Nov
14

Some ill-informed but perhaps well-intentioned people opine that all we need to do to solve the healthcare cost problem is unleash the free market.

Their thinking seems to be that creative approaches and Adam Smith’s “invisible hand” will conquer the cost:quality:access conundrum.

That is wrong for several reasons.

First, no for-profit insurance company wants to “insure” a person with cancer, depression, heart disease, asthma. Nor do they want to keep insuring someone who gets sick.

That would be irrational and stupid, a bad business decision indeed.

Second, there has been ample time and much experimentation with various types of “free market” solutions – yet here we are. Family insurance premiums are close to $20,000 and come with sky-high deductibles, medical trend continues to climb, and big insurers are not jumping into markets.

The free marketers will argue that allowing people to buy skinny healthplans like those pushed by the Trump Administration that don’t cover stuff like drugs or pregnancy is the solution, that this keeps insurance costs down by eliminating coverage that’s “not needed”.

Funny thing about health insurance – no one can predict when they’ll find out they have Hepatitis C, have a motorcycle accident, or have an aneurism.

There’s another problem with the skinny plan idea – insurance requires the many subsidize the few. If healthy people aren’t in the regular insurance pool, costs for sick folks will go up a lot – and inevitably lead to insurance market death spirals where only the wealthiest people can afford insurance.

To be fair, free marketers will assert that this is exactly the problem – a big part of healthcare costs (e.g. maintenance drugs, child health, care for chronic conditions) shouldn’t be insured as they are not a classic “insurable risk”; somewhat unpredictable and random. That’s true. But it begs the question – most Americans can’t afford to pay for needed medical care without support from an insurer or third party.

Which leads us to the real problem – healthcare in this country is very much a profit driven business, and the companies and individuals making gazillions on healthcare are going to fight to the death to keep it that way.

As evidence, see California’s attempt to limit the profits of the dialysis industry. The big dialysis companies spent $111 million dollars to prevent this – which makes perfect sense. However, one needs to understand that almost all dialysis treatment is paid for by you, the taxpayer. And a big chunk of Californians’ tax dollars going to fatten up corporate profits – 3 billion dollars to be precise.

It’s not just dialysis.

Investment firms are buying up dermatology practices, and, according to some reports, encouraging providers to order lots of expensive and potentially unnecessary treatments.

I’m not blaming private equity firms – they are doing what they are supposed to do, generate big returns for their investors. (to be fair, I know several PE firms that are NOT like this – they believe in doing well by doing good.)

And they are very, very good at it.

Finally, Invisible Hand fans will argue that dialysis is the issue – if we get government out of the mix, then the consumer will force down the price.

Ha.

What does this mean for you?

Can you afford dialysis? Is it right for those who can’t afford it to die? Because that’s what the invisible hand would do – push many of us right into a long and painful death.

Note – friend and colleague Tom Lynch must’ve been thinking the same thoughts I have been, as his post is a data-rich, elegant and thoughtful discussion of single payer, and government’s role in healthcare. 

 


Nov
7

And the big winner of the 2018 midterms is…Medicaid.

Three deep red states voted to expand Medicaid, and a fourth voted in a Governor who will comply with her state’s 2017 referendum results and do the  same.

Four states; Montana, Utah, Nebraska, and Idaho, all consistently Republican – had Medicaid expansion on the ballot. Montana’s results are not yet final, but the measure passed in the other three states. [Montana had temporarily expanded Medicaid about two years ago; the vote was to decide whether or not to make expansion permanent.]

53 percent of Nebraskans voting checked the “expansion” box, despite strident requests from Gov Pete Ricketts (R) to vote NO. Utah passed the referendum by about the same margin, while Idahoans were even more supportive, with 62 percent voting in favor.

Departing Maine Gov Paul LePage refused to expand Medicaid even after more than 60 percent of voters demanded just that in a referendum last year. Gov. Elect Janet Mills has promised to begin expansion on day one of her term in office.

Montana might be a different story. Early returns indicate a $20 million anti-Medicaid campaign backed by the tobacco industry may have been effective. The measure would have increased the price on a host of tobacco products by $2 to cover the state’s costs.

Notably, hospital groups in each state were strong supporters of each initiative, as they have been in pretty much every state since the ACA was passed. I’d expect to see more states expanding Medicaid in the future in a replay of the original Medicaid roll-out from the mid-nineteen sixties.

With the rollout, rural hospitals and those with higher proportions of poorer patients are getting a financial lifeline, one that they sorely need.

What does this mean for you?

Medicaid expansion is inevitable, and that is good news for hospitals and decreases pressure to cost-shift to other payers.


Nov
5

What this election means to you.

This election is about your health and your family’s, because:

“Virtually every American has someone with an existing health condition in their family at any given time” 

Dan Mendelson, CEO, Avalere

(Note to readers – this isn’t a “liberal” or Democratic post, it is a factual description of reality. If you disagree, please provide citations to support assertions)

Today, you are protected because under current law (the ACA, aka “Obamacare”)  insurance companies can’t refuse to provide coverage or charge you more if you have a medical condition.  

Those protections will go away if Republicans have their way. 

According to Avalere,

Over 50% of Americans enrolled in coverage outside of the major public programs could face medical underwriting or be denied access to coverage or care without the protections for people with pre-existing conditions contained in the ACA.

Here’s why.

  1. Last year Republicans came within one vote of repealing the ACA – with NO replacement plan in place.
  2. Senate leader Mitch McConnell has said he will try to repeal ACA next year.
  3. House Republicans voted over 54 times to repeal ACA – with NO replacement plan in place.
  4. The “short-term” and “association” healthplans proposed by Republicans let insurance companies charge you anything they want if you or a family member have a pre-existing condition.
  5. These short-term and association healthplans can pick and choose what healthcare services they cover – they don’t have to cover drugs, pregnancy, or emergency room care, or anything else they bury in the fine print.
  6. Republicans are backing a lawsuit that would overturn the ACA in its entirety – and many of the Republicans behind the suit are running for Congress.

If you or someone in your family has had:

  • heart disease, high cholesterol, or high blood pressure
  • anxiety or depression or any other mental health condition
  • obesity
  • diabetes
  • cancer
  • or is pregnant,

your healthcare is at risk.

I have no problem whatsoever with principled Republicans – or anyone else – wanting to overturn the ACA. I have a big problem with anyone who’s lying about what they are doing.

 

Fact is the GOP has tried over 50 times to let insurance companies refuse to cover your pre-existing conditions, they are pushing a suit that would do the same thing, their bills in Congress will let insurance companies charge you anything they want, yet they are claiming they will protect you.

That’s just a lie.

What does this mean for you?

Do you want insurance to cover your pre-existing medical conditions? 


Oct
24

This election is about your pre-existing medical condition

Will you be able to afford health insurance, and will that insurance cover your pre-existing medical conditions? For most, that’s the biggest issue in the upcoming election.

Congressional Republicans are planning to pass legislation that allows insurers to:

a) stop paying for your pre-ex conditions; and/or

b) charge you anything they want for your health insurance – which does the same thing

Ignore their claims that they will protect you, because:

What they do have is bait-and-switch.

Republican candidates are pushing legislation that would “force insurers to cover all pre-existing conditions” – but they could charge you anything they want for that insurance. 

If you just won the $1.4 billion lotto, you’re all set. If not, you’re screwed.

What does this mean for you?

If you or a family member have a pre-existing condition, this election is about you.

If you aren’t sure, here’s a list.

And if you think you can hide your condition, you can’t. 


Oct
15

It’s complicated.

Let’s have a reasoned and fact-based discussion of why I believe the trade war is bad for your business and your job.

At its most basic level, the issue is this – there are few simple answers to big problems. Sure, there are soundbites and memes that may make you feel good… but like that second helping of dessert, it tastes great but leaves you feeling bloated and unhappy.

For example – “Trade wars are good and easy to win.”

If you want to get a country to change it’s industrial policy or actions, a trade war is certainly one option.

Some think the tariffs on China were an appropriate way to get its attention. And no doubt, the import duties on steel and aluminum and manufactured goods got noticed.

But tariffs are a two way street; the Administration’s actions resulted in China imposing retaliatory taxes on US exports of coal, farm goods, motorcycles, asphalt, Vaseline, cars, meat, airplanes and a bunch of other stuff.

It’s not just China – The tariffs on Canadian newsprint were crushing US newspapers, many of which have been barely staying afloat. The tariffs were finally overturned after hundreds of jobs were lost.

Farmers aren’t as fortunate; there are hundreds of millions of bushels of soybeans piling up – with no buyers in sight. Farmers looking to store this grain can’t afford new silos, as the price of steel has gone up 25%.

And jobs are at stake.  From Forbes:

“The tariffs, quotas and retaliation would increase the annual level of U.S. steel employment and non-ferrous metals (primarily aluminum) employment by 26,280 jobs over the first one-three years, but reduce net employment by 432,747 jobs throughout the rest of the economy, for a total net loss of 400,445 jobs.” [emphasis added] The analysis found, “16 jobs would be lost for every steel/aluminum job gained.”

It’s not just employment; tariffs don’t operate in a vacuum, but are one tool governments have to influence other countries. In fact, there are real national security issues in play here.

One is North Korea; China has more influence on North Korea than every other country combined, so when we anger the Chinese, they get a lot less interested in enforcing arms and energy embargoes on the rogue state of North Korea.

Then there’s China’s illegal building of naval bases in the South China Sea, which is a shipping bottleneck; over a quarter of the world’s shipping transits the Sea. It is also home to huge reserves of carbon-based energy deposits. The pace of construction has greatly accelerated of late and the number of troubling incidents in the area has increased – a Chinese naval vessel almost collided with a US destroyer a few weeks ago.

Okay, you say, we’ll get this resolved and all will go back to the way it was, farmers and pork producers and Boeing and coal miners will be fine.

Not so fast.

In reality, China – and other countries affected by our tariffs – have already shifted their purchasing to other countries. Brazil and Argentina are huge grain and meat producing countries, and they are benefiting greatly from the trade war.

US farmers are getting hammeredUS wheat exports globally have plummeted by 21 per cent in just the first half of 2018. This means fewer dollars for farm equipment, fencing, fuel, fertilizer.

And farmers are the canary in the coal mine; this trade war is going to have lasting and serious repercussions for our economy and each one of us; the longer it goes on, the worse it will get.

What does this mean for you?

When you’re stuck in a hole, the first thing to do is stop digging. 

Why this affects you – a recession hurts all of us – lowering employment, increasing healthcare costs, increasing work comp claims.

But long-term losses of markets causes long-term damage to entire economic sectors. That’s the real issue here.

 


Sep
10

Hypocrisy hits new heights.

The same folks who want to cut $537 billion from Medicare are now claiming only they can “protect” Medicare.

Out on the campaign trail, President Trump and Gov Rick Scott (R FL) are claiming “Medicare for All” would somehow harm Medicare, and seniors need to vote for them to preserve Medicare as it is.

In an obvious attempt to scare seniors, Trump et al are asserting that expanding Medicare – the most-liked health coverage in the nation – will somehow result in seniors losing Medicare benefits. They support this assertion with no logic, no coherent argument, no evidence or data, yet there it is.

This from the same folks who, just a couple months ago, wanted to cut seniors’ Medicare benefits. What’s changed?

Elections are coming, that’s what’s changed.

According to Forbes, the GOP is looking for:

$900 million in cuts to rein in Medicare prescription abuses. Another $5 billion is cuts are specified to address high drug prices, while $286 billion in funding will be pared to reduce excessive hospital payments.

Now, there’s an argument to be made that Medicare is not financially sustainable – especially given the huge tax cuts passed by the GOP.  And yes, we need to figure out how we can keep Medicare viable given the drop in federal tax revenue due to the tax cut.

But to turn around and claim that expanding Medicare for All is somehow damaging to a program you’d like to cut by a half-trillion dollars is, well, the height of hypocrisy.

What does this mean for you?

Medicare for All isn’t a threat to Medicare. 


Sep
5

Making “Medicaid for All” work

The US healthcare “system” is headed towards a cliff, and when it hits the edge, Medicaid may well be the replacement.

Briefly:

  • Managed Medicaid plans would be offered in every state
  • people would sign up for the plan they want, with the option of enrolling in regular fee for service Medicaid
  • funding would be from payroll taxes, individual service-based fees, and federal funds
  • provider reimbursement would be pegged to Medicare for ALL payers, eliminating payer-shopping by providers and increasing Medicaid FFS reimbursement

The details…

There are two ways this would work – Medicaid for All (MFA) becomes the way all of us get coverage, or Medicare remains in place for elderly folks and Medicaid covers everyone else.

It’s entirely possible employers continue providing basic healthcare coverage, but really, do they want to? It’s expensive and a pain in the neck. Instead, employers will be able to offer supplemental insurance (similar to what happens in Canada, the UK, and other countries) as an employment benefit.

Today, Medicaid comes in two general flavors – “classic” and Managed Medicaid.

Classic is fee-for-service Medicaid, where members can go to any provider that accepts Medicaid. Providers are paid on a fee for service basis, at rates that vary greatly between states (states set reimbursement).

Managed Medicaid is an option in almost every state. The states contract with healthplans to provide integrated Medicare and Medicaid in what are called “dual eligible” programs (members are eligible for both Medicare and Medicaid).

The Managed Medicaid (MM) plans are paid on a capitated basis – that is, a flat fee per member. That fee is based on the health status and health risks of the members; the sicker the member is, the higher the capitation amount.

This arrangement incentivizes MM plans to figure out the optimal ways to keep members healthy and keep costs down – keep them out of the ER, avoid inpatient hospital stays, and encourage healthy behaviors. If costs come in under budget, the plans make money (usually a couple percent at most). If not, the plan loses money – not the taxpayer. (MFA will be based on Managed Medicaid)

(a detailed explanation is here.)

Today, states with these plans in place enroll members in different ways. Some randomly assign members to plans, others allow more assertive competition among the plans for members. I’d expect this to continue under Medicaid for All; existing enrollment processes would be expanded, systems upgraded, and communications refined to address the broader market. Every fall, MM plans would compete for members, enrolling them before the end of the calendar year.

Individual contributions to premiums would be income-based (as under ACA today); there could be low copays for certain services but paperwork for members would be almost non-existent. (All Medicaid members today have ID cards that enable electronic record sharing, billing, and claims submission.)

Funding would be a combination of service-based fees (copays and co-insurance), payroll taxes, federal funds, and perhaps general state funds.

Remember, as employers would no longer have to deliver health insurance, those dollars could be spent on higher wages, to offset payroll taxes, or for other purposes. Similarly, individual payments for premiums, high deductibles and the like would be eliminated, altho some of those “savings” would go to higher payroll taxes to cover Medicaid for All.

Provider reimbursement would be up to the MM plans negotiating with providers – who would remain independent (unless they are employed in a health system that is also a MM plan provider). However, FFS Medicaid reimbursement would be increased to mirror Medicare’s rates.

Why this is the future

US healthcare is not sustainable. Period.

Family health insurance premiums are nearing $20,000, the number one cause for bankruptcy is medical debt, Medicare and Medicaid are the largest chunks of the federal budget, and industrial competitiveness is hampered by healthcare costs which are double the average costs in other countries.

And, 74% of Americans are worried about losing their insurance.

So, we can either keep driving off the cliff, or take an alternate route. One that will be very rocky, cause a lot of headaches and heartache, disrupt businesses and families and providers, but one that sooner or later, we’ll have to choose.

What does this mean for you?

It’s not a matter of if, but when.

Note – happy to engage in fact-based, citation-supported conversation. “I heard this” and “everyone knows” arguments are not helpful.

 


Sep
4

The case for Medicaid for All

When Single Payer becomes the law of the land, Medicaid will be the foundation.

We’ve looked at the current push for Medicare for All, the factors that I believe will drive us to some form of single payer, and posted a primer on Medicaid.

Here’s why it’s going to be Medicaid for All.

  1. Medicaid for All will spread the cost of universal coverage across states, reducing federal financing requirements.
    Medicaid is a state AND federal program; States provide a lot of the funding for Medicaid; on average the Feds contribute 63% and states 37%. This is critical, as Congress will want to spread the cost of a Single Payer solution and there’s no better way to do this than require states to pony up big dollars [State contributions vary based on a state’s average personal income relative to the national average; states with lower average personal incomes get more federal dollars.]
  2. Medicaid is already built to cover everyone.
    Medicare covers people of all ages, Medicare is very much elder-care focused.
    Adapting Medicare to handle everyone from newborns to elderly, maternity care to pediatrics will be difficult, time-consuming, and expensive. Medicaid does all this and more – today.
  3. Generally, Medicaid is less expensive than other “systems”.
    This is due to much lower provider payment and significantly lower administrative costs. Yes, this means providers are going to be paid less.
  4. Medicaid member satisfaction is pretty good; access to care is not much of an issue.
  5. Medicaid-based Exchange programs are much more successful in the Exchanges than commercially-based plans.
    The Centenes et al [Medicaid-based plans] understand the demographics of the uninsured, have lower medical costs, and already have provider networks, customer relations operations, workflows and processes set up and operational. At the end of the day, lower cost wins – and their costs are lower.
  6. Medicaid is a simple, fully-integrated healthplan.
    Medicare’s alphabet-soup of Parts A B C and D is confusing and convoluted, with different payers often covering the same individual. This increases administrative costs, member hassles, and decreases quality of care (co-ordinating pharmacy and medical care between different payers is problematic at best.
  7. Managed Medicaid plans are working.
    These plans currently exist in most states, and many have been able to deliver excellent care at lower costs through innovation and very tight focus on outcomes. One example is using paramedics to deliver care. [disclosure – I sit on the board of Commonwealth Care Alliance, a Massachusetts healthplan that serves dual-eligible members]

Tomorrow I speculate on how Medicaid for All will integrate with Medicare and employer-based coverage.

What does this mean for you?

Better care, lower costs, while a big impact on pharma, device companies, healthcare systems, and healthcare providers.


Aug
29

Medicare for All means…what?

After last night’s gubernatorial primary elections, no one can claim “those politicians are all the same.”

Gillum v DeSantis in Florida, Ducey v Garcia in Arizona, Abrams v Kent in Georgia, Evers v Walker in Wisconsin…the contrast between candidates in these and other states could not be more stark.

Many of the Democratic candidates for Governor – and some Congressional candidates as well – are pushing Medicare for All as a solution to the health care mess, while their Republican opponents are blasting the idea.

Why?

Before we dig into the details to understand the pros, cons, and challenges of “single payer”, let’s understand what Medicare is – and isn’t…

  • Medicare is a federal program, funded (mostly) by payroll taxes and member “premiums”. Unlike Medicaid, there is no variation between states, nor do states contribute financially.
  • Medicare is NOT simple – it is not a straight-forward healthplan, but rather several different plans covering hospital care (Medicare Part A), physician/provider care (Medicare Part B), and drugs (Medicare Part D).
  • Medicare Part C is the term for “Medicare Advantage” programs typically managed by commercial insurers. These plans include both A and B, and sometimes D coverage.
  • If you were setting out to design the most confusing health coverage possible, you could use A, B, and D as a great template. Medicare’s A, B, and D coverages include complicated deductibles, coverage limits (for stuff like rehab hospitals and nursing home care), qualifying periods, copays etc. It’s kind of like a camel, which is a horse designed by committee.
  • Medicare Advantage (MA) programs are a lot less complicated and sometimes have additional benefits, but often have restrictions on which providers members can see.
  • “Old style” medicare (not Medicare Advantage) pays providers on a fee for service basis, with reimbursement rates set by CMMS (Centers for Medicare and Medicaid Services).

So, Medicare is a federal program mostly for folks over 65 that covers most health care needs. Members can often choose between the “old style” Medicare, which allows access to pretty much any provider but has lots of cost-sharing provisions, and MA plans that restrict provider choice but have fewer complexities.

What’s often missing from the candidates’ calls for “Medicare for All” is any detail on:

  • what exactly they mean – Medicare Advantage? old style Medicare? Would patients be able to choose?
  • how would this be paid for?
  • would employers still be able to/required to provide health insurance?

We will delve into these issues tomorrow.

 

 

 


Aug
16

U.S. healthcare vs the world in one chart

How does our healthcare stack up against the rest of the world?

As we think about the possibility of moving to some version of Single Payer, we have to look at all sides of the question – what do we pay, what do we get, and how is that working for us.

Let’s start with a quick snapshot – we pay twice as much as the average country, to get results that are generally worse than average.

Would your business survive if you delivered these results at this cost?

Briefly – we are paying twice as much as the average industrialized country, yet our life expectancy is lower, more of us die from heart disease, far fewer of us have insurance coverage, and too many of us are admitted with breathing problems.

Want more?

It won’t surprise you to see more Americans skipped taking medications because they couldn’t afford them.

Add that to the fact that the US has a higher percentage of adults with diabetes than all but two countries, and we know that the prognosis for many of those diabetics is poor.

Oh, and more American babies die than in most other countries; fortunately we are just a tad better than Russia, land of alcoholism and awful medical care.

That may be because we have a higher rate of obstetric trauma than most other countries…

Our surgical infection rates are also average – although we pay way more than they do in other countries.

 

What does this mean for you?

The US healthcare system is delivering crappy results for way too much of our money. Given what we pay, we should have the fewest infant deaths, lowest surgical infection rates, highest medication adherence, and longest and healthiest lives.

And that’s exactly why Amazon, Berkshire Hathaway, and JPMOrganChase are taking it on.

*Source for all charts is http://dx.doi.org/10.1787/health_glance-2017-en