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Biden Should Extend a “Public Option” as a Message to “Health Care Royalists”

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By MIKE MAGEE

In this world of political theatrics, with Democratic legislators from Texas forced into exodus to preserve voters’ rights, and Tucker Carlson rantings about Rep. Eric Swalwell riding shirtless on a camel in Qatar streaming relentlessly, Americans can be excused if they missed a substantive and historic news event last week.

On Friday, July 9th, President Biden signed a far-reaching executive order intended to fuel social and economic reform, and in the process created a potential super-highway sized corridor for programs like universal healthcare. In the President’s view, the enemy of the common man in pursuit of a “fair deal” is not lack of competition but “favoritism.”

To understand the far-reaching implications of this subtle shift in emphasis, let’s review a bit of history. It is easy to forget that this nation was the byproduct of British induced tyranny and economic favoritism. In 1773, citizens of Boston decided they had had enough, and dumped a shipment of tea, owned by the British East India Company, into the Boston Harbor. This action was more an act of practical necessity than politics. The company was simply one of many “favorites” (organizations and individuals) that “got along by going along” with their British controllers.  In lacking a free hand to compete in a free market, the horizons for our budding patriots and their families were indefinitely curtailed.

Large power differentials not only threatened them as individuals but also the proper functioning of the new representative government that would emerge after the American Revolution. Let’s recall that only white male property owners over 21(excluding Catholics and Jews) had the right to vote at our nation’s inception.

Over the following two centuries, power imbalances have taken on a number of forms. For example, during the industrial revolution, corporate mega-powers earned the designation “trusts”, and the enmity of legislators like Senator John Sherman of Ohio, who as Chairman of the Senate Republican Conference, led the enactment of the Sherman Antitrust Act of 1890.

He defined a “trust” as a group of businesses that collude or merge to form a monopoly. To Sen. Sherman, J.D. Rockefeller, the head of Standard Oil, was no better than a monarch. “If we will not endure a king as political power, we should not endure a king over the production, transportation and sale of any of the necessities of life”, he said.   The law itself stated “[e]very contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal.”

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A Hamiltonian View of Post-Pandemic America

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By MIKE MAGEE

“In countries where there is great private wealth much may be effected by the voluntary contributions of patriotic individuals, but in a community situated like that of the United States, the public purse must supply the deficiency of private resource. In what can it be so useful as in prompting and improving the efforts of industry?”

Those were the words of Alexander Hamilton published on December 5, 1791 in his “Report on the Subject of Manufactures.” He was making the case for an activist federal government with the capacity to support a fledgling nation and its leaders long enough to allow economic independence from foreign competitors.

Today’s “foreign force” of course is not any one nation but rather a microbe, gearing up for a fourth attack on our shores with Delta and Lambda variants. This invader has already wreaked havoc with our economy, knocking off nearly 2% of our GDP, as the nation and the majority of its workers experienced a period of voluntary lockdown.

Our leaders followed Hamilton’s advice and threw the full economic weight of our federal government into a dramatic and direct response. Seeing the threat as akin to a national disaster, money was placed expansively and directly into the waiting hands of our citizens, debtors were temporarily forgiven, foreclosures and evictions were halted, and all but the most essential workers sheltered in place.

Millions of citizens were asked to work remotely or differently (including school children and their teachers) or to not work at all – made possible by the government temporarily serving as their paymaster and keeping them afloat.

As we awake from this economic coma, many of our citizens are reflecting on their previously out-of-balance lives, their hyper-competitiveness, their under-valued or dead-end jobs, and acknowledging their remarkable capacity to survive, and even thrive, in a very different social arrangement.

If our nation is experiencing a trauma-induced existential awakening, it is certainly understandable. America has lost over 600,000 of our own in the past 18 months, more people per capita than almost all comparator nations in Europe and Asia. This has included not just the frail elderly, but also those under 65. In the disastrous wake of this tragedy, 40% of our population reports new pandemic-related anxiety and depression.

A quarter of our citizens avoided needed medical care during this lockdown. For example, screening PAP smears dropped by 80%. And so, Americans’ chronic burden of disease, already twice that of most nations in the world, has expanded once again. There will be an additional price to be paid for that.

The Kaiser Family Foundation’s most recent Health System Dashboard lists COVID-19 as our third leading cause of death, inching out deaths from prescription opioid overdoses. Year-to-date spending on provider health services through 2020 dropped 2%, but pharmaceutical profits, driven by exorbitant pricing, actually increased, bringing health sector declines overall down by -.5% compared to overall GDP declines of -1.8%. The net effect? The percentage of our GDP devoted to health care in the U.S. actually grew during the pandemic – a startling fact since our citizens already pay roughly twice as much per capita as most comparator nations around the world for health care.

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Community Health Plans Are Serious: Support Major Federal Action to Reduce Rx Drug Costs

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By CECI CONNOLLY

Equal treatment under the law. A foundational pillar of American life. Except when it comes to drug makers who benefit from favorable treatment by the federal government.

For far too long, prescription drug companies have profited immensely under a system that affords them monopolistic powers to set prices devoid of government or public scrutiny.

Even during the pandemic, while much of the economy took a beating, the pharmaceutical industry continued to benefit from the high prices they charge. In fact, 9 of the 10 biggest profit margins recorded last summer belonged to drug companies.

As the nation’s economy sputters back, Big Pharma continues to raise prices and block patient access to lower-cost alternatives. It is beyond time to tame the soaring prices of prescription drugs once and for all.

For years, health care players have skirted around concrete actions to truly impact drug prices. Efforts to cut costs for consumers have translated to higher costs for health plans, resulting in a cost shift instead of a cost reduction. We, as private, nonprofit insurers, believe in the ambition and innovation possible in a free market – but the  market has failed in this instance and it’s time for the government to take action.

That is why the Alliance of Community Health Plans (ACHP) is putting its support behind reforms that can make a real, lasting impact for consumers and the entire health system. For the first time, a national health care payer organization is stepping up and supporting pragmatic and progressive reforms that can truly begin to rein in the price of prescription drugs.

This includes backing the dramatic step to grant the Secretary of Health and Human Services the power to negotiate lower prices for the highest-priced medications for which there is no competition, in addition to other actions.

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“Necessitous Men Are Not Free Men” – Words to Remember

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By MIKE MAGEE

In the second half of the 19th century, Emily Dickinson wrote a short poem that could easily have been a forward looking tribute to two American Presidents – one from the 20th, the other the 21st century.

Dickinson’s poem “A WORD is dead” is hardly longer than its title.

“A WORD is dead

When it is said,

  Some say.

I say it just

Begins to live

  That day.”

She certainly was on the mark when it came to President Franklin Delano Roosevelt’s signature legislation. FDR’s New Deal, extending from 1933 to 1939, ultimately came down to just three words – the 3R’s – Relief , Recovery, and Reform.

He promised “Action, and action now!”  This included a series of programs, infrastructure projects, financial reforms, a national health care program and industry regulations, protecting those he saw as particularly vulnerable including farmers, unemployed, children and the elderly.  And he wasn’t afraid to make enemies. Of Big Business, he said in a 1936 speech in Madison Square Garden, “They are unanimous in their hate for me – and I welcome their hatred.”

But he was also a political realist. And by his second term of office Justice Hughes and his Conservative dominated Supreme Court had begun to undermine his legislative successes and were threatening his signature bill- the Social Security Act. So FDR compromised, and in the face of withering criticism from the AMA, postponed his plans for national health care.

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What Will Shape Joe Biden’s Health Care Agenda?

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I’m thrilled to have health futurist Jeff Goldsmith back on THCB, and given Biden was only confirmed as President-elect this morning, his article on what to expect is extremely timely!–Matthew Holt

By  JEFF GOLDSMITH

The Trump administration’s health care journey began with a trillion dollar near miss–the failed Repeal and Replacement of ObamaCare- and ended with a full-on train wreck, the catastrophically mismanaged COVID epidemic that will have claimed 300,000 lives by the time he leaves office. After four years of posturing and lethal incompetence, it will be a relief to see caring and professionalism return to the White House health policy under President-Elect Joe Biden.   

Like Inheriting a Badly Managed World War

Like Barack Obama, Joe Biden will be saddled at the beginning of his regime with a damaged national economy. He will also walk in the door to the immediate need to manage the greatest public health catastrophe in a century as well as its economic consequences–a deep and enduring recession. Biden will be inheriting the equivalent of a badly managed World War we are presently losing.

Public health professionals who were marginalized by Trump will be challenged not only to craft coherent policy to contain and extinguish COVID  but also to sell it to a frightened and polarized general public, many of whom reject the need for basic public safety measures.    

Controlling COVID and rebuilding the critical public health agencies–CDC and FDA–that have damaged by political meddling will consume the lion’s share of the administration’s health policy bandwidth in its first year. It will be pressed to address a huge readiness gap–from critical PPE supplies to the development and deployment of testing and tracing capability to public health co-ordination and messaging–for the next pandemic. Increasing the presently inadequate level of public health funding (less than $100 billion a year in a $21 trillion economy) seems inevitable.

The inability of Congress to produce a fall round of COVID relief will create pressure on Biden to take immediate action to help struggling sectors of the economy, like airlines, restaurants and hospitals, as well as further help for the long term unemployed. Only a little more than half of the 22 million jobs lost in the spring have returned by November. Twenty million Americans were stranded by the July expiration of supplemental unemployment benefits as well as countless millions more “free agents” and contractors not eligible for traditional unemployment that are losing coverage at the end of the year. Mortgage, credit card and consumer loan forbearance are ending, and unless Congress acts, acres of rotten credit will turn rapidly into a banking and bond market crisis which the Federal Reserve cannot fix by itself.   

State governments face FY21 deficits equaling $500 billion over the next two years , against a current annual spending base of about $900 billion.  Further assistance to state and local governments will almost certainly include an additional increase in the federal match for Medicaid (FMAP), beyond the 6.2% temporary increase passed in March). Medicaid enrollment will likely top 80 million by mid 2021, almost one-quarter of the US population. Some states will have upwards of 40% of their population on Medicaid by mid-2021.

States laboring under severe revenue shortfalls will be unable to afford the expanded Medicaid program that was part of ObamaCare without a further increase in the FMAP rate.  President Trump and Senate Republicans blamed the state and local government fiscal crisis on profligate Democratic mismanagement, and blocked aid to them during 2020. But Texas, Florida, Georgia and other red states have the same problems New York and California do. 

Serious Fiscal Limitations Push the Health Policy Agenda Away from Coverage Expansion

Barack Obama entered office with a FY08 federal deficit of $420 billion. Joe Biden enters with a FY20 deficit of $3.1 trillion and a baseline FY21 deficit of $1.8 trillion, before adding the cost of the likely additional trillion dollar-plus stimulus package early next year. It will be passed over the dead bodies of Republican Congressional leadership suddenly recommitted to deficit reduction after racking up $8 trillion in deficit spending during the four years they controlled the federal government.

Coverage Expansion via Medicare and Public Option Unlikely

That deficit will significantly constrain a further expansion of health coverage. Not only will “Medicare for All” be off the table. Severe fiscal pressures will cause the new administration to “slow walk” a public option (which would require federal subsidies to implement) and Medicare expansion to people over age 60. These expansions were going to be  controversial and politically costly because they would be fiercely contested by hospitals and other care providers concerned about the erosion of their commercial insured customer base (the source of perhaps 130% of their bottom lines) as well as the use of Medicare as a de facto price control lever. 

By the time Biden addresses the first two problems–COVID and the economic crisis–he will probably have expended his limited stock of political capital and be weakened enough to be unable to take on the large messy issues of health coverage expansion and cost control. The Affordable Care Act exhausted Obama’s store of political capital, by early 2010. His administration’s failure to turn the economy cost the Democrats control of the House of Representatives and 20 (!) state legislatures in 2010.

What Can Biden Do in Health that Does Not Require Federal Spending?

Thus, the focus of Biden health policy is likely to be on items not requiring fresh spending.

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New Technologies Drive Cost Growth Over Time

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By KEN TERRY

(This is the eighth and final installment in a series of excerpts from Terry’s new book, Physician-Led Healthcare Reform: a New Approach to Medicare for All, published by the American Association for Physician Leadership.)

Medical technologies include drugs, devices, tests, and procedures. Considered as a whole, these technologies are the key driver of growth in health costs, according to Georgetown University professor Gregg Bloche and his associates.

Bloche, et al., view insurance coverage as the chief enabler of these technological innovations. In a 2017 Health Affairs Blog post, they said, “Drug and device developers, clinical researchers, and their financial backers anticipate coverage for new tests and treatments with little concern for whether they add substantial therapeutic value, and they make research and development decisions accordingly.”

In an interview, Bloche further explained, “If you’re a technology developer, you can reasonably anticipate that if your product achieves a low but significant health gain, insurers are going to be under pressure to pay for it.”

Insurers do cover most new drugs, although they may make it difficult for patients to access the ones that they deem to be low-value, notes Peter Neumann, director of the Center for the Evaluation of Value and Risk in Health at the Institute for Clinical Research and Health Policy Studies at Tufts Medical Center in Boston.

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Obstacles to Value-Based Care Can Be Overcome

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By KEN TERRY

(This is the seventh in a series of excerpts from Terry’s new book, Physician-Led Healthcare Reform: a New Approach to Medicare for All, published by the American Association for Physician Leadership.)

Even in a healthcare system dedicated to value-based care, there would be a few major barriers to the kinds of waste reduction described in this book. First, there’s the ethical challenge: Physicians might be tempted to skimp on care when they have financial incentives to cut costs. Second, there’s a practical obstacle: Clinical guidelines are not infallible, and large parts of medicine have never been subjected to rigorous trials. Third, because of the many gaps in clinical knowledge, it can be difficult for physicians to distinguish between beneficial and non-beneficial care before they provide it.

Regarding the ethical dimension, insurance companies often are criticized when they deny coverage for what doctors and patients view as financial reasons. Physicians encounter this every day when they request prior authorization for a test, a drug, or a procedure that they believe could benefit their patient. But in groups that take financial risk, physicians themselves have incentives to limit the amount and types of care to what they think is necessary. In other words, they must balance their duty to the patient against their role as stewards of scarce healthcare resources.

On the other hand, fee-for-service payment motivates physicians to do more for patients, regardless of whether it’s necessary or not. In some cases, doctors may order tests or do procedures of questionable value to protect themselves against malpractice suits; but studies of defensive medicine have shown that it actually raises health costs by a fairly small percentage. More often, physicians overtreat patients because of individual practice patterns or because they practice in areas where that’s the standard of care. As long as doctors believe there’s a chance that the patient will benefit from low-value care, they can justify their decision to provide that care.

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THCB Gang Episode 26, 9/24

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Episode 26 of “The THCB Gang” was live-streamed on Thursday, September 24th! Watch it below!

Joining Matthew Holt (@boltyboy) were some of our regulars: health futurist Ian Morrison (@seccurve), patient advocate Grace Cordovano (@GraceCordovano), patient & entrepreneur Robin Farmanfarmaian (@Robinff3), health care consultant Daniel O’Neill (@dp_oneill), and patient safety expert Michael Millenson (@MLMillenson). The conversation revolved around the dismantling of the ACA, conservatives causing chaos in the government, the dismissal of pre-existing conditions, and the state of women’s health rights after the passing of RBG. It was both an emotional & impactful conversation.

If you’d rather listen to the episode, the audio is preserved as a weekly podcast available on our iTunes & Spotify channels — Zoya Khan

Why Health Systems Employ Doctors: Money and Control

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By KEN TERRY

(This is the third in a series of excerpts from Terry’s new book, Physician-Led Healthcare Reform: a New Approach to Medicare for All, published by the American Association for Physician Leadership.)

The American Medical Association (AMA) last year announced that, for the first time, more physicians were employed than were independent. While many of these doctors were employed by private practices, the AMA said, about 35% of them worked directly for a hospital or for a hospital-owned practice.25

This estimate was lower than that of other surveys. According to research conducted by the Physicians Advocacy Institute (PAI) and Avalere Health, a consulting firm, 44% of physicians were employed by hospitals in January 2018, compared to 25% in July 2012. More than half of U.S. physicians now work for or contract with fewer than 700 healthcare systems across the country, according to a new study in Health Affairs.

Many of the physicians employed by hospitals and health systems formerly were in private practice. They sold their practices to hospitals because of increasing overhead, dwindling reimbursement, and the rising administrative burdens of ownership, according to Jackson Healthcare, a physician recruiting firm.

The many negative factors affecting primary care also have impelled a growing number of primary care physicians to seek employment in recent years. In 2018, 47% of general internists, 57% of family physicians and 56% of pediatricians were employed. There is evidence that this trend may be exacerbating the primary care shortage because employed doctors see fewer patients per day, on average, than do those in private practice.

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Slow Walking to Value Based Care: Why Fee for Service Still Rules

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By KEN TERRY

(This is the second in a series of excerpts from Terry’s new book, Physician-Led Healthcare Reform: a New Approach to Medicare for All, published by the American Association for Physician Leadership.)

In January 2015, then Health and Human Services Secretary Sylvia Burwell announced lofty goals for the government’s value-based payment program. By the end of 2016, she said, 85% of all payments in the traditional Medicare program would be tied to quality or value, and 90% would be value-based by the end of 2018.

The government planned to tie 30% of Medicare payments to alternative payment models by 2017, according to Burwell, and hoped to reach the 50% mark by 2018. In March 2016, HHS said it had reached the 30% goal a year ahead of schedule, mainly because of the Medicare Shared Savings Program (MSSP).

More recent data on the value-based-care movement comes from the Health Care Payment & Learning Action Network (LAN), a public-private partnership launched in 2015 by the Department of Health and Human Services. The LAN reported in October 2018 that public and private payers covering 226 million lives, or 77% of insured Americans, had tied 34% of their payments to value-based care. According to the organization, only 23% of total payments had been value-based in 2016.A deeper analysis of the LAN data, however, shows that the vast majority of value-based payments—both in Medicare and in the larger healthcare system—were still limited to pay for performance, upside-only shared savings, and care management fees paid to patient-centered medical homes.

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