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‘Medicare For All’ Can Be a Common Enemy to Unite ‘Foes’

It is both comical and infuriating to watch how key healthcare stakeholders react to two different, but highly inter-related subjects: 1) Medicare For All, and 2) Who is at fault for outrageous medical prices. Stakeholders in healthcare include hospital systems, provider groups, health insurance companies and pharmaceutical and device manufacturers. Employers are another major stakeholder, but much too often, they are largely excluded when it comes to contractual relationships between many of the aforementioned players.

When many of these stakeholders are asked who is at fault for charging high prices for medical services, each will conveniently step into a circle and point fingers at one another, as if they are participating in a circular firing squad. It seems that someone else is always at fault, but never the accused.

However, when asked about the growing ‘Medicare For All‘ proposals, commonly believed to eliminate private insurance and ‘socialize medicine,’ many of these same stakeholders will quickly hold hands in support of something centrally sacred to their collective well-being, as if they are military comrades in the HBO mini-series, “Band of Brothers.” These stakeholders’ words and actions are quite transparent about protecting their own self-seeking interests.

Below are just a few examples of this love-hate relationship between various healthcare stakeholders.

Medicare For All

Former Secretary of State, Condoleezza Rice, was quoted as saying, “We need a common enemy to unite us.”  For stakeholders who are frequently at odds with each other, such as medical providers are with insurance companies when it comes to contractual reimbursement arrangements, the relationships can be confrontational, if not outright brutal. However, for various reasons, both typically view Medicare For All as a major threat to their profitable well-being, if not survival. Given what is at stake with a ‘Single-Payer’ system that presumably would be controlled by federal bureaucrats, providers and insurers have found this ‘common enemy’ to mask their mutual differences with each other.

On April 16, UnitedHealth Group CEO David Wichmann warned Democrats that Medicare For All would destabilize the nation’s healthcare system. As mentioned in The Hill, Medicare For All would be a “wholesale disruption of American healthcare [that] would surely jeopardize the relationship people have with their doctors, destabilize the nation’s health system, and limit the ability of clinicians to practice medicine at their best.”

Insurance companies are greatly threatened by the many proposals initiated by progressive Democrats to expand Medicare to the entire U.S. population, most likely greatly reducing the role of private insurers. It must be noted, however, even with any given Medicare For All program implemented, private insurers would most likely be chosen as subcontractors to administer the program, but the profit motive would be greatly reduced from today’s standards.

Not to be outdone, a major counterpart to private insurers, the American Hospital Association (AHA), have similar views to Wichmann’s. AHA President Rick Pollack wrote in February that Medicare For All proposals “could do more harm than good to patient care.” Additionally, this one-size-fits-all approach could disrupt coverage of 180 million Americans who are currently covered by employer plans, and that physicians and other providers “may limit the number of Medicare or Medicaid patients they see because of chronic government underpayment.”

When lobbyists from both stakeholders were recently on stage together in Nashville addressing the Medicare For All topic, such as Matt Eyles (CEO of America’s Health Insurance Plans (AHIP)) and Chip Kahn (CEO of the Federation for American Hospitals), one could almost detect John Lennon’s epic song, “Give Peace A Chance” in the background. Kahn discussed a new organization that he formed, Partnership for America’s Health Care Future, and its purpose of ‘counter-messaging’ against the Medicare For All movement. Eyles acknowledged that AHIP was one of the first groups to become part of this new organization.

Healthcare Prices – Who is at Fault?

The camaraderie found in Medicare For All quickly vanishes when stakeholders are simply asked why healthcare prices are so high. This healthcare ‘hot potato’ can quickly determine just how deep-seated relationships are (or not) between major industry players. The April 15 cover of Modern Healthcare appropriately illustrates fingers pointing at each other, deflecting the price question and placing the blame elsewhere. Additionally, when leaders from Pharmacy Benefit Managers and the Pharmaceutical Research and Manufacturers of America (PhRMA) have appeared in front of the Senate Finance Committee during the past few months to justify their pricing methods, both pointed fingers at one another (insurers also), making sure that their respective organizations and industry were not to blame.

Deflecting responsibility and other self-preservation behaviors will only add to the desire to seek alternative solutions that can reform a grossly underperforming and bloated healthcare system. Stakeholder organizations and industries must decide whether they want to be part of the solution – or, at their own peril – continue to pursue their ‘business-as-usual’ behavior that benefits no one – but themselves.

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Optical Illusions of Healthcare ‘Reality’

I spend a great deal of time studying healthcare issues, giving balanced attention to both the ‘delivery’ and ‘payment’ of medical care. Admittedly, I have my own biases. How healthcare is delivered in our country is largely dependent on the incentives and disincentives that come from the payment side of our healthcare infrastructure. As a result, the fallout from the misalignment of these incentives cause a great deal of unintentional consequences.

It is true there are positive stories about exceptional doctors and medical staff who shine brightly when caring for patients. In fact, their work can be awe-inspiring, as most people performing this work are honorable and want to do the right thing for patients. However, these well-intentioned professionals are relegated to work in systems ill-equipped for them to consistently succeed. This too-often causes morale problems that can eventually lead to job burnout for medical professionals – which adversely impacts all of us.

For me, cynicism about our healthcare ‘system’ has become a way of life. Key healthcare players are legally allowed to operate within their own myopic sphere to justify their ‘value’ within increasingly complex – yet profitable – inter-related sectors that suck oxygen from our economy. What escalating costs are doing to our families and to our economy, to put it mildly, remains deeply disturbing. Healthcare’s inability to control costs continues to shortchange other sectors of our economy. Opaqueness and creating illusions are important tools to ensuring the status quo will not go away soon.

Within the span of two hours one recent morning, I perused the following topics that fed my skepticism about the true intent of the healthcare sector:

Axios – Executive Pay Packages

This article analyzed the pay of CEOs from 70 of the largest U.S. healthcare companies, who have, on a cumulative basis, earned $9.8 BILLION during the seven years following the passage of the Affordable Care Act (ACA). Why does this matter? Because the pay packages rarely, if ever, incentivize CEOs to control healthcare spending, eliminate unnecessary procedures, tests or devices and coordinate care. Instead, CEOs are motivated to sell more prescription drugs, perform more tests and procedures, purchase another practice/competitor and create new medical therapies that may not add value to one’s life. In short, CEOs are paid to “do anything to create higher earnings per share” for their shareholders.

My Takeaway: Developing an organizational infrastructure to ensure “value-based healthcare” is evidently dependent on someone else’s pay-scale.

Modern Healthcare – Other Revenue Streams are the Priority

Ninety percent of surveyed hospital and health-system executives have an “urgent priority” to find new revenue streams in the next three years due to downward revenue pressure causing massive financial headwinds to their profitability goals. In healthcare, it is all about revenue growth.

My Takeaway: Too bad the revenue streams derived from patient-centric and safety programs are paltry when compared to other appealing opportunities being pursued by these executives.

A transcript of the most recent ‘Fixing Healthcare’ podcast – Perverse Incentives

Dr. Robert Pearl and Jeremy Corr interviewed Dr. Elisabeth Rosenthal, Editor-in-Chief at Kaiser Health News. Dr. Rosenthal does not mince words within this podcast, or in her bestselling book, An American Sickness, as well as other articles she has carefully researched and written. Within this nearly one-hour interview, Rosenthal pointed out many perverse bugaboos found in U.S. healthcare – many of which I have previously written about over the years. But one particular comment she made was screaming at me. Largely unnoticed in mainstream media is the perverse incentive for insurance companies to have little motivation to keep costs down. Yes, you heard me right.

Under the ACA, a well-intentioned, but flawed regulation was directed at insurance companies to spend 80 to 85 percent of premiums on medical care – a much larger chunk than what was spent by some insurers in the pre-ACA era. Put another way, insurers are bound by this rule to not spend more than 20 percent of individual and 15 percent of small-group premium revenue on administration, marketing and profit. On the surface, this seems to make sense. Insurance companies must spend a higher proportion of premiums on medical care, rather than retain as profit. However, insurers can skirt around this issue by paying inflated medical bills so that they can retain a larger piece of the cost pie. This certainly benefits the medical providers, as well. To be sure, this is seldom (if ever) admitted by industry insiders – and is also very difficult to prove this is intentionally done.

My Takeaway: No wonder why larger employers and states are looking to bypass the inflated appearance of negotiated ‘discounts’ arranged by insurance companies, and instead, directly negotiate payment arrangements with providers based on methods tied to lower Medicare costs. But when this happens, using the state of North Carolina as an example, hospitals and insurers balk at this approach.

Health Affairs Blog – Health Costs Major Concern for Americans

This blog is a direct result of the previous behaviors briefly described earlier. Cost-shifting fatigue is taking its toll on the payers. One quarter of surveyed U.S. adults reported that cost was the nation’s most pressing healthcare issue, while 61 percent indicated that paying higher premiums (or a greater portion of medical expenses) was a “major concern.” About one-half of U.S. adults worry they will not have enough money to afford care.

My Takeaway: The ‘optics’ in healthcare are alive – indeed thriving.  The hypnotic messages you hear and see from many key stakeholders may not be the reality we wish and hope to have. The desire to ‘reform’ our healthcare infrastructure to become more affordable with better outcomes runs contrary with how major stakeholders are being incentivized and motivated to act. Re-engineering appropriate incentives (and disincentives) is necessary before we can obtain meaningful progress. Until this happens, the chairs are on the Titanic are merely being rearranged for appearance purposes only.

Skepticism, especially in healthcare, can be a virtue. Accepting the truth that this is happening is the first step of recovery.

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Why It Matters to Have Private Health Coverage

I should not be astonished, but I am.

In 1910, Dr. William J. Mayo wrote his view on making patients a central reason for his organization to exist: “The best interest of the patient is the only interest to be considered, and in order that the sick may have the benefit of advancing knowledge, union of forces is necessary.”

But 107 years later, the healthcare landscape has changed, running opposite to Dr. Mayo’s credo.

A March 15 article in the Star Tribune revealed a healthcare system truth that some have suspected for years – that it’s a tier-system of care dependent on the type of health insurance card you carry in your wallet or purse. If you are fortunate to have private insurance coverage through your employer or have personally purchased it through a commercial insurance company, you should feel somewhat privileged. However, if you have Medicaid or Medicare coverage, please step to the back of the line.

Dr. John Noseworthy, CEO at the famed Mayo Clinic, was videotaped speaking to his staff last fall about giving preference to patients with private insurance over lower-paying public coverage (e.g. Medicaid and Medicare). “We’re asking…if the patient has commercial insurance, or they’re Medicaid or Medicare patients and they’re equal, that we prioritize the commercial insured patients enough so…we can be financially strong at the end of the year to continue to advance, advance our mission…”.

It is important to note that, regardless of payer source, Mayo will always take patients when they’re unable to find medical expertise elsewhere. However, when given two patients who have equivalent medical conditions, the Mayo health system will “prioritize” the patient with private insurance – private plans pay Mayo (and all other providers) more than public coverages. Noseworthy continued, “If we don’t grow the commercially insured patients, we won’t have income at the end of the year to pay our staff, pay the pensions, and so on…so we’re looking for a really mild or modest change of a couple percentage points to shift that balance.”

Hospitals are not allowed to discriminate against patients seeking care in the emergency room. Outside the ER walls, however, providers can choose to accept (or decline) Medicaid and Medicare patients. Mayo recently indicated to Modern Healthcare that Medicare and Medicaid patients account for half of their services, but with more baby boomers becoming eligible for Medicare, coupled with Medicaid expansion, Mayo is looking to have higher-paying private insurance offset the shortfalls received from public health plans.

The ‘dirty little secret’ of establishing a pecking order of patients, based on payment sources, has not been widely known. In that sense, kudos to Mayo for their honesty, as it appears they are not attempting to sweep this fact under the rug. Yet, the Mayo acknowledgement that commercially-insured patients would get preferential consideration in certain situations should raise questions for those of us who are covered by private payers.

If the provider community establishes a pecking order between public and private payers, could special consideration also be given AMONG private payers? Think about it. If margins are so thin for world-reknown providers like Mayo, why wouldn’t other medical providers seek similarly-related practices with all sources of revenue?

For example, if insurer A reimburses hospitals at a higher rate over other private insurers within that particular market, would insurer A patients receive preferential consideration, much like what Mayo described? If so, are you better off purchasing health coverage at a higher premium from insurer A because their reimbursement rates will guarantee preferential service compared to other insurers within that market?

This raises questions about the potential practices initiated by the provider community. Having a particular insurance card provides a ticket of entry into our healthcare system. But does it also determine the level of care we ultimately receive?

What’s in your pocket or purse? In healthcare, it just might matter a great deal.

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