President Trump might be going in the right direction. Unfortunately, the media’s hatred of him and the Democratic Party’s ideology and obstructionism might prevent him from potentially pursuing a new and sustainable direction that gives consumers the power to choose their healthcare goals. There is no reason that the government could not incentivize and subsidize the needy and less fortunate with this simple system.
I think everyone is tired of the political noise in the healthcare system. There seems to be no room for an understandable signal. However, I believe that effective technology and social networking can serve to decrease that noise to signal ratio and provide a less complex system.
President Trump is offering association directed healthcare plans, a blueprint to reduce decrease drug costs and health reimbursement arrangements to reduce the cost of healthcare insurance.
All three initiatives, if kept simple, can put control of the healthcare system in the hands of consumers.
Associations can provide healthcare plans to its members. An association health plan (AHP) can provide multiple medical insurance plan options. Smaller employers, freelancers and self-employed association members can buy healthcare insurance through the association.
President Trump’s new regulations have made it easier for the members of associations to be equal to large corporations in negotiating the purchasing for health care insurance. They can also offer multiple healthcare plans and still have a high enough enrollment to obtain deeply discounted premiums and deductibles for small businesses, freelancers and self-employed that the members cannot get on their own.
These consumers will also be able to spend pre-tax dollars on their healthcare plans.
“ Savings can be increased further through tactics such as self-insuring. Avalere Health, a healthcare research and consulting firm, has projected in a recent report that “premiums in the new AHPs are projected to be between $1,900 to $4,100 lower than the yearly premiums in the small group market and $8,700 to $10,800 lower than the yearly premiums in the individual market by 2022, depending on the generosity of AHP coverage offered.”
I think Jeff Bezos, Jamie Diamond and Warren Buffet’s new alliance has the right idea. They will provide deeply discounted healthcare coverage for their combined employees.
The primary advantage of offering health insurance through an association is the ability for an association to aggregate multiple employers so that the resulting health plan:
“Leverages its scale of participants in negotiations with health providers in order to obtain more favorable rates for medical services.”
The country has not been given enough information nor data to understand Obamacare’s inefficiency. The media has not been helpful in letting consumers understand Obamacare’s inefficiency and deficiencies.
President Trump is interested in having associations form and compare their success to the failed structure of Obamacare. Obamacare would seize to exist.
If associations are done right they can become a simple system that consumers can easily understand and use. This was Steve Jobs vision when Apple developed the iPod, iPhone, and iPads.
The insurance product that could achieve this vision for healthcare is my Ideal Medical Savings Accounts.
Americans need the new option to create a sustainable healthcare system.
The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.
President Trump’s administration has developed an alternative to Obamacare.
The press is suddenly saying the public considers the healthcare system its biggest problem. The healthcare system has been a huge problem all along. Obamacare was supposed to fix the problem. Obamacare has only enrolled twelve (12) million people in an individual healthcare market in 2019. Eighty-five percent of those enrolled are receiving government subsidies. Many of the enrollees have unaffordable deductibles and cannot afford to use the healthcare insurance.
Obamacare is methodically destroying the infrastructure of the healthcare system. Consumers of healthcare are becoming commodities. The healthcare system is complex. Obamacare has increased its complexity. It has increased costs to Medicare and Medicaid and made the entire healthcare system unsustainable.
Unfortunately, Democrats have ignored Obamacare’s effect on our national deficit while not increasing the efficiency of delivering healthcare. There has been some press quoting Democrats who have said that Republicans are starting to believe that our budget deficit is not significant.
It was recently discovered that insurance companies have overcharged the government’s Medicare Part D more than ten billion dollars.
What are consumers thinking as their savings are worth less and drugs cost more each year? Do they believe that the government’s bureaucracy is efficient? Is it any wonder that Congress’ approval rating is close to single digits?
When people feel they have less freedom to choose their doctor, hospital or insurance company and are being compelled by their government to settle for what is available, does anyone think they want more of the same?
Now, the narrative heard all over the land is “Medicare for All.” Medicare for all will not solve the healthcare system’s problems. It did not solve the VA Healthcare systems problem. The VA system is being privatized.
I do not believe that the way to solve our healthcare problem is to enlarge an unsustainable program. It is illogical. It will make the healthcare system worse and more unsustainable.
The first thing to do to solve any problem is to understand the problem. Everyone wants the best medical care for the entire population. Everyone says the healthcare system is so complex that it is impossible to fix.
The best way to cut through the healthcare system complexity and find a solution is to a clearly define the goal. The goal should be quality medical care available for all at an affordable cost. This means that all of the waste must be eliminated from the healthcare system. This is the goal of the Trump administration’s three-point approach.
Next, is to search for an approach devoid of politics and ideology that will have the highest impact. In my view, this means developing a system that provides consumers with the most control and responsibility for their medical care decisions.
The highest impact can be provided by the development of a system using technology to put the healthcare system in the hands of consumers. It must provide consumers with the greatest control over their choices and generate incentives to be responsible for their medical care and healthcare dollars.
There will be outliers who will be a potential burden to the system. However, if a system is developed with financial incentives to consumers, those outliers will realize they are hurting themselves. I do not believe consumers are stupid. They have simply been uneducated, unaware and unmotivated to control their health and healthcare dollars because a system to motivate them to be healthy and responsible for themselves is unavailable.
Steve Jobs said it all when he told his engineers that the consumers are not too stupid to use the machines, we are too stupid to make machines that easy to use. The same holds true for our healthcare system. The goal in the healthcare system would be to reorient our thinking.
Obamacare is beyond improving because it put more power in the hands of the government which translates to more control over consumers’ freedom. An “improvement” such as an attempt to provide “Medicare for All” will lead to disaster.
The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.
Little did Mr. Trump know that the Arizona senator would help drive the stake through legislation that sought to realize the Republicans’ seven-year dream of finally dismantling Obamacare.”
John McCain’s vote was a surprise to everyone. Mitch McConnell then put healthcare reform on hold. Senator McConnell decided to let Obamacare die on its own.
However, the Senate rejection did not deter President Trump from pursuing healthcare reform .
He has already approved the development of purchasing associations through an executive order. The associations will sell health Insurance coverage. The rules will go into effect January 1, 2019.
He has also has attacked the drug industry with his blue print on drugs. The regulations from this will decrease the costs of drugs by decreasing the number of middlemen in the manufacture to sales process.
On October 2017 President Trump issued an executive order to promote healthcare choice and competition in the country.
The Secretaries of the Treasury, Labor, and Health and Human Services shall consider proposing regulations or revising guidance, to the extent permitted by law and supported by sound policy, to increase the usability of HRAs, to expand employers’ ability to offer HRAs to their employees, and to allow HRAs to be used in conjunction with nongroup coverage.
The proposals, issued Tuesday, October 23, 2018 by Treasury ,Labor and HHS were a response to the October 2017 executive order from President Donald Trump.
“That order instructed the Departments to increase the availability and usability of health reimbursement arrangements (HRAs)—especially those offered in conjunction with non-group insurance.”
The proposal is well thought out. I have a problem with some of the upcoming regulations but they are an excellent step in the right direction.
The regulations do not utilize a most important element in my ideal medical savings accounts. It does not provide financial incentives for consumers to become informed consumers of healthcare or motivated to save healthcare dollars.
Consumers of healthcare have to be incentivized to become savvy purchasers of their own healthcare and healthcare insurance coverage.
“If enacted, the regulations would create two new HRAs: something we’re calling the individual-integrated HRA, and the smaller, excepted benefit HRA.”
HRAs can be viewed as a superstructure for my ideal medical savings accounts. President Obama did everything he could to discourage the purchase of health savings accounts. His goal was to drive everyone into a single party payer system with the individual consumer’s healthcare decision are made by the government.
Despite President Obama’s attempts to discourage health savings accounts, they grew as the fastest and most popular healthcare insurance product. HSAs permitted consumers to have some control of their healthcare spending and some of their healthcare dollars.
“In 2013, IRS Notice 2013-54 issued guidance on the Affordable Care Act (ACA) that seriously limited businesses’ ability to offer HRAs. The IRS said that while HRAs integrated with group health insurance satisfy key ACA provisions, HRAs integrated with individual health insurance do not.”
This is where Obamacare discouraged consumers to buy HSA as individuals. The insurance was not completely tax free to businesses or individual consumers.
“Congress provided some relief in December 2016 by creating the qualified small employer HRA(QSEHRA). The QSEHRA, a benefit specifically designed for small businesses with fewer than 50 employees, allows businesses to reimburse employees tax-free for their health care costs.”
With his October 2017 executive order, President Trump sought to expand HRAs even further. In the order, he asked the Treasury, the DOL, and the HHS to reexamine past rulings and “increase the usability of HRAs, to expand employers’ ability to offer HRAs to their employees, and to allow HRAs to be used in conjunction with non-group coverage.”
The new proposed regulations are a direct response to that executive order. Unfortunately it does not solve the healthcare insurance problem. The proposal keeps the insurance industry in charge of the healthcare dollars and healthcare decisions. It is a step in the right direction. It helps small business more than it helps the individual.
QSEHRA “Qualified Small Employer Health Reimbursement Arrangement”
Individual-integrated HRA
Business size restrictions
Only available to businesses with fewer than 50 full-time employees.
None.
Employee eligibility requirements
All full-time employees are automatically eligible. Part-time employees can be included, but the HRA must be offered on the same terms. Employees can participate in the HRA without individual health insurance, but those without MEC must pay income tax on all reimbursements during the time they were uninsured.
The business can set eligibility guidelines according to permitted employee classes, but the HRA must be offered on the same terms to all employees in each class. Employees without individual health insurance, including those covered by a spouse’s group policy, cannot participate in the HRA.
Allowance amount restrictions
In 2018, annual allowance amounts are capped at $5,050 for self-only employees and $10,250 for employees with a family. The business can vary allowance amounts only by family status, age, and family size, but not based on employee classes.
There are no caps on annual allowance amounts. The business can vary allowance amounts according to permitted employee classes, as well as age and family size.
Group policy requirements
Businesses offering the HRA cannot offer a group policy.
Businesses offering the HRA may offer a group policy, but it cannot offer both the group policy and the HRA to the same employee class.
Premium tax credit coordination
Individuals participating in the HRA are still eligible for premium tax credits, but the amount of the credit is reduced dollar-for-dollar by the amount of the HRA allowance.
Individuals participating in the HRA aren’t eligible for premium tax credits.
I will explain each category as well as its advantages and disadvantages in the near future. These regulations do much toward Repairing the Healthcare System.
The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.
It is very difficult to know the truth in our post truth era. Intellectuals, elites and the well-educated are criticizing every idea the Trump administration brings forward.
He was hampered in moving forward in Repairing the Healthcare System when his own Republican Party did not pass the house of representatives’ bill to repeal Obamacare. The repeal would have enabled his administration to move the repair of the healthcare system forward quickly.
Most of President Trump’s ideas when it has related to repairing the healthcare system have been common sense. They are steps in the right direction.
Common sense solutions sometimes threaten to undermine extremely profitable private and public enterprises. The pharmaceutical industry and all related middlemen are an industry that is threatened by President Trump’s common sense solutions.
The industry will do everything in its power to spin the story so that the Trump administration’s plans sound sinister to the American public.
The American public can only make decisions on the information presented. In the post-true era the public does not know what to believe. The media has been anti-Trump and is not interested in presenting the details of President Trump’s blueprint for lowering drug prices utilizing free market principles.
We are privileged to have a president finally acting, by laying out a blueprint for solving these problems using private-sector competition and private sector negotiation.
We’re not going to propose cheap political gimmicks. The President’s blueprint is a sophisticated approach to reforming and improving our system.
Everyone at HHS is rolling up their sleeves to get to work on this.”
On October 28,2018 the WSJ editorial board wrote a negative view of the Trump administration’s plan to lower drug prices. It is almost as if the editorial board did not read President Trump’s proposal as it appears on the White House web site.
I believe it is worth discussing President Trump’s blueprint for lower drug prices.
I will then present the main points in the Wall Street Journal editorial.
The blueprint starts by stating:
These are the main problems with drug prices in the U.S.
Drug costs consume 30% of the healthcare dollar. Drug costs are unaffordable to both consumers and the government. Over 40% of elderly patients consume greater than nine drugs daily. Fifty percent of those 40% experience adverse drug reactions due to drug interaction. Many end up being hospitalized thereby increasing the cost of medical care.
If a patient cannot afford to buy a drug because of its cost it will not help control their disease. A hospitalization will occur increasing the cost of healthcare.
The public should take this comment at face value.
These are some of the facts;
According to the Organization for Economic Co-operation and Development (OECD), the United States had the highest per-capita pharmaceutical spending in 2015.
Senior citizens pay more in Medicare Part B and Part D because government rules prevent health plans and vendors from negotiating the better deals seen in other markets.
Isn’t that crazy? The government negotiates drug prices for the VA and Military but not for seniors. The government pays less than half for drugs in the VA healthcare system than seniors do for Medicare Part B and Part D.
Some hospitals that receive drug discounts under the 340B program, ultimately pushing up drug prices for patients with private health insurance.
The 340B program was enacted in 1992 by congress. Section 340B requires pharmaceutical manufacturers to enter into an agreement, called a pharmaceutical pricing agreement (PPA), with the HHS Secretary.
Under the PPA, the manufacturer agrees to provide front-end discounts on covered outpatient drugs purchased by specified providers, called “covered entities,” that serve the nation’s most vulnerable patient populations. Medicaid patients get drugs free. The government pays the pharmaceutical companies the money through a series of middlemen.
Lower-cost drugs are kept out of the market by drug companies gaming regulatory processes and the patent system in order to unfairly maintain monopolies.
Lack of transparency in drug pricing benefits special interests and prevents patients from being able to make fully informed decisions about their care.
Other countries use socialized healthcare to command unfairly low prices from U.S. drug makers. These lower prices place the burden of financing drug development largely on American patients and taxpayers and subsidizes foreign consumers.
The United States pays more than 70 percent of branded drug profits among OECD countries.
The drug companies claim this behavior by other countries reduces innovation and the development of new treatments. They have to make the loss of revenue up by increasing the price of drugs.
The HHS executive summary outlines not only the problem it outlines the Trump administration’s solution. President Trump’s HHS team which includes CMS has spent many years studying the abuses that have led to dysfunction of the healthcare system. I believe HHS figured out the solution.
HHS has identified four challenges in the American drug market:
High list prices for drugs
Seniors and government programs overpaying for drugs due to lack of the latest negotiation tools
High and rising out-of-pocket costs for consumers
Foreign governments free-riding of American investment in innovation
Under President Trump, HHS has proposed a comprehensive blueprint for addressing these challenges, identifying four key strategies for reform:
Improved competition
Better negotiation
Incentives for lower list prices
Lowering out-of-pocket costs
There is nothing sinister about these goals. Some will work. Direct negotiation with drug companies certainly will work. The middlemen get more money per capsule than the drug company that invented and manufactured the drug. The middlemen, who are marketers, are terrified that President Trump is going to destroy their business.
HHS’s blueprint encompasses two phases:
1) actions the President may direct HHS to take immediately.
2) actions HHS is actively considering, on which feedback is being solicited.
The president and his administration are not a heartless group of politicians who don’t care about cancer drug cost. They are interested in patients receiving the best care at an affordable price. They care about fair pricing. Their goal is to eliminate the mechanisms by which multiple stakeholders game the system. This includes the multiple middlemen and the tremendous bureaucratic load.
Is the diagram complicated enough? Can you visualize all the areas of potential abuse? Do you think a government bureaucracy can control the potential abuse?
Phase one of the blueprint:
Lower prices on some Medicare Part B drugs could be negotiated for by Part D plans
Leveraging the Competitive Acquisition Program in Part B.
Working across the Administration to assess the problem of foreign free-riding.
The administration is aware of foreign free riding. They have not published a definite free market solution to change the situation yet.
Further Opportunities
Considering further use of value-based purchasing in federal programs, including indication-based pricing and long-term financing.
Removing government impediments to value-based purchasing by private payers.
“Value–Based Purchasing (VBP) Linking provider payments to improved performance by health care providers. This form of payment holds health care providers accountable for both the cost and quality of care they provide. It attempts to reduce inappropriate care and to identify and reward the best-performing providers.”
This is a stupid idea. It might save money but it tries to direct care and eliminate physician judgement. Healthcare providers will figure out how to game the system.
It is about time this is happening. Hospitals are buying more and more physicians’ practices. Hospital systems bill the government hospital reimbursement prices. These prices are twice the government and private insurance companies approved office prices.
I suspect the hospital systems do not credit the physicians with this increase in reimbursement. The hospital systems leverage physicians’ intellectual property and outpatient surgical skills for the hospital systems’ own profit.
Hospital systems will fight this change tooth and nail. President Trump has the courage to go at it. Almost everyone in medicine has known about these unfair payments. However, past U.S. presidents have been afraid of the blowback from the powerful hospital lobby.
President Obama knew that this would drive physicians into selling their practices to hospital systems. The result is obvious. It would be easier to institute a single party payer system.
Evaluating the accuracy and usefulness of current national drug spending data.
Phase two;
Incentives for Lower List Prices Immediate Actions
FDA evaluation of requiring manufacturers to include list prices in advertising
Updating Medicare’s drug-pricing dashboard to make price increases and generic competition more transparent.
Further Opportunities
Measures to restrict the use of rebates, including revisiting the safe harbor under the Antikickback statute for drug rebates.
“The anti-kickback statute has been in place since 1971, but these specific safe harbors, protecting drug companies from anti-kickback laws, were introduced more than 2 decades ago.
The federal government provides an excellent resource for information about these safe harbors at the Federal Register website. It tells everything one needs to know about the opportunities for fraud and abuse in the current system. The website describes how the Trump administration plans to eliminate the government support of fraud and abuse.
A rebate given as an incentive to provide a drug (i.e., on formulary) or to utilize more of a product (i.e., “performance rebates”) would currently qualify for safe harbor protection.”
I will discuss this in more detail in the future. This is another act of courage by the Trump administration. It is also a common sense move to reduce the cost of healthcare in our dysfunctional healthcare system.
Additional reforms to the rebating system.
Using incentives to discourage manufacturer price increases for drugs used in Part B and Part D.
The high retail pricing of new drugs on the market must be control. Many of the new drugs are a reformulation of two old drugs. The reformulation does not change the effectiveness of either drug.
The retail price of drugs used to treat cancer must be controlled someway.
Considering fiduciary status for Pharmacy Benefit Managers (PBMs)
Reforms to the Medicaid Drug Rebate Program
Reforms to the 340B drug discount program
Considering changes to HHS regulations regarding drug copay discount cards
Lowering Out-of-Pocket Costs Immediate Actions
Prohibiting Part D contracts from preventing pharmacists telling patients when they could pay less out-of-pocket by not using insurance
Improving the usefulness of the Part D Explanation of Benefits statement by including information about drug price increases and lower cost alternatives.
Further Opportunities to Reduce Drug Costs to Consumers
More measures to inform Medicare Parts B and D beneficiaries about lower cost alternatives
Providing better annual, or more frequent, information on costs to Part D beneficiaries
Insurance Contract Reimbursement for Consumers’ Rx
Share of Manufacturer Rebates.
Consumers Payers Drug Manufacturer Pharmacies
Pharmacy Benefits Manager Formulary Agreement
Copayment Network Agreement
PBM Agreement Payment for Dispensed Drugs Formulary
Rebates & Other Fees Premium Drugs
Money Contracting DispensedDrugs
Prime Vendor Agreement Shipped Bulk Drugs Payment for Wholesale Drugs Distributor
Payment for Wholesale Drugs Shipped Bulk Drugs Distributor Agreement
Most physician do not know about this complicated system. All they care about is taking care of the patients. It is time physicians understand how ancillary providers have been ripping off the patients. Somehow, the ancillary providers manage to blame drug prices on physicians.
Finally, we have an administration that not only recognizes the problems but is not afraid to fix them.
The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.
The Mainstream media refuses to acknowledge the advantage of the Presidential order to allow Associations to participate in available health insurance plans.
Democrats do not want the public to understand the advantages President Trump’s healthcare insurance associations will provide to consumers. It is an important step in Repairing the Healthcare System. Obamacare was advertised only to fix the individual insurance market.
Pre- Obamacare there were 14 million people who had individual healthcare insurance plans. Most were unaffordable. Now, there are only 12 million in the individual market on Obamacare. Most are unaffordable.
Medicaid has expanded from 2 million to 10 million under Obamacare. The total on healthcare insurance provide by Obamacare is 22 million. Medicaid is a failed healthcare insurance plan. It is a socialized medical insurance plan the has failed.
The mainstream media has forgotten that Obamacare was originally sold by President Obama to cover the individual insurance market. The individual healthcare insurance market was unaffordable. Obamacare was supposed to make it affordable. It turns out that 85% of Obamacare recipients are subsidized by the federal government. President Obama has expanded socialized medicine and a single party payer (the government) with Obamacare. Even with government subsidies the insurance is unaffordable because of the high deductibles.
It is difficult for me to understand how President Obama says he always tells the truth. He said he was going to make the healthcare individual market more affordable. He has not.
I remember he also said; “If you like your doctor you can keep your doctor” and “if you like your healthcare plan you can keep your healthcare plan.” Nothing could be further from the truth.
When Obamacare was passed there were requirements in the bill that outlined coverage the healthcare insurance industry must provide for everyone who has any kind of healthcare insurance. These requirements included levels of coverage that many people did not need. This excess coverage raised the cost of healthcare insurance in both the individual healthcare insurance market and the group healthcare insurance market. Both types of insurance became unaffordable.
This, combined with the inefficiency of a bureaucratic government raised prices of healthcare insurance even further. Remember the government outsources all of the administrative services to the healthcare insurance industry.
Now, the Democrats want the government to run the entire healthcare delivery system with “Medicare for All.” The unsustainability of “Medicare for All” is estimated at 32 TRILLION dollars over the next ten years!
Associations will not solve all the problems in the healthcare system. However, they will start solving a good many of them. The Democrats are scared to death that the public will start to understand the advantages of associations. Consumers will have a choice of healthcare insurance plans. Consumers will be in a position to start controlling their healthcare dollars.
The pundits in the mainstream media seem to have no interest in understanding this dynamic. Their only interest is to despise President Trump and regurgitate the Democrats’ easy to understand talking points.
allow the healthcare industry to sell healthcare plans without the rigid requirements imposed on them by Obamacare.
make individual healthcare plans tax deductible. The large corporations’ group healthcare insurance plans are tax deductible. The individual healthcare insurance plans presently are not tax deductible.
allow members to buy healthcare insurance across state lines. This will create price competition that will lower premiums.
let small companies and the self-employed band together and buy health insurance outside of Obamacare’s strict rules.
offer a way for people to take advantage of the group insurance market, even if they are self-employed or work for a business too small to provide insurance.
“will “level the playing field” by giving small businesses bargaining power.” This statement was made by Labor Secretary Alexander Acosta.
Mr. Acosta said “As the cost of insurance for small businesses has been increasing, the percentage of small business offering health coverage has been dropping substantially,”. “This expansion will offer millions of Americans more affordable health care options.”
The U.S. Chamber of Commerce said the change, “will give employers the relief and flexibility they need to cover more employees at a lower cost with more choices for quality care.”
The Congressional Budget Office estimates that 4 million people, including 400,000 who otherwise would go without insurance, are expected to join association health care plans by 2023.
The introduction of associations is going to disrupt the Democrats plans to take total control of the delivery of healthcare. It is going to start to put healthcare delivery back in the hands of the consumer!
Mr. Trump said at the National Federation of Independent Business’ 75th anniversary celebration in his usual hyperbolic style;
“You’re going to save a fortune,”
I believe he is closer to being right than he is being wrong.
The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.
President Obama and progressive Democrats such as John Kerry and Barney Frank wanted the healthcare system to become a single party payer system. Their problem was that they could not get enough votes in the house or senate.
This goal for a single party payer by the progressives and Democrats must not be forgotten as the Trump administration tries to make a serious attempt to repair the healthcare system.
The Democrats and progressive will try to block this attempt at every turn.
All the stakeholders have played an important role in distorting the healthcare system including the government, the healthcare insurance industry, the pharmaceutical industry, the hospital systems, the physicians and patients.
A starting salary for a starting hospital administrator is $250,000 a year. A starting salary for a pediatrician is $90,000 a year. Top hospital administrators are paid between five (5) million and fifteen (15) million dollars a year. Mature pediatricians make $150,000 to $200,000 a year.
Which professional adds more value to medical care? Physicians add more value to the medical care system. Hospital administrators do not understand why physicians resent them.
Physicians also resent hospital systems ripping off consumers with $50 aspirins and $100 sleeping pillows. Consumers who care about the cost of healthcare do not understand why the government and insurance companies let hospital systems charge these obscene prices.
Most physicians do not pay attention to these costs until they are patients.
All of the stakeholders except the government and patients try to optimize the amount of money they take out of the system. Surgeons are much further ahead of primary care physicians in figuring out their value to the healthcare system.
As a result of advances in technology, physicians figured out that 70-80% of the work-ups done requiring hospitalization 30 years ago could be done as outpatient care.
The brick and mortar value of hospital facilities has decreased.
As soon as hospitals realized this they started to build ambulatory surgical care facilities and outpatient clinics. Hospital system procedures are more expensive than free standing outpatient ambulatory surgical care facilities.
Hospital administrators somehow convinced the government that if they formed hospital systems and merged hospitals in an area they would increase their efficiency and they could decrease costs.
At the same time the management of private practices became complicated as a result of government regulations. Expensive electronic medical records were required but did not work as advertised. Overhead increased while reimbursement decreased.
Many physicians became disgusted managing their complicated private practices. Some physicians quit practicing early.
The hospital systems offered to buy private practices for a “reasonable cash price”, provide an electronic medical record, do the billing and management of the practice and hire and pay full time employees.
Hospital systems usually paid physicians under contract the same take home pay they had for two years. After the two-year contract expired the hospital systems offered new contracts depending on a physician’s productivity or fired the physician. Physicians had no say in the matter.
Physicians and surgeons signing with the hospital system did not consider the criteria to be used for determining salary after their contract expired .
This hospital arrangement seemed attractive to many primary care physicians and some surgeons. The growth of hospital owned physicians increased from 20% to 70% of physicians in a region.
Organized medicine, the AMA and physician specialty groups, did little to warn or educate physicians of these unforeseen consequences.
Hospital systems did their best to isolate private practicing physicians from using their hospital facilities.
The only private practice physicians who were not marginalized by the hospital systems were physicians who were needed by the hospital system for the services they performed. As soon as the hospital systems were able to hire physicians to cover those services the private practice physicians were marginalized.
Large hospitals systems are making deals with insurers that squelch competitive hospitals.
President Obama’s plan was to allow hospital systems to hide prices from consumers and corporations. The goal was to discourage use of less-expensive rivals. This tactic would force the less-expensive competition to join the regional hospital systems as affiliates.
At first hospital systems did not grasp the ultimate significance of enlarging hospital systems. They figured merging hospitals would increase efficiency and decrease the cost of medical care.
They also thought owning physician practices would decrease their reliance on in-patient hospital billings and their brick and mortar structures.
During the Obama years there was a tremendous increase in building growth on the campus of most hospital systems.
I never understood the hospital building growth. More building meant more hospital administrators and more overhead. I thought the government must have created some economic incentive for hospital systems to build more buildings on campus. I could not find the incentives given to hospital systems.
As hospital systems merged all the hospitals in a region the hospital systems realized they had a monopoly on not only hospital services but also physician services.
They could negotiate with healthcare insurance companies from strength.
Initially the healthcare insurance companies were in control of the costs and services that were available. The healthcare insurance companies lost their control over cost to the regional hospital systems.
“Dominant hospital systems use an array of secret contract terms to protect their turf and block efforts to curb health-care costs. As part of these deals, hospitals can demand insurers include them in every plan and discourage use of less-expensive rivals. Other terms allow hospitals to mask prices from consumers, limit audits of claims, add extra fees and block efforts to exclude health-care providers based on quality or cost.”
There are hundreds of regional hospital system giants throughout the United States. In many cities there are two or three giant hospital systems. It is difficult for independents to negotiate contracts in these cities.
The goal of the government should be to lower the price of healthcare to all of its citizens including seniors, workers who get insurance from their employers and people who do not have employer sponsored healthcare.
The Obama administration did nothing about stopping hospital system monopolies. In fact, it encouraged them.
“Certain hospital systems are able to command advantageous terms because they have grown through years of deal-making, shifting the balance of power between hospitals and insurers. In 2010, the year the Affordable Care Act passed, the annual number of hospital mergers shot up 40% to 59, and the number of deals has remained above 60 every year since, according to IrvingLevin Associates, a research firm that tracks health-care transactions.”
The Obama administration did nothing about it because the distortion in pricing is going to lead to collapse of the private segment of our healthcare system. Once the private segment of the healthcare system collapses a progressive government hungry to have power and control over the populous will install a single party payer system.
As proven over and over again, a single party payer system does not work. The government has to outsource all of the infrastructure to administrative services. The government does not control the administrative services overhead. Also, the government does not want to develop another uncontrolled and inefficient bureaucracy like the VA Healthcare System.
A single party payer system will lead to increases in unsustainable deficits and decreasing healthcare services.
It will take many years for the public to recognize that a universal single party payer system is inefficient. The government will hide the system’s inefficiency from the public.
The government should make common sense rules, enforce those rules and get out of the healthcare administration business.
Medicare and Medicaid costs have not been recognized by the general public yet.
The VA inefficiency and lack of service by the VA Healthcare System has been recognized in the last two years by the general public. The government has assured the public that the VA Healthcare System is improving.
The insurance industry is trying to fight back.
“No hospital system should be able to exercise market power to demand contract agreements that prevent more competitively priced networks,” said Cigna’s chief medical officer, Alan Muney, in a written statement provided by the company.
The Trump administration is aware of all of these problems. President Trump is trying to figure out a way of negotiating a deal with all the providers who are taking advantage of consumers and the government. His administration’s actions have been delayed by the slow death of Obamacare.
If Obamacare was repealed last year I am sure the topic of hospital monopolies would be a hot topic of debate today.
President Trump is presently attacking the middlemen who have made drug prices so obscene. This is a big problem and an easier target.
“The effect of contracts between hospital systems and insurers can be difficult to see directly because negotiations are secret. The contract details, including pricing, typically aren’t disclosed even to insurers’ clients—the employers and consumers who ultimately bear the cost.”
There are many examples of how hospital systems rip off consumers and increase the cost of healthcare insurance for all including employers, individuals and the government. It is also decreasing the access to care for all.
This article appeared in Kevin M.D. several weeks ago. The article has some valid points. However, it misses the vital reasons hospital mergers are not working.
By creating incentives for physicians and health providers to coordinate under accountable care organizations (ACOs), the ACA hindered the ability of regulators to block hospital mergers while incentivizing hospital consolidation.”
The government published reason for encouraging hospital mergers was to increase hospital efficiency and decrease healthcare costs.
I have said over and over again that the real goal of Obamacare was to have total control over the healthcare system. This control could be accomplished by controlling all the providers.
Hospitals realized that physicians controlled the utilization of hospital facilities. As knowledge and technology improved more and more diagnosis and treatment could be performed on an outpatient basis.
All the hospitals had to offer was a brick and mortar facility. Hospitals tried to stop physicians, before Obamacare, from developing their own outpatient facilities. The hospitals lobbied the government to require certificate of need for advanced outpatient technology (MRI, CAT scans, Outpatient Surgical facilities, and laboratories).
It did not work.
Obamacare provided incentives for hospitals to merge and consolidate into hospital systems.
Obamacare also provided incentives for hospital systems to create Accountable Care Organizations (ACOs). I have written about ACOs destiny to fail ad nauseum.
The government’s pretext was that hospital consolidation into hospital systems would increase efficiency with resultant decreases in hospital care costs.
The real reason was to get hospitals to hire physicians. At that point they would lower reimbursement on both. Hospitals and physicians would be totally dependent on the government.
“There is a growing body of evidence that hospital mergers lead to higher prices for consumers, employers, insurance and the government.”
The result is opposite the stated goal and was totally predictable.
“It is imperative to educate patients and lawmakers as to how the consolidation of hospitals and medical practices raise costs, decrease access, eliminate jobs and, ultimately, reduce care quality as a result.”
The development of hospital systems led to the expansion of administrative personnel which in turn led to increased administrative salaries and costs. Administrative costs are not government controlled. They are part of the overinflated hospital overhead.
In some cases, the government increased hospital systems’ subsidies because of increased administrative costs.
It did not lead to greater compensation to physicians they hired. Yet the hospital system was totally dependent on staff physicians for revenue production.
Physicians tended to work hard when they owned their own practice. Now that their salary was guaranteed they tended not to work 12-hour days.
Initially, hospital systems paid physicians on the basis of physicians’ previous productivity in their private practice. Additionally, physicians were given a payout for their practice. The payout was never the real value of their practice.
Hospital systems calculated the physicians’ productivity because the hospital system hired all the full-time employees. The hospital systems’ computer systems were also used in the calculation of productivity and overhead.
Hospital systems controlled the overhead and the books. A lot of the time the calculation was inaccurate. This was the result of two fees collected from the government and the insurance companies. One was a technical fee that belonged to the hospital system. The other was a professional fee for the physician.
At times, the professional fees were not collected and the physician groups could not figure out the discrepancy.
There had been a long-standing mistrust by physicians toward hospitals prior to Obamacare. The errors in calculations resulted in greater mistrust by physicians toward hospitals.
If a physician was not producing according to the hospital system’s calculation the physician, at the end of a usual two-year contract, was let go. This created more mistrust and suspicion among physicians toward hospital systems.
It has also caused physicians who anticipated this stranglehold by hospital systems to become concierge physicians or open outpatient clinics of their own.
This has caused hospital systems to provide concierge physicians of their own as well as hospital outpatient ambulatory surgical care clinics. The problem is that the free-standing physician owned ambulatory surgical care clinics (ASC) are more efficient and cheaper than the inpatient hospital care and the hospital’s own outpatient ambulatory surgical care clinics (HOPD). Some privately own ASC are cheaper than the increasing deductibles patients with private insurance have to pay using their insurance.
Below are some examples of Ambulatory Care Surgical Center fees as opposed to Hospital Owned Outpatient Surgical fees.
There has been a dramatic increase in hospitals gobbling up independent providers and becoming powerful regional monopolies. These monopolies raise prices not decrease prices.
“According to a 2012 study by the Robert Wood Johnson Foundation, “the magnitude of price increases when hospitals merge in concentrated markets is typically quite large, most exceeding 20 percent.”
Forbes’ Avvik Roy of Forbes said, a presentation in 2012.
The underlying theme is that President Obama wanted Obamacare to fail so it can be replaced by a single party payer system that has been pushed by progressives since 1935. Obamacare is moribund despite claims by Democrats. They refuse to face the fact that socialism does not work even thought it is a feel-good concept.
“A recent paper authored by Northwestern’s Leemore Dafny, Columbia’s Kate Ho, and Harvard’s Robin Lee provides some definitive proof that when hospitals consolidate, prices increase substantially. The effect is made worse directly inproportion to proximity of the merging hospitals. “If you are doing it because you think in the long run it will serve your community well, you should think twice,” Dafny said.”
Hospital systems are consolidating because they think it is in their vested interests to consolidate. They are falling right into President Obama’s trap. Hospital systems do not control productivity. Physicians control productivity.
A study published by the National Bureau of Economic Research, conducted by Zack Cooper of Yale University, Stuart Craig of the University of Pennsylvania, Martin Gaynor of Carnegie Mellon and John Van Reenen of the London School of Economics, sheds light on the real cost of reduced competition among hospitals: hospital prices are 15.3 % higher when a hospital had no competition compared in markets with four or more hospitals, amounting to a cost difference of up to $2000 per admission. Hospital prices are 6.4% higher in markets with two hospitals and those with three are 4.8 % more expensive when compared to markets with four hospitals.”
The American Hospital Association has been aggressive in criticizing those reports. It has funded a couple of critical reports defending mergers and consolidations. The American Hospital Association doesn’t understand the progressives’ trap either.
It is backfiring already as hospital systems are saying they are losing money. The government is cutting reimbursement, the insurance companies are raising insurance rates and increased deductibles are unaffordable. Consumers are experiencing a decreased access to care.
None of the policy makers are focused on the right problems because they want a single party payer system in order to gain total control over the healthcare system. Progressive have no interests in the cost of care, the need to raise taxes or the delivery of efficient care.
America is going to experience an economic disaster as it has been experienced in Canada, England and many other countries in the world.
Consumers are continuing to take it on the chin in other countries because 80% are not sick at any one time. Consumers in other countries feel secure with the guaranteed coverage even if it increases their taxes and decreases access to care.
The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.
Dr. Don Berwick touted Britain’s National Health Serviceas the America’s ultimate healthcare role model.
Dr. Berwick had some good ideas and many very bad ideas.
President Obama had other ideas. His ideas were not about repairing the healthcare system. His goal for healthcare reform was having the federal government control the entire healthcare system.
President Obama and Dr. Berwick portrayed physicians and patients as the villains in healthcare dysfunction. It is easy to blame the physicians and the patients because both have some blame in the dysfunction.
Baroness Hale had previously written the following for the British High Court, the U.K.’s equivalent of the U.S. Supreme Court:
“Decision-makers must look at [the patient’s] welfare … the nature of the medical treatment in question, … they [decision makers] must try and put themselves in the place of the individual patient.”
“The patient is not the decision-maker.”
The British Healthcare Service has an organization called NICE. Nice is a perfect bureaucratic name for “the National Institute for Clinical Excellence.” NICE sounds nice. Its function is not very nice.
According to the NHS Constitution, “You have the right to drugs and treatments that have been recommended by NICE.”The National Institute for Clinical Excellence is an agency that “advises” the government whether to authorize payments or withhold them for treatments deemed “not cost effective.”
Britain’s National Health Servicehas continually changed over the 62 years. Various British administrations have searched for the formula to deliver high quality care at an affordable price.
Unfortunately,Britain is making another complicated mistake.
The United States is making the same mistake as it marches toward a single party payer system. The mistake is the lack of respect for the intelligence and will of consumers. The mistake is not permitting consumers to be financially and emotionally responsible for their own medical care decisions.
The British incident is chilling. The British High Court recently ruled against parents’ wishes in defense of the National Health Services.
The high court’s decision is the result of British consumers giving total control of the healthcare system to its central government.
The British government believes that the people are not smart enough or responsible enough to figure out how to take care of themselves.
The British thinking is not dissimilar to the thinking of the Obama administration and Dr. Donald Berwick.
The basic conflict is over who is ultimately in charge of medical decision making. Government control of medical decision making is not limited to Great Britain’s single-payer structure.
In all government run health-care systems, whether in Australia, Canada, or even here in the United States under Obamacare, government increasingly makes final medical decisions, not patients in consultation with their doctors.
NICE is an agency that “advises” the government whether to authorize payments or withhold them for treatments deemed “not cost effective.”
“Consumers have the right to do what they or their doctor thinks best medically as long as your decision does not override the decision NICE decides is cost effective for the government.”
All government has to do is make the right rules, empower consumers with their own money, level the playing field among stakeholders and get out of the way.
Americans did not fully understand two recent single party payer events that occurred in Britain. This was partly because the American media did not cover the story’s significance adequately.
Perhaps the American media did not understand the story’s significance to the American debate in reference to a single party payer healthcare system.
“ First Charlie Gard and now Alfie Evans. These are two 23 month old babies who, though verbally silent, still gave clarion warnings to proponents of single-payer health care: The government — not my parents — is in charge of my life.”
Charlie Gard was born in August 2015 with a rare genetic disorder that carried a poor long-term prognosis.
“In July 2017, little Charlie was just 23 months of age and on a ventilator. Over the objections of his parents, British doctors decided to withdraw life-sustaining care.”
“According to British Courts, the National Health Service (NHS), the country’s single-payer system, is the ultimate medical decision maker — not the family. Ventilator support was withdrawn and Charlie died.”
Less than a year later another 23 month old child hit the British headlines. Alfie Evans was a comatose child whose NHS doctors said his condition was hopeless. His physicians felt he could not survive without ventilating life support. They wanted to terminate his life support.
His parents wanted to transfer their child to Rome’s Bambino Gesu Pediatric Hospital for further care. The Italian Hospital was willing to take him.
In my opinion it should not be the government or the court that decides about who should live or die. It should be the patient or the patient’s family who decides with the advice of the patient’s physicians and clergy.
The institution the patient is being cared in should not be responsible for the bill.
Consider the question “who’s in charge?” from two perspectives: that of the American public and that of physicians.
Americans prize their freedom above all else. When the government makes medical decisions against the patient’s wishes, it directly infringes on personal freedom. It is doubtful that Americans would support a single-payer system if they understood what they have to give up in exchange for the promise of government supplied health care. Americans would be giving up freedom of choice.
Democrats have tried to pass a single party payer healthcare system since 1935. Slowly, but surely, the American population has been indoctrinated into believing that a single party payer system run by the government is the best healthcare system to have.
Americans have been filled with disinformation about the wild successes of single party payer systems in the rest of the world.
The economics of these single party payer systems are seldom discussed in a coherent way. Americans have no idea of the economic burden a single party payer system places on the budget of countries that have such a system.
The fact that these governments continue to raise taxes to pay for their single party payer system while decreasing their citizens’ access to care is hardly ever discussed. Only the favorable statistics that fit the progressive narrative are published.
In Norway the income tax rate is 50%. This is mostly because of its universal single party payer healthcare system. Norwegians seem happy with the system. If they get sick they have nothing to worry about. Their health care is free.
The Canadian healthcare system is unsustainable.
“Canada spends 50% of its GNP on healthcare. All of the provinces are experiencing massive deficits due to additional healthcare costs.”
“Canadians who are healthy and do not need to interact with the system are happy and feel secure that their healthcare needs will be serviced without cost. Nothing is free.”
“The United States consumes only 18.5% of our GDP on healthcare. This percentage is rising as access to care is decreasing.”
The Frazer Reportis very specific on the cost of healthcare in Canada although the government is not very transparent.
Each province is having a difficult time figuring out how to fix its healthcare system. Many Canadians are convinced that a single party payer system is not the answer but cannot politically eliminate it.
The fact is nothing is free and only 20% of the population interacts with the healthcare system at any one time. People who are not sick think the single party payer system in great. They are happy they have no anxiety about the cost of healthcare if they get sick.
In Britain taxpayers are unhappy with the National Health Services. Consumers recognize the bureaucratic waste in their healthcare system. They suffer from decreased access to care. Wait times for health care and surgery are ridiculously long.
The British healthcare system is unsustainable. The British government has not been able to fix the expensive National Health Service.
America has a single party payer system for Medicare, Medicaid, SCHIP and the VA system.
Seniors love Medicare. Most seniors could not afford to get medical treatment if there was not the Medicare System. Policy wonks and Democrats refuse to recognize that in 1965 after Medicare was enacted, healthcare prices exploded. Most economist agree, as a result of Medicare, the cost of healthcare in America has continued to increase yearly for all Americans.
Congress has ignored the basic defects in the Medicare system that has caused this explosion. Over the years a few brave congressmen have made attempts to correct these structural defects.
The Democrat and Republican establishment have ignored these congressmen.
The political establishment has made feeble attempts to control costs through ineffective regulations. The bureaucracy has grown and the healthcare system has become more costly and inefficient.
The reduction in reimbursement to physicians has resulted in the tremendous increase in concierge medicine. This explosion in concierge medicine has decreased access to medical care in many cities in the U.S.
The result is an increase in cost and greater opportunity for abuse by the insurance industry, the pharmaceutical industry, hospitals and healthcare providers. The government has imposed more control over the individual’s ability to make his or her own healthcare decisions.
Medicaid has experienced the same increasing costs. It also created a shortage of physicians because of low reimbursement. Obamacare has expanded Medicaid. This has decreased the availability of medical care for Medicaid patients.
President Obama’s law (Obamacare) increased the number of Medicaid recipients but did not cure the reasons for the lack of providers. Many clever Medicaid providers have figured out how to exploit Medicaid rules only to suffer from government investigations and penalties in the long run.
The VA system is the purest example of sheer failure. Not only are the patients unhappy but also the providing administrative bureaucracy is riddled with inefficiency, corruption and waste.
The inefficiency, corruption and waste have not been able to be fixed by many notable private sector executives the government has hired to fix it. They have all ultimately resigned or were fired.
The VA system’s single party payer system remains an incurable failure.
These examples are proof that a single party payer system is unsustainable and not economically feasible. The government continues to make the same mistakes over and over again.
Are these mistakes intentional? Perhaps.
The government’s goals are to gain power and have control over the population. If its goals were to have an efficient and effective healthcare system, it would provide the resources to permit all consumers to drive the healthcare system. It would create a system that would motivate consumers to be responsible for their healthcare.
What is happening now?
The healthcare policy ideologists are using the New York Times as their propaganda vehicle to promote a single party payer system.
After one casually reads the article on a pleasant Sunday morning it would seem much simpler to have a single party healthcare system controlled by the government than the chaotic system that presently exist. The New York Times article is promoting Medicare for all.
Medicare currently is a single party payer system whosecost is out of control. America cannot continue to print money forever.
America’s politicians are ignoring this fact in order to gain more power.
The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.