11 October 2019
Dear Interested Readers,
Where Would You Start?
When I listen to politicians talk, at least the ones running for president, the health care problems they are interested in solving are mostly limited to how we achieve universal access and lowering the cost of insurance and drugs for consumers. Lowering the cost of coverage and drugs is not the same as lowering the cost of care. There is no doubt that covering everyone at a price that is affordable to every consumer is a laudable goal, but we should all realize that if the government payments required to achieve those goals add substantially to the tax burden, then the downside will be an instability that undermines other government funded programs. What individuals pay either directly or indirectly for their healthcare should concern us all, but we all know that this is a complex issue. If the cost of coverage is too high, many people will elect to go uncovered. It is also true that just providing coverage, especially if the coverage is associated with high out of pocket expenses as a way of controlling the risk of third party payers, does not really improve care. The higher the expense to the individual at the point of care, the less likely people are to get the care they need even if they are “covered.” If you have not been concerned about out of pocket expense then one of three things is true.
1.You have enjoyed great health and never go to a doctor’s office or a hospital, and you never talked to anyone who does.
2. You are quite wealthy, or have “platinum” or “Cadillac” coverage with a concierge practice.
3.You are oblivious to most things in your environment, or you have world class denial skills.
Universal access and the cost of drugs and insurance are huge problems, and I am not out to undermine the discussions that are underway within the Democratic presidential primary process. But, I am increasingly concerned that it will be impossible to improve the experience of care for most people by just expanding access and making some financial adjustments that are politically acceptable. This concern is especially true if the cost of care to covered individuals at the point of service continues to rise.
We know that lowering the total cost of care, the total amount of money our nation spends together on medical care which is now approaching four trillion dollars a year, is imperative if we are ever to come closer to the objectives of the Triple Aim. There are many reasons for the continuing increases in the cost of care. But, there is no doubt that rising health care costs are an impediment to improving the social determinants of health and abolishing healthcare disparities. There is much to do if it is to be true that the total cost of care does not undermine our personal finances or our collective ability to support the repair of our infrastructure, improve our system of public education, expand housing, make progress in developing sustainable energy, offer relief from student debt, and do all the other things that progressive politicians are suggesting they would lead us to do. The cost of care is also being used as a major argument against Medicare for all.
There was a very disappointing op ed piece in the New York Times this week that attempted to undermine the concept of Medicare for all based on the failed effort in Vermont to expand coverage to everyone through the resources of the state. The author, Peter Suderman, is an editor at Reason, a libertarian publication. It is understandable that he has philosophical, as well as practical, concerns about “government run” healthcare, but he did make some points worth considering.
The Vermont plan was done in by high taxes, distrust of government and lack of political support. Any effort by a Sanders administration to enact a single-payer system at a national level would probably be doomed by similar problems.
Like Mr. Shumlin [the Vermont governor who tried to establish a single payer system in Vermont], Mr. Sanders is a devout single-payer supporter who has campaigned aggressively on the idea. And like Mr. Shumlin, Mr. Sanders has so far declined to lay out a plan for fully financing his Medicare for All system.
But while some polls show majority public support for single-payer, that support declines substantially when faced with trade-offs like the elimination of most private coverage or higher taxes — two components of Mr. Sanders’s plan.
Similarly, Medicare for All supporters argue that single-payer would reduce the nation’s overall health spending. But savings are heavily predicated on the assumption that the new government-run system could pay Medicare rates, which are typically lower than those of private insurance, to providers across the board.
I totally agree with Mr. Suderman that the if the proponents of single payer efforts want to be successful, they must develop much more public support, and provide more clarity about how much Medicare for all will cost, and how it will be financed. Beyond the concern about how to pay for Medicare for all, there has been no substantive and convincing discussion within the debates about how a single payer system would control costs. I share Mr. Suderman’s apprehension that if claims for lower costs are based primarily on the idea of paying for care at Medicare rates, then we are dealing with “fuzzy thinking.” John Delaney’s campaign for president has wallowed in ignominity, but since he has made hundreds of millions of dollars (estimated net worth of 230 million plus) in healthcare finance, there was some valid experience behind his comment that caused some consternation among other candidates, and did create an anti “Medicare for all” talking point when he said in the first Democratic debate that paying for all healthcare at Medicare rates would put most of our health systems into bankruptcy.
In retrospect, the ACA did include strategies that were meant to foster cost control. It was designed to provide preventative care through its coverage provisions and value based reimbursement through its encouragement of ACOs. Most of us believe that better primary care for everyone will reduce the total cost of care by providing everyone with access to preventive health measures and prospective chronic disease management. Most of us also believe that population health methodologies will result in fewer acute hospitalizations and create the opportunity for management before problems become more severe. Encouraging use of behavioral health and fostering primary care relationships that might reduce behaviors that predispose to addictions, chronic disease, and avoidable accidents are all strategies that improve health while lowering healthcare costs. There was a further “nudge” toward cost containment when MACRA was passed in 2015 because it provides a pathway in Medicare payment toward value based reimbursement.
Government does have the power to nudge us toward lower healthcare costs through its payment methodologies. That possibility is enhanced by eliminating commercial insurance and making the government the primary payer for healthcare through either Medicare for all or some sort of a public option. The government now pays for some percentage of the care for almost 40% of Americans. It is easy to see the potential power of the government as a payer if you look at who is covered and by whom.
In 2017 the Kaiser Family Foundation reported that 91% of Americans had some form of health care coverage. Here is the breakdown of the sources of coverage:
- Employers: 49%
- Non Group: 7%: Primarily the coverage provided to the non group market through the exchanges. Some percentage of these policies are purchased with subsidies.
- Medicaid: 20%
- Medicare: 14%
- Other public (VA etc.): 1%
- Uninsured: 9%
All of the existing federal payment mechanisms yield less revenue to providers than commercial insurance yields. What Delaney’s comment underlines is that commercial insurance subsidizes the care of those who get care through public resources. The government has three degrees of freedom to control costs. Prior to the ACA its primary mechanism for controlling cost was underpayment to providers which then forced up prices charged by providers to commercial payers. The second strategy was to make acquiring care very difficult by creating administrative burdens. The Trump administration and “red states” have doubled down on this strategy. I will come back to this perverse mechanism in an extended discussion. Finally, with the ACA and MACRA there is a new third strategy of using innovative payment mechanisms to encourage the evolution of risk based contracts that might create enthusiasm for operational efficiency and innovation through the expansion of the cost control possibilities of value based reimbursement.
Few medical professionals seem to realize or accept responsibility for the fact that we are a significant part of the overall problem. Our practice methodologies, clinical biases, insistence on individual practice autonomy that creates clinical variation, and all forms of waste and rework are major drivers of the cost of care. The government will continue to try to lower costs through payment mechanisms, but the only way for costs to be lowered while the experience of care improves for everyone is through a collective effort for better practice that is focused on waste elimination and innovation. The “Choosing Wisely” campaign was a laudable attempt to engage clinicians in the elimination of waste. The bottom line is that everyone will pay more, and the cost of care will continue to rise until the providers of healthcare achieve the ability to practice more efficiently. That is not news. It was the message of Crossing the Quality Chasm. It is the thinking that has always been the foundation of the Triple Aim. I know that providers and systems of care frequently like to think that they are “victims” of inadequate reimbursement, but it is easy to make the case that we are a major part of the problems that we complain about.
I frequently ask people about their experience of getting care. Almost everyone (except for those in one of the three categories that I mentioned near the start of this missive) has noticed that they are paying more out of pocket. It is also true that almost everyone who must use care frequently has a story about an administrative hurdle that they have encountered. I frequently talk with patients on Medicaid or Medicare and many have stories about how difficult it is to get service, or how a necessary service was not covered forcing them to either not get what they needed or pay out of pocket. If you are poor, “out of pocket” is the equivalent of acquiring debt or being unable to cover some other critical necessity like child care, car insurance, the telephone bill, food, medications, or rent. If you want a dramatic first person account of what it is like to try to survive and get adequate care for your child under the pressures of poverty, I would recommend that you read Maid: Hard Work, Low Pay, and a Mother’s Will to Survive by Stephanie Land and Barbara Ehrenreich.
This week, two authorities on “administrative burden,” Pamela Herd and Donald P. Moynihan, professors of public policy at Georgetown University, published an op ed article in the New York Times entitled “How to Straighten Out the Medicare Maze: Expanding insurance coverage isn’t the only task ahead.” That piece was my inspiration for this post. The “hook” in their post was the comparison of accessing care for their child with epilepsy in America versus care for the same child while they were on sabbatical in the UK. They write:
As parents of a child with a disability caused by a rare genetic syndrome, we’ve wasted hundreds of hours sorting out enrollment choices, completing unending forms and engaging in maddeningly repetitious conversations, all to ensure that our daughter receives the care she needs and that we don’t get stuck with financially devastating bills.
While many other Americans continue to struggle with these problems, ours have mostly disappeared because we are spending the year in Britain. In its National Health Service, we found a system that did not demand an expertise in navigating bureaucracies. After 10 minutes filling out a few simple forms, we enrolled our daughter. Within two days she had an appointment and a filled prescription for medication, which was free.
We had anticipated the financial relief that can come from a single-payer system, but not the administrative relief. It had never occurred to us that it could be so different.
They continue:
Even if Democrats sweep the 2020 elections, the incrementalist history of health policy reform in the United States suggests that an expansion of the current Medicare program is the most probable outcome. And yet the sizable role private insurers already play in Medicare is largely overlooked, even as they cause substantial administrative burdens for beneficiaries.
More than one-third of Medicare beneficiaries are covered by private insurers, in what is known as the Medicare Advantage program. Many of the remaining beneficiaries have private insurance coverage, through Medigap and Medicare Part D prescription drug coverage or their former employers, to help offset the health care costs not covered by Medicare Parts A and B, which amount to almost half of the overall cost of their care. In fact, 44 percent of Medicare dollars goes through private insurance plans and a majority of Medicare beneficiaries must interact with private insurers.
Private insurers make Medicare extraordinarily confusing, increasing costs for beneficiaries and their own profits. When enrolling in Medicare, and then every subsequent year, beneficiaries are required to make a series of decisions regarding their coverage. Though there is a base benefit package, there are also many and varied options, ranging from which prescription drugs are covered to the amount of premiums, co-payments and deductibles. The plans also change every year.
Elizabeth Bruenig of the Washington Post and her husband Matt Bruenig of the People Policy Project make the point that coverage instability and administrative burdens are also characteristic of employer based insurance. Every year a large percentage of employees either need to adjust their benefits because of the change in support from their employer, or some other event occurs. Their coverage changes when they change jobs, lose their job, or their employer changes insurers.
Herd and Moynihan contine:
Making the right choice means finding a match between your fluctuating health needs and the changing plans. It is as complicated as it sounds. Getting the best coverage for the lowest cost often requires switching plans nearly every year but very few people do this, leaving them with higher costs and less effective coverage…
They contend that the instability in Medicare Advantage offerings create problems for many seniors that should be a warning for those who think Medicare for all is the total answer to our healthcare miseries:
Medicare beneficiaries are left feeling overwhelmed. As one noted, “I had papers taped together — it was six feet wide — of the different companies and circles and arrows.” Even health care experts struggle when they hit age 65 and need to enroll. It’s not just Medicare. Nearly all coverage expansions over the last 20 years have relied on private insurers, including Obamacare. As the Medicaid program has grown, private insurers have played a larger role.
“Even health care experts struggle” applies to my wife and me. When I retired we were amazed at the complexities associated with the fact that we continued on employer supplied insurance after age 65. Through some strange rule, and incorrect advice from human resources, my wife had passed the window to transfer to Medicare without a substantial penalty even though she had been covered by my insurance and by an extension of her Federal insurance since age 65. In frustration we gave up on enrolling for Medicare, and I enrolled in her Federal retiree health insurance program with a $5,000 a year/person out of pocket ceiling. This year my out of pocket expenses will be about $5,000 because of a couple of surgeries. Hurd and Moynihan give some credit to Bernie Sanders because his plan does not allow private insurance to continue to exist in his bill for Medicare for all. They offer the advice that attention to “administrative burden” should be applied to any new program that might be passed.
Regulatory approaches could more seamlessly standardize plan options so that it’s easier to compare what you’re “buying” and reduce the number of options to ensure there isn’t a flock of essentially identical plans. Government can do more to help people enroll and ensure they receive the benefits to which they are entitled. Yet there has been little meaningful discussion of these options among the Democratic presidential contenders.
If Medicare for all merely puts the frustrations that people experience in the existing system under a public brand, it will be a magnet for attack. For any policy to be sustainable, voters need to demand that their leaders not only make health care more accessible, but also that they make it less burdensome.
“Administrative Burden” is a social sin that most of us have encountered. In the private sector it enhances the profitability of insurers. In the public sector it is a primary cost control tool. The Trump administration has encouraged its use by states with work requirements for Medicaid. A variation has been to limit enrollment periods and decrease funding for support, education, and advertising of enrollment for the ACA when they were unable to repeal it. Herd and Moynihan have published a book on the subject: Administrative Burden: Policymaking by Other Means and I would recommend the excellent review of the book by Cass Sunstein.
There is also a PDF of the book’s introduction that is worthy of your attention. I have lifted their definition of administrative burden from that piece.
The term administrative burden may evoke images of business regulation or basic bureaucratic encounters, such as renewing a driver’s license. But any context in which the state regulates private behavior or structures how individuals seek public services is a venue in which the state may impose burdens on its citizens. We focus on the costs that people encounter when they search for information about public services (learning costs), comply with rules and requirements (compliance costs), and experience the stresses, loss of autonomy, or stigma that come from such encounters (psychological costs). All policies that require citizens to engage with the state will, to varying degrees, create such frictions. Although these burdens vary by policy and by the person experiencing them, the experiences can be minimized in a number of ways. One is to simply reduce burdens, such as trusting someone’s word that they are a citizen rather than requiring a document to prove it. Another is to shift burdens away from the individual, and onto the state, by, for example, requiring eligibility workers to tap into administrative databases to establish whether someone is a citizen.
Burdens matter. They affect whether people will be able to exercise fundamental rights of citizenship, such as voting; they affect whether people can access benefits that can improve quality of life, such as health insurance. Burdens can alter the effectiveness of public programs. Social programs often reach only a fraction of their target population, automatically weakening their effectiveness by shutting out those who fail to negotiate the required procedure. Ultimately, administrative burdens are the fine print of the social contract between citizens and their government. They are the nuts and bolts of policy design. The presence of administrative burdens makes the difference as to whether government is experienced as accessible or opaque, simple or bewildering, respectful or antagonistic.
The title of this post is the question, “Where would you start?” My answer to my own question is that I would start with stressing two points:
- Clinicians must lead the way in the work of lowering the total cost of care.
- We must demand that we no longer use “administrative barriers” as a cost control mechanism in healthcare.
If we do not make these two objectives central to any effort to lower the total cost of care, I am concerned that we will continue to be frustrated by ever increasing costs for us all and increasing frustration in our attempts to give everyone the care that is their human right.
Dazzling Color Everywhere I Look
I have experienced the beauty of every fall in New Hampshire for the last quarter century. I do not remember one that has been more beautiful than this one. It has been a relief from all the craziness that comes at us every day, and the fact that the Red Sox are not working their way toward another World Series victory. I guess I want too much, but if I can’t have everything be the way I want it, having a most beautiful fall is good enough.
By now you are well aware of the fact that my neighbor, Peter Bloch, is an artist working in the new medium of drone photography. Peter is serially publishing short videos that capture the fall of 2019. Video #5 is out this week, and it is spectacular. In some parts, it is an excellent reproduction of the sort of walk in the woods I enjoy. In other parts, it is a reproduction of what the eagle that lives on the shore of my little lake must see as I watch it soar across our sky. This week’s header is from a screen shot that I lifted from his latest video. As I watched it for the third time, it occurred to me that many of my readers may not have the opportunity to enjoy the fall the way I do. Some of you live in the Southwest. Some in the Southeast. A few of you are in the UK. One is in the northernmost part of Michigan. Another faithful reader is in South Florida. Some readers are in Houston and I am rooting for their team in the series against the Yankees. Wherever you are, let me invite you to click on the link and enjoy the beauty of New Hampshire in the fall.
Be well, take good care of yourself, let me hear from you often, and don’t let anything keep you from doing the good that you can do every day,
Gene
