I am posting the following with some trepidation. I want to be clear that I am attempting to do my best to lay out some of the issues we are facing in a dispassionate and nonpartisan manner. I have my own opinions about all of this, but I am not going to express them as they don’t matter for the purposes here, as I am not advocating for anything. I am writing this because Federal healthcare law will be changing soon, and we need to be prepared for that.
This January, we will be pushing the Healthcare Reset Button.
I am writing this from the perspective of having served since 1991 on panels and task forces (under both Republican and Democratic administrations) that have developed state medical regulations, and currently, I am serving on another state task force, and a panel advising CMS. Over the course of time, I have been present on numerous occasions when medical policies have been intensely debated for months on end. It can be an at times excruciating process of trying to wordsmith complex policies. I suspect that over the next few months that there will be both an intense scrutiny of proposals, and intense debates about the relative merits of different policies and laws. From this standpoint of the legal regulation of healthcare, I have the following thoughts.
Following the results of the recent election, it has been stated that a priority will be to repeal the Affordable Care Act. It has been stated repeatedly that, “We will repeal every line of Obama Care.” Now that the election is over though, this position already appears to be evolving. It should be remembered that the U.S. healthcare system is a three trillion dollar a year economy, which is regulated to a considerable degree by the Affordable Care Act. As the ACA is about a thousand pages long, repealing this is a major reorganization, and conducting this reorganization will require a move from platitudes to regulatory reality.
The Affordable Care Act was a paradigm shift in healthcare delivery, and repealing it will be an equally large shift in healthcare delivery. This has to be done with considerable care. If 20 to 30 million patients suddenly lost their insurance and exited the healthcare system, I am not sure what would happen. Whether your political orientation is left or right, we don’t want to crash the healthcare system.
In the six years now that the Affordable Care Act has been in effect, quite a number of changes have become part of the medical culture. A few of the changes brought about by the ACA are as follows:
- No preexisting conditions
- Closed the Medicare “doughnut hole” (a coverage gap that created additional out-of-pocket expenses for prescriptions)
- Children under age 26 may still remain on their parents’ healthcare policy.
- The expansion of Medicaid in 31 states
- Free screening and preventative care
- Fixed medical loss ratio (i.e. insurers must allocate 80% of premiums to healthcare benefits, max 20% profit)
- Insurers cannot deny coverage
- Insurers cannot cancel your coverage following the onset of an illness or injury
- Insurers cannot charge you more due to gender or health status
- Premium rebates for low income subscribers
- An additional 30 million Americans with healthcare insurance
- The medical home
- Accountable Care Organizations (with its associated system of incentives)
- The Patient Centered Outcomes Research Institute (PCORI)
- Federal standards for what every health insurance policy must cover
- Everyone much purchase insurance or be fined
ACA features on the list above range from very popular (80% approval) to unpopular (35%). Repealing the APA would be repealing all of this.
So how is the ACA working?
Currently in America, if your income is at the poverty level, you are eligible for Medicaid, and your healthcare is almost free. If you are wealthy, you can easily afford to pay healthcare insurance. If you are disabled or elderly, you get Medicare. The people who are struggling under the current system are those in the working class, who struggle with the high cost of healthcare insurance. For many families, the cost of healthcare exceeds the cost of rent or their mortgage payment. Furthermore, healthcare inflation is escalating, with the estimated national inflation next year at 25%, which is obviously unsustainable. That is the segment of healthcare that needs work.
Healthcare reform could be conducted under progressive, conservative, socialist or perhaps populist principals. A progressive approach would be to amend the ACA to lessen the burden on the working class, while a socialized medicine approach would probably be Medicare for all. Due to the election results though, neither of these are being considered.
If we try to apply conservative principles to healthcare reform, I am just guessing here but some of the changes that might happen could be as follows:
- Healthcare should be less centrally regulated and more variety and innovation should be made available. Get rid of the federal standards for what every health insurance policy must cover. Stripped down policies, such as a “major medical” policy could be offered, where a policy holder pays for all basic medical care out of pocket, and the insurance policy covers only for major medical problems, such as surgery. This would be substantially less expensive, but cover substantially less.
- Free screening and preventative care should not be mandatory. Don’t limit innovation. Companies should be able to choose what features a policy should offer, and people should choose the plan they want. If this does not result in the best plan for the population, so be it. The focus was on individual choice.
- Services should be unbundled. If I go to McDonald’s, why should the government tell me I have to buy a happy meal, when I only want fries? Similarly, if I want medical care, I should be able to pay for only the parts that I want (fee for service). If I want to buy medical insurance but not mental health, I should have that option.
- Insurance companies should have the right to pick and chose who they accept as their subscribers and should also have the freedom to make decisions about what conditions they will cover and what conditions they will not cover.
- Get rid of the fixed medical loss ratio. Limiting insurer profitability will outlaw highly efficient companies (but getting rid of the fixed medical loss ratio would also allow profiteering).
- Insurers should be able to compete across state lines, as due to economies of scale this could allow greater efficiency.
Like all ideas, the above have pros and cons. For example, regarding #6 above, if Blue Cross of North Dakota sells policies in South Dakota, and cheats patients in South Dakota, it is unclear if the Insurance Commissioner in either state would have jurisdiction to intervene. This would reduce payer regulation by the states, and instead rely on market forces or the courts – people would stop buying bad policies or sue the payer. Depending on your philosophy, reduced regulation and trusting the market is a good or bad thing.
Another problem relates to #4. If I needed a heart transplant, no insurer would choose to cover me. One moderate conservative solution proposed was that high risk folks should be in a separate system. If I will die unless I get a million dollar treatment, I have a budget busting condition that causes problems when thrown into a market driven system. So one solution would be to have a market driven system for typical patients, and a high risk system for others. Great! But who pays for the high risk system?
While the above are possible conservative methods of healthcare reform, what confuses me at this point is that it appears that a conservative method may NOT be the guiding philosophy here, but rather a “populist” or some hybrid of a populist and conservative method. This week, President-elect Trump stated that he would retain popular parts of the Affordable Care Act, but not the unpopular parts. The problem is that with the ACA, the unpopular parts pay for the popular parts. Human nature: We love to get things, hate to pay for them.
At this point in time, although the “repeal and replace” mantra has been chanted for quite some time, there has not been a clear articulation of what will be offered to replace the ACA. So what is the populist solution for healthcare? UNKNOWN. Unlike traditional conservative policy solutions, no mention has been made lately of cutting entitlements for the working class. I would not be surprised if a populist solution incorporated significant parts of Obama Care, but of course it would all have to be rebranded. Just a speculation but maybe they reorganize Obama Care and call it Trump Care. Wild guess, but after all the guy does know branding. If I am right, you all owe me a latte.
If we step WAY back and look at the view from 30,000 feet above the landscape of healthcare, it can be seen that the history of healthcare in the US is that it evolves by a dialectical process. If you recall philosophy 101, the dialectical process is thesis, antithesis and synthesis, and is a process where two counter-balancing forces interact in the evolution of ideas. Over the last century, healthcare has been trending in a general liberal direction, although with each pendulum swing toward the liberal side, there is a corresponding swing back toward the conservative. So now we may be considering a populist-conservative position that is some type of evolution of the conservative approach, which perhaps incorporates some of the liberal concepts but has different priorities. We will need to see where this ends up. My guess though is that none of this has been thought through yet, and that it is very much in flux. That creates opportunity.
So, it appears that we will be entering a period when there is a greater than usual amount of chaos in the healthcare system. However, it has been pointed out that a crisis is composed of equal parts of danger and opportunity. The opportunity for psychology will be the opportunity to once again advocate for the important role we have in delivering better care, at less cost. Given the coming changes, we will need to be prepared to make our best case for what we can do to contribute to a better healthcare system.
So, federal health care law is going to be changing soon. We would be well advised to try to anticipate what these changes might be, and consider how to advocate for what we believe to be true and valuable. We will also need to consider how to adapt to policies we cannot change.
If we don’t advocate for what we believe though, the train will leave the station without us.