Healthcare Costs Too Much

I have complained about the lack of discussion of healthcare in the election. Then to my surprise a few days after the last debate on October 19 was in the can, healthcare suddenly became an issue when it was announced that the cost of the average policy on the exchange would be priced 25% higher in 2017. That conversation lasted less than a week because FBI Director James Comey abruptly threw the election into further turmoil with his letter to Congress reopening the investigation of Hillary Clinton’s use of emails. 

Months ago I predicted that the important moments in this election would not be related to issues of policy but rather to some kind of surprise event. When the Trump/Billy Bush video with “locker room conversation” came out I wondered whether that was the surprise that I was expecting. Are the emails the big pre election surprise that I was anticipating? Will there be another surprise before the election that trumps all of the other surprises?

Setting aside the email questions, it is important to return to the subject of healthcare. I fear that the future of healthcare under any new president may be distorted by misinformation that is the result of the negative “drip drip” effect of a steady progression of unsettling stories and events. Back in August many of us were upset to learn that Aetna, United and Humana were withdrawing from many of the 2017 state healthcare purchasing exchanges. In September we were shocked to learn that Dartmouth was withdrawing from all Medicare ACOs for financial reasons. The pain from these disturbing announcements was increased like salt being poured into a wound when Bill Clinton handed the Republican party a big gift in early October when he called the ACA “the craziest thing.” Even after we have turned our attention to the FBI report of emails, I see that unfortunate soundbite of Bill Clinton’s speech in the negative political ads for Donald Trump as well as for the Senate race in New Hampshire.

We should be concerned about the lack of real progress that is being made in the effort to lower the total cost of care. How to lower the cost of care will be a major problem after the election.  Hillary Clinton and the majority of Democrats believe that the answer to the painful realities of the medical cost question is not to throw out the ACA but to build on it. Donald Trump will repeal the ACA and replace it with “whatever”. In previous postings I have reviewed articles describing the problem and proposing possible solutions. From where I sit all of the proposed solutions miss the fundamental point that insurance premiums are too high because charges are higher than ever and besides being inflated are often nothing more than the monetary expression of waste.

As important as it is to shore up the ACA and correct many of its design flaws, it is even more important to realize that for us to lower the cost of healthcare we must actually change the way we practice and deliver care. The answer to the healthcare cost concerns lies secondarily in how we are paid or how patients are insured and primarily in how we practice. I am not so sure that just fostering more competition will lower the cost of care.

Recently, Columbia Economist Jeffrey Sachs attempted to explain the problem of high healthcare costs in a thoughtful Boston Globe op ed article, “Disparities and high costs fuel the health care crisis.” The article begins by reminding us that the life expectancy in America now falls behind that of most developed countries. What it also emphasized was the inequity in our system of care. Variation by zip code reveals defects that are attributable to race and class. The citizens in some of our zip codes might have a better outlook in a third world country. The crowning defect that we have all tolerated is that we spend up to twice as much on healthcare as many of the counties that have much better results than ours.

The likelihood that the ACA as passed in 2010 would lead to a substantial reduction in the cost of care was always low. The law was primarily about expanding coverage and improving benefits for those who are covered. Twenty million more people have been covered. Everyone who has coverage has enjoyed the improved security of lifting lifetime limits and the guarantee of insurability despite pre existing conditions. The long list of the ACA’s benefits and proposed solutions for its deficits was well documented last August by the president in JAMA.

The law is not the final act because almost 30 million people or ten percent of the population still lacks care at any cost. In some of the states that refused the Medicaid expansion the rates of the uninsured approach 25%. Care has been made affordable for many patients who qualify for subsidies, but that has not reduced the total cost of care. With the subsidies to low income eligible participants in the exchanges and through Medicare and Medicaid, many patients are largely shielded from the dramatic increases in costs projected for 2017. 

My contention is that the ACA is not the cause of the problems. The root cause problems that largely explain the variances between the experience of care, the public health metrics and the cost differential between our country and other countries with better results can not be fixed by legislation alone. As an industry and as a profession, we theoretically have the ability to lower the cost of care and perhaps even make a dent in some of the social issues that contribute to the inequities of care. We just do not do what we could do. The real questions are why is it that we don’t do what we can do, and what will it take for us to do what no law can do?

We have become unresponsive to the warnings of economists who anticipate that the burden of healthcare costs will eventually force substantial changes to life as we know it. The good news is that if we do not want to undermine our ability to invest in other social supports like education, housing, infrastructure and culture, and if we do not want to resort to greater de facto rationing of care than we experience now, there is still time to realize the Triple Aim, if we act promptly. That is the optimistic outlook. If there is not some fundamental change in the way we approach our responsibility over the next twenty to thirty years, healthcare costs could easily become the falling domino that knocks down some of the most vulnerable parts of our economy and leads to a continuing cycle of loss.

In the past, not so much now, many people looked to Massachusetts for leadership in healthcare policy and practice. At the moment I see the story of Massachusetts as a cautionary tale. No one felt more challenged and conflicted than I did when Massachusetts passed Chapter 58 in 2006, Romneycare. I liked the universal coverage. I disagreed with the idea of a mandate. I was concerned about costs. I was actually delighted in 2008 when Chapter 305 was passed with the objective of fixing the cost problem by making “global payment” the finance system of the state’s healthcare by 2013. Well that did not happen. Again I was cautiously optimistic when Chapter 224 was passed in 2012 creating the Health Policy Commission to guide the cost reductions that were needed because of the rising cost of care. My caution was an expression of my concern that the HPC had no powers to enforce its opinions or make real change much beyond the use of transparency and the exercise of influence on public opinion.

Now ten years after the passage of Chapter 58, Massachusetts still has a substantial problem with the total cost of care that does distort the state budget and does continue to undermine the economics of individuals, employers, and taxpayers. Why? The job of lowering the cost of care can not be done without the active engagement of clinicians and their institutions. The transition has been painfully slow for our patients and the community and ultimately our inability to organize for effective change will undermine our long term objectives.

Despite all of our laws, without clinician and institutional engagement health care premiums are once again soaring, and the social determinants of poor health are not being adequately addressed. Obamacare is not enough alone to fix such a flawed system.

Jeffrey Sachs is a numbers guy. Much of his piece in the Globe was data to document our failures, but he does bring some emphasis to the ethical questions that the status of our healthcare performance raises. 

America’s health outcomes are starkly unequal by class and race. According to the Health Inequality Project, the richest 1 per cent of American men have a life expectancy of 87.3 years, a remarkable 15 years longer than the poorest 1 percent of American men, at 72.7 years. As for race, non-Hispanic white life expectancy in 2014 was 78.8 years, 3.6 years longer than for non-Hispanic blacks, at 75.2 years.

I hope that you read the article because in the end, after making both the ethical and the economic arguments, Sachs comes close to pointing his finger in the same uncomfortable direction that I pointed my finger.

The sky-high costs of medicines and health services exacerbate the problem at every turn. … higher health care outlays in the United States — compared with Europe, Canada, Japan, and Australia — are due to the higher prices of health services, including drugs, hospital stays, outpatient visits, and medical procedures rather than to a greater use or higher quality of those services.

In his discussion of the economic realities of supply and demand Professor Sachs points to the fact that our shortage of physicians is potentially our largest problem.

In 2013, the United States graduated just 7.3 medical students per 100,000 people, compared with an OECD average of 11.5 per 100,000 and a high of 19.7 per 100,000 in Denmark. The United States has only 2.6 doctors per 1,000 people, compared with an OECD average of 3.3 per 1,000…

Professor Sachs makes a statement that lends credence to the possibility that poorly discussed issues of healthcare could have a significant impact on the last two weeks of the presidential campaigns.

Recent research by Nobel laureate Angus Deaton and his coauthor, Ann Case, has shown that middle-aged working-class whites are now experiencing an unprecedented rise in mortality rates, not unlike the falling life expectancy that plagued middle-aged men in the Soviet Union in the years before its collapse. Rising death rates in the population signify a deep crisis in the social order, including the health system.

I do not disagree with his recommendations to fix the problem:

• America should adopt policies to reduce income inequalities, end the over-incarceration of the poor, empower workers, clean and green the environment, and raise the social status of working-class families.
• America should move toward universal health care coverage through public financing, as in Canada and Europe, with health providers (both private and not-for-profit) supplying coverage on the basis of capitation rather than fee-for-service.
• Third, the government should move to a system of price ceilings for medicines under patent through rational guidelines that balance the incentives for R&D with drug affordability and access.

To those three recommendations I would add that our healthcare professionals and institutions should move toward Don Berwick’s Era 3 of healthcare. In Era 3 we will put our patients’ interests first and that includes their economic interests. In Era 3 we will practice waste reduction and continuous improvement as practical ways of lowering the cost of care. In Era 3 we will collectively accept our responsibility to fix this broken system no matter who is President.