask, “Can we afford it?” Or even, “What’s the best value for the money?” They ask, “Is it covered? Can we get reimbursed for this?” And the reimbursement or coverage is set by complex non-market mechanisms that in most parts of the market are themselves opaque to the customer. So there is no real customer and no real price signal in most relationships throughout the market.
A House proposal for repealing and replacing the ACA surfaced this week. The Republican’s healthcare plan tries to seduce us by promising lower premiums and removal of the individual mandate. No longer will Obamacare encroach on personal freedom and financial stability, they boast. But let’s not be fooled by their ACA alternatives. The GOP proposal is no better for us. In fact, it is worse.
I share this insight as a physician and policy maker in-training. In this role, it is my duty to identify, mitigate, and manage threats to patient health and wellbeing. Sometimes, these threats are obvious – say, a heart attack, pneumonia, or financial hardship imposed by exorbitant medical bills. But at other times, I must rely on my training to detect more subtle health threats, like heart murmurs, hypertension, and “continuous coverage” clauses in healthcare bills.
That last threat may sound unfamiliar, but continuous coverage provisions have consistently shown up in the Republican Party’s prominent healthcare proposals. Continuous coverage clauses mislead us into thinking we will be guaranteed insurance at low market rates. But the catch is if there is a lapse in coverage lasting more than two months, then insurance companies can hike up the price of the policy. The most recent proposal capped this price hike at 130% of regular premium rates for the first year. But this limit may change, as previous versions allowed premium rates to reach 150% for the first 18 months.
The continuous coverage provision aims to fulfill the same objective as the ACA’s individual mandate; both policies induce young and healthy people to buy insurance. The participation of these sprightly citizens helps to pay for and offset the large, costly claims of the ill and old, thereby lowering premiums across the whole population.
But there is a striking and dangerous difference between the policy nudges in Obamacare and those in the replacement plan. While the ACA’s individual mandate taxes us if we opt out, the continuous coverage clause would punish us at a point when we are trying to opt in. For any of us, the cost of re-gaining insurance following a temporary lapse could be so high that we would not be able to afford new coverage.
Even those Americans who are neither sick nor poor at the moment could be adversely affected by Republicans’ continuous coverage nudge. The need for acute or chronic medical care is impossible to predict, and financial health is likewise uncertain. As Sendhil Mullainathan, a Harvard Economist, and Eldar Shafir, a Princeton Cognitive Scientist elucidate in their book, Scarcity, none of us is immune to the sorts of mistakes that cause insurance lapses. Citing studies from a variety of fields, these experts explore how financial and emotional stress leads to difficulty performing tasks, like paying bills and making deadlines. This happens because the more tasks we are responsible for doing, the fewer we are able to do well.
What does this mean for healthcare reform and for Americans’ wellbeing? Changing jobs, moving, launching start-ups, and filing for divorce are all occasions where even the healthy and wealthy might need a new insurance plan but would be limited in their capacity to meet this need. In the face of these major life events, anyone could have limited cognitive bandwidth, making all citizens prone to unintended breaks in coverage.
So far, Republican leaders have narrow-mindedly put forth alternatives that seem better than Obamacare. And, at first glance, their continuous coverage clause does appear benign. But the nudges in their proposals won’t shepherd us to safety. They’ll push us off a cliff.
Perhaps the continuous coverage provision would be less dangerous if we were to de-link insurance from employment, as changes in job status are among the most common reasons for breaks in coverage. Unfortunately, Republicans are unlikely to pursue this sort of reform, because, even if premiums were lowered in an absolute sense, patients would feel as though they were higher; costs would come visibly out of our wallets instead of being paid for invisibly by employers. An alternative way to make continuous coverage clauses more humane would be having insurance as our default status in America. This won’t happen either; these leaders have consistently opposed universal coverage.
Because the Republicans’ objective appears to be seduction, not protection, it is hard to believe they will take the necessary steps to keep Americans covered. To my medical eye, the replacement plan we’ve heard about thus far would harm more individuals than anything we’ve experienced in the ACA. If you would like a second opinion, I’d be happy to refer you to another specialist. But most doctors agree: health policies should facilitate insurance coverage, not discourage it.
Maggie Salinger is a MD MPP candidate at Emory Medical School and the Kennedy School of Government. This post originally appeared in the Kennedy School of Government blog.
THCB's Podcasts
Listen to them on Itunes or Spotify
