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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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The Rust Belt Is Burning: Republicans Lay Waste to their Base on Health Reform

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By JEFF GOLDSMITH

William Tecumseh Sherman, who laid waste to the South at the end of the Civil War, famously said, “War is Hell”.  So, too, is health reform.  And like Sherman’s infamous March to the Sea, where he burned town after Confederate town, the Republican War on Obamacare entered its attrition phase with the introduction on Monday in the House legislation to repeal and replace ObamaCare.  Except that Ryan is marching in the wrong direction; his troops are marching “north” and burning towns behind their own lines.

Ryan’s bill released Monday was greeted with a chorus of derision from the newly empowered Republican base; some conservative wags dubbed the bill “RINOCare”. Thoughtful conservative analysts savaged it.  Michael Cannon, the hard core libertarian Cato Institute health analyst, called it “a trainwreck waiting to happen” and suggested  that “ it will create the potential for the sort of wave election Democrats experienced in 2008”    In Reason.com, Peter Sunderman wrote,  “it’s not clear what problems this particular bill would actually solve.”

Ryan’s draft neither repeals nor replaces ObamaCare.  Continue reading…

All Risk is Local

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By JEFF GOLDSMITH and BRUCE HENDERSON

flying cadeuciiWe all knew how this was going to go, or thought we did.   Fee-for-service payment for health services was going to disappear, and be replaced by population health risk-based payment (or as some term it, “capitation”- fixed payment for each enrolled life).  Hospitals and care systems invested substantial time and dollars building capacity to manage the health of populations, yet many are discovering a shortage of actual revenues for this complex new activity.  Was population health a mirage, or an actual opportunity for hospitals, physicians and health systems?   

The historic health reform law passed by Congress and signed by President Obama in March, 2010 was widely expected to catalyze a shift in healthcare payment from “volume to value” through multiple policy changes.  The Affordable Care Act’s new health exchanges were going to double or triple the individual health insurance market, channeling tens of millions of new lives into new “narrow network” insurance products expected to evolve rapidly into full risk contracts.   

In addition, the Medicare Accountable Care Organization (ACO) program created by ACA would succeed in reducing costs and quickly scale up to cover the entire non-Medicare Advantage population of beneficiaries (currently about 70% of current enrollees) and transition provider payment from one-sided to global/population based risk.   Finally, seeking to avoid the looming “Cadillac tax”  created by ACA, larger employers would convert their group health plans to defined contribution models to cap their health cost liability, and channel tens of millions of their employees into private exchanges which would, in turn, push them into at-risk narrow networks organized around specific provider systems. 

Three Surprising Developments

Well, guess what?   It is entirely possible that none of these things may actually come to pass or at least not to the degree and pace predicted.  At the end of 2015, a grand total of 8.8 million people had actually paid the premiums for public exchange products, far short of the expected 21 million lives for 2016.  As few as half this number may have been previously uninsured.   It remains to be seen how many of the 12.7 million who enrolled in 2016’s enrollment cycle will actually pay their premiums, but the likely answer is around ten million.    Public exchange enrollment has been a disappointment thus far, largely because the plans have been unattractive to those not eligible for federal subsidy. 

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The C Word

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By JEFF GOLDSMITH

flying cadeuciiThat we are experiencing a “consumer revolution” in healthcare is a durable meme in the media and in policy circles just now.  When you hear the word “consumer”, it conjures images of someone with a cart and a credit card happily weaving their way through Best Buy. It is, however, a less than useful way of thinking about the patient’s experience in the health system.

A persistent critique of our country’s high cost health system is that because patients are insulated from the cost of care by health insurance, they freely “consume” it without regard to its value, and are absolved of the need to manage their own health.  In effect, this view ascribes our very high health costs to moral failure on the part of patients.

Market-oriented policy advocates believe that if we “empower”patients as consumers by asking them to pay more of the bill, market forces will help us tame the ever rising cost of care. If patients have “skin in the game” when they use the health system and also “transparency” of health providers’ prices and performance, patients can deploy their own dollars more sensibly.

This concept played a major role in the otherwise “progressive” Affordable Care Act. The 13 million people who signed up for coverage this year through the Affordable Care Act’s Health Exchanges opted overwhelmingly for subsidized policies with very high deductibles and out-of-pocket cost limits. The “skin in the game” argument has also heavily influenced corporate health benefits decisions. More than 30 million workers and their families receive high deductible plans through employers.

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Who Is to Blame for Health Care’s Problems? A Tale of Two Narratives

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By JEFF GOLDSMITH

Jeff GoldsmithWhat to do about the seemingly inexorable rise in health spending has been the central health policy challenge for two generations of health economists and policymakers. In 1965, before Medicare and Medicaid, health spending was about 5.8 percent of GDP. In 2013, it was nearly 18 percent. And GDPquadrupled during this same period.

Over the past 30 years, there are been two warring political narratives explaining health spending growth, with two different culprits and indicated remedies. At their cores, these narratives blame the main actors in the health care drama—patients and physicians—for rising costs.

The Conservative Narrative: The Patient As Culprit

The conservative thesis holds that the demand for health care is unlimited because it has been, historically, a free good for many patients. Moreover, the argument runs, much illness is driven by bad personal health choices — for example, smoking and obesity, and the heart disease and diabetes that follows. Thus, much of our cost problem is actually the patient’s fault.

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The Kaiser Permanente Model and Health Reform’s Unfinished Business

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By JEFF GOLDSMITH

Halvorson WEF

For decades, health policymakers considered Kaiser Permanente the lode star of delivery system reform.  Yet by the end of 1999, the nation’s oldest and largest group model HMO had experienced almost three years of significant operating losses, the first in the plan’s history. It was struggling to implement a functional electronic health record, and had a reputation for inconsistent customer service.  But most seriously, it faced deep divisions between management and the leadership of its powerful Permanente Federation, which represents Kaiser’s more than 17,000 physicians, over both strategic direction and operations of the plan.

Against this backdrop, Kaiser surprised the health plan community by announcing in March 2002 the selection of a non-physician, George Halvorson, as its new CEO.  Halvorson had spent most of his career in the Twin Cities, most recently as CEO of HealthPartners, a successful mixed model health plan.  Halvorson’s reputation was as a product innovator; he not only developed a prototype of the consumer-directed health plan in the mid-1990’s, but also population health improvement objectives for its membership, both firsts in the industry.

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HCA: The Bashful Giant

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JEFF GOLDSMITH

Screen Shot 2014-09-24 at 1.25.29 PMJudging by its nearly invisible public presence, you’d never know that this is prime time for HCA, the nation’s largest hospital chain.    A former HCA regional VP, Marilyn Tavenner, runs the nation’s Medicare and Medicaid programs.  Former CMS Head and Obama White House health policy chief Nancy Ann DeParle, sits on the HCA Board.  Its longtime investor relations chief, Vic Campbell, is immediate past Chair of the highly effective trade group, the Federation of American Hospitals.  And its Chief Medical Officer, Jonathan Perlin, MD, is Chair Elect of the American Hospital Association.

This astonishing industry leadership presence is something most health systems would be trumpeting, perhaps even placing ads in Modern Healthcare.  But not HCA, the bashful giant of American healthcare.  Most hospital systems make a show of “branding” their hospitals with the company logo.  Yet in its corporate home, Nashville, and the surrounding multi-state region, HCA’s 15 hospital network is called TriStar.  Everyone in Nashville’s tight knit healthcare community knows who owns their hospitals, but you have to read TriStar’s home page closely to find the elliptical acknowledgement of HCA’s ownership.

Despite a nationwide merger and acquisition boom, HCA hasn’t done a major deal in twelve years (Health Midwest in Kansas City joined HCA in 2002).  The company has not participated in the post-reform feeding frenzy, continuing a long-standing and admirable tradition of refusing to overpay for assets. For the moment, owning 160 hospitals is plenty.

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A Modest Proposal: Charting Day

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By JEFF GOLDSMITH

flying cadeuciiAt the end of March, Congress decreed a year-long postponement of the implementation of ICD-10, a remarkably detailed and arcane new coding scheme providers would have been required to use in order to get paid by any payer in the US (“bitten by orca” is but one of the sixty thousand new codes ).

The year postponement gives caregivers and managers a little more time to prepare for a further unwelcome increase in the complexity of their non-patient care activities.

In the spirit of Jonathan Swift, who famously proposed in 1729 that the Irish sell their children as a food crop to solve the country’s chronic poverty problem , I have a suggestion about how to cope with the steady rise in complexity of the medical revenue cycle.

Beginning when ICD-10 is implemented, there should be no patient care whatsoever on Fridays, permitting nurses and physicians to spend the entire day catching up on their charting and documentation, and other administrative activities.

Physicians, nurses, and others involved in patient care already spend at least a day a week of their time on this process now, but it is interspersed within the patient care workflow, constantly distracting clinicians and interrupting patient interaction.

Hospitals are solving this problem with a medieval remedy:  scribes who follow physicians around and enter the required coding and “quality” information into the patient’s electronic record on tablets.   Healthcare might be the only industry in economic history to see a decline in worker productivity as it automated.

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Why the SGR Fix Won’t Work and Could Actually Make Things Worse

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By Jeff Goldsmith

Partisan gridlock in Washington regarding health policy has been so pervasive and bitter that any bipartisan co-operation on any important health issue should be applauded by a frustrated public.

That is why the emerging bipartisan compromise regarding the fifteen-year long policy embarrassment known as the Sustainable Growth Rate (SGR) problem needs to be taken seriously.

Remarkably similar solutions — a new hybrid physician “value-based” payment methodology — have emerged from three of the four key committees in Congress, and seemingly the only stumbling block is finding the $115-120 billion to pay for it.

Moreover, key physician interest groups, including the American Medical Association, appear to have signed off on this approach.

This makes it all the more troubling that the approach taken is unsound health policy that will damage practicing physicians in diverse settings: private practice, medical school practice plans, and hospital employment.

This is because the proposed legislation casts in concrete an almost laughably complex and expensive clinical record-keeping regime, while preserving the very volume-enhancing features of fee-for-service payment that caused the SGR problem in the first place. The cure is actually worse, and potentially more expensive, that the disease we have now.

The SGR fix would basically freeze or severely limit future physician fee updates for Medicare Part B (a serious problem for primary care), while permitting physicians to earn modest “value-based” bonuses if they can document quality measure attainment, cost reductions, participation in alternative payment schemes, practice enhancement activities, or meaningful use of EHRs.

Physicians who meet all these standards could expect to supplement their existing Part B fee by about 4 percent in 2016, going to 10 percent in 2020, with the aggregate bonuses subtracted from the pool of total Part B physician payments to preserve budget neutrality.  Non-compliant physicians would see corresponding reductions in their updates.

There are sensible opt-outs for physicians who can report in groups, virtual or real, as well as for physicians who participate in as yet unspecified “advanced payment models” (APMs).
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What I Expect From the Medicare Program

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By Jeff Goldsmith

After half a lifetime of following the Medicare program, on October 1, 2013, I became a Medicare beneficiary.  I turned 65 on October 31.   I’m part of the leading edge of baby boomers joining the program, ten thousand a day.   We’re going to change this program, both by how we use it and what we expect its keepers in Washington to do to improve it.

Here are some reflections upon joining Medicare.

1-Don’t Refer to Me as “Retired”, Please. I’m still working (hard) and paying Medicare as well as income taxes taxes every month.   Like most of my fellow boomers, I lack the financial cushion I want in order to stop working.  Additionally, for what it’s worth, like all too many boomers, I don’t know how not to work.   So my main goal, which is closely aligned with the country’s,  is to stay healthy enough to keep working long enough to be able to retire comfortably when I wish to do so.

I plan on staying a long way away from the expensive parts of our healthcare system, if only to avoid being inadvertently harmed.  Rest assured that if I know I’m dying, you won’t find me in a hospital if I have any say in the matter.

I don’t consider myself “entitled” to Medicare, or to subsidies from younger people.  I’m paying more than $400 a month in Part B fees and the special assessment on Part D that got tacked on in the Affordable Care Act.   After what I’ve already paid in, that’s not exactly a flaming bargain.  I’ve paid Medicare enough over my working lifetime to buy a  house, and will pay more Medicare taxes for years to come for each month that I work. Nothing makes me angrier than the suggestion that I’m somehow sponging off my kids by participating in Medicare.

2- The Regular Medicare Program is a Relic. There is a lot of political fog enshrouding Medicare.  Personally, I could care less about the politics of this program.  The big choice was fairly cut and dried:  either regular Medicare plus a supplemental plan or Medicare Advantage.   After logging onto Medicare.gov, I found the regular Medicare benefit completely incomprehensible- chopped up into Parts that may have made legislative sense in the 1960’s.  If you included the supplemental coverage,  there were just too many moving parts that didn’t seem to fit together into a unified benefit.

So I chose Medicare Advantage. It’s simple to understand and user-friendly, and looks a lot like my previous coverage.   My doctor is a participating physician as is my beloved community hospital, Martha Jefferson.   And the price is right:  zero dollars after my Part B premium. More than 40% of boomers are picking Medicare Advantage, largely because it’s easy to use and remains a bargain. It will eventually be half the program.

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