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Sunday, July 16, 2017

Repeal and Replace Agonies

The Republican attempts to change the ACA into something else are destined to fail. They are destined to fail not necessarily because their ideas are devoid of any merit, but they are destined to fail because they are charged with a series of impossible tasks. The only acceptable outcomes which are politically sellable are ones that must include the following characteristics:

1. All pre-existing conditions must be covered and insurance companies cannot discriminate on the basis of age of illness. To be actuarial sound you need broad participation but you can't force people to buy insurance they do not want to buy.
2. People must be insulated from the costs of care - this means minimal to non-existent copays and deductibles
3. Since health care is a right, all reasonable services need to be covered, including new and innovative treatments, drugs, and procedures
4. Cost of care must be kept in control and increases in costs must not break state or Federal budgets. However, you need to cut costs without cutting expenditures. Cutting expenditures means you will be killing people. This is where the game of political Twister really becomes interesting.

This is an impossible task. They simply cannot succeed. The insurance markets are a complete mess with the prospect of complete breakdown without intervention. However, no intervention is likely to happen without total collapse. The collapse will be used to justify movement to a Federally administered health system.  Everyone will gain coverage by fiat but that is when the next set of challenges will become apparent.

With a single payer which presumably will coopt present insurance markets, the question will be whether it will represent a floor for care or a ceiling. If a Federal "universal" program has ambitions to provide a comprehensive package of services to everyone covered, it is no trivial task to decide what is covered and what is not covered. Who is going to do this? Are we simply going to contract with the current insurance carriers to do what they have been doing? What are the gains that we will see from this approach. We as physicians and patients will end up bargaining with the same people we have been bargaining with all along. How will these parties be incentivized to administer the system. I suspect they will be rewarded for stinting on care. Sound familiar?

I have worked within a Federal single payer system call the VA Health System. The VA system is amazingly comprehensive. In fact, there are days where it appears that there is no service which might be delivered to a veteran which cannot fall broadly into the scope of health care service delivery. Furthermore, there is really no one who is charged with the job of defining what the scope of health care services might be. The end result is a perpetually expanding scope of services all defined as within the scope of their right to health care. If the job of defining scope does not fall upon former insurance companies, it will end up in the hands of Federal employees who will not be empowered to anything other than allow for scope creep.

The point is that a Federally financed universal health insurance program will not be administered by the Federal government. The Feds to no have any experience in dealing with the systems required with the exception of the VA Health System and the only thing less politically sellable than the Republican alternatives to the ACA is to put everyone into the VA health system.

Despite the explosive growth of Medicare costs, the care of patients on Medicare patients has been cross subsidized by patients whose care is covered by private insurance. A movement to Medicare for all will represent a price shock for suppliers of care They will push for acceptance of Medicare for all only if the system allows for patients to purchase supplemental policies that do more than help pay co-pays and deductibles. Care can be delivered for Medicare prices only by paring costs dramatically. With fewer financial resources coming in, health systems will need to figure out how to operate under these conditions. They will figure out how to do less and spend less and justify these actions.

We are already seeing hints of this under the current system. Rural health delivery is disappearing. It is simply too expensive to maintain a comprehensive set of services where the costs to deliver these services are higher. The first services which go away are ones with small or negative margins. There are also massive movement away from using physicians, who are expensive. The move to a single payer would in essence make everything look like rural health. The drive to reduce costs and to do less, especially less of anything low margin, would translate into whole swaths of care services disappearing. If you have a hard time finding something now, it will only get more challenging.

This is actually happening already. A shift to single payer would only accelerate this shift. However, universal state sponsored health plans also exist within the context of private insurance. This happens in France, Germany, and Great Britain. The Universal Plans provide more of a floor than a ceiling. From my understanding (and I may be wrong) the Canadian system historically had few non-state outlets, other than travelling across the southern border and paying cash to the doctors at the Mayo Clinic. A more basic coverage model is clearly possible with non-covered or poorly covered services being available via supplemental insurance. Whether this would look like our current alternatives for Medicare covered patients is uncertain. If more options are made available to non-Medicare patients, these additional choices will ultimately diffuse into the Medicare population. The program may end up to be a Medicare for all program, but I predict that the end result would be a disruption of Medicare as we know it. Giving options to one group will obligate us to provide those options to all.

What do I predict will happen within the next five years?

1. Single payer in the US. It will not likely happen in the current administration unless there is a complete meltdown of the insurance markets.
2. Single payer will result in dramatic changes to the Medicare program
3. The big debate will be how much of a parallel private insurance market will pop up  - the other tier