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Richard Helppie
Hello. Welcome to this special edition of The Common Bridge and the Healthcare Bridge: this is a joint presentation with your host of The Common Bridge, Rich Helppie, and - joining us from San Diego - my good friend and colleague, the host of the Healthcare Bridge, Nate Kaufman.
Nate Kaufman
Back from the East Coast, so I’m a little bit blurry eyed.
Richard Helppie
But always clear about healthcare. The controversy right now in the federal government, about what to do with healthcare, I just want to set the stage. On the demand side of healthcare, we’ve got many people that want wellness, they want diagnostics, and then they want to be treated. And on the supply side, we have amazing healthcare systems that provide preventive care, that provide screening and that also have great therapy. In the middle there is this disaster of the financing, the way that we do things in the United States. And as my good friend Nate says, the largest insurance company in the country – the federal government - changes their CEO every four years. Nate, today the Democrats are saying we’re not voting for anything that looks like a health savings account from the Republicans. The Republicans are saying we’re not voting for anything that looks like a subsidy that would extend the premium support for the Affordable Care Act, the Obamacare. How do we explain this to people and tell them what that fight is really about?
Nate Kaufman
The first way to explain it... I just came back from the East Coast. I spent five days with doctors, various specialties, trying to improve the care that’s provided by a healthcare system. I was inside the healthcare system working, and the challenge that I see is the people outside the system who don’t understand the nuances are amateurs. So we have a bunch of amateurs with political agendas trying to fix the most complicated system on the planet. And what they’re trying to do actually, is two things. They’re trying to solve the Affordable Care Act issue, and they’re trying to - at the same time - solve the complex issue of [the fact that] our system is, in fact, broken, and we need to fix it. First of all, I don’t necessarily think we have the right people, and second, you can’t do that in three weeks. It’s going to take a lot longer. So what we need is a patch.
Richard Helppie
Yeah, exactly right. The right kind of overhaul that we’ve talked about isn’t possible in these three weeks. So under the Affordable Care Act, the idea was there would be these healthcare marketplaces, and that people would be able to go there to choose their own plan. Remember, you keep your doctor and save $2,500 - but then they made this mistake of, well, we’re going to design all of the plans and we’re going to limit the margin that the health plan providers would be able to get. And so guess what? All the plans look alike, and the only way for the United Healthcare, Aetna, Blue Cross, the insurers of the world, can make more money is just to keep cranking the premiums up, not doing anything to provide us care. During COVID, the Biden administration said we’re going to increase the subsidies and we’re going to extend them. They’re due to expire in about three weeks and the Democrats are saying, hey, let’s just put more money in there. Am I framing that correctly, that definition of subsidy?
Nate Kaufman
Yeah, there were all kinds. At one point the government was going to help co-payments and deductibles and not deal with the premiums as much. But what happened was there was a shift - I think it was with Trump, but I’m not sure - and we went to premium subsidies. The premiums are way too expensive and they’ve increased like 100% - some ridiculous amount. There are no controls over that and there’s no market, and the deductibles are high and the co-payments are high. It is a mess and it needs to be fixed, but it can’t be fixed in three weeks. And again, it can’t be fixed, necessarily by the folks that are trying to fix it. One of the things that I see on the web all the time are academics and policy experts and politicians and others coming up with these hypothetical models to fix it. The problem is, if you don’t understand the nuances of our healthcare system, you’re just going to actually make things worse, and in some respects, Obamacare did that. What we really need to do is focus on improving the system, but we need to this patch to work or there are going to be people that are going to suffer. They won’t be able to afford healthcare, they’re going to show up in the emergency departments, and everybody’s going to suffer, because when you need emergency care, it’s going to be clogged up with all these people that couldn’t afford the premiums. So what we need right now is a patch, and then what we need is people that understand the health system to actually start working together with the politicians to fix it.
Richard Helppie
Yes, you and I are together on the contours of a greater plan, which would be a consolidation of all the taxpayer supported programs - everybody gets that, every citizen, every green card holder. Let there be a private market above and beyond that, but also that would not be tax advantaged, the health insurers would have to make a relevant product that actually added value. And, of course - in my book - also let everybody get on Part D for drugs right now. But for this patch right now, the Democrats are saying, yeah, the system’s broken, we didn’t save $2,500, the costs have run out of control because of all the mandates inside the plans, so let’s throw more money at the problem, which is just kicking the can down the road. Your point is, what can we do besides kick the can down the road? The Republicans are coming back and saying, look, health savings accounts are the way to go. And just to set the table, a health savings account, or a device designed to let people take money out of their paycheck like they do with a 401-k, that money would be growing tax free, and could then be used for medical care. And if you didn’t use it up, it’d be available for long term care. Now, in theory, that sounds good, but what’s been the practice? What do we know about HSAs right now?
Nate Kaufman
What we know is that HSAs don’t work really well. They don’t work well. I mean, again, this is the theory. There is a professor who’s promoting giving everybody $15,000 and letting them go buy health insurance. But this is an asymmetrical market. How are people going to know what is good health insurance and what isn’t? One of my thoughts is, if Medicare and Medicaid paid about 50% more than they’re paying right now, we could say Medicare for all, because at that point in time, Medicare would cover the cost. One of the biggest issues that people don’t understand is in the state of Connecticut, Medicare covers 70 cents per dollar of cost. Medicaid about the same. So if with two thirds of your patients you’re losing 30% on them, what are you going to do? And by the way, everyone says, well, you just need to cut costs. And yes, there are abuses within health systems, but I negotiate contracts. My hospital clients wouldn’t have anesthesia if we didn’t pay the anesthesiologists more. They wouldn’t have radiologists. So right now, what we need to do is just solve this problem, the immediate problem, and then go from there. And don’t listen to people who are not intimately knowledgeable about the inner workings of health systems. It’s just a theory. I don’t know what the difference is between a theory and a hallucination, but I don’t think it’s much.
Richard Helppie
It’s not, because neither one stands the test against reality. But anything that starts starving the healthcare insurers I’m in favor of. So you’re saying, look, we’re going to spend the taxpayer money anyway, and what the Democrats are proposing today is take the money, give it to the insurance companies by individual, and somehow, magically, that will come out. In the end, they’ll quit asking for more, which has happened - let’s see - never. But what you’re proposing is, look, we’re just going to raise the reimbursement rates for Medicare and Medicaid. I would also propose - concurrent with that - cut the tax favored treatment of that employer provided private plan. The providers will make money on Medicare and Medicaid, or Medicare for all, and the Uniteds of the world won’t have the taxpayer subsidizing them. I think that would work. Now, I want to come back to HSA.
Nate Kaufman
Yeah, the only piece that the Republicans are saying - I’m not political here, I’m just focusing on healthcare – is well, let’s move to site neutral, meaning that the hospitals will get paid the same rate from Medicare as an ambulatory surgery center for the same procedure. Now that makes a lot of sense, except Rich, what do you call a Medicaid or no pay patient in an ambulatory surgery center (ASC)? You don’t have them, okay? So why is commercial insurance so expensive? To subsidize the under-funding of Medicare and Medicaid. It’s a fundamental issue that needs to be addressed, and if you cut the Medicare reimbursement to hospitals to make it equivalent to the ASCs, you’re going to see what we’re seeing in rural hospitals right now: services close, hospitals close, access problems that you won’t believe. And so again, from my standpoint, we have amateurs working on a very complicated problem.
Richard Helppie
Absolutely. When you look at HSAs - they’ve been around for a while - they didn’t make it into Clintoncare bill, they didn’t make it into the Obamacare bill. There are a lot of theories. One is that people won’t spend their own money when they need to; they won’t do it. Another argument is that when you look at things like 529 college savings plans, the data doesn’t really show that people who wouldn’t have saved for college suddenly started saving. What it does show is that people who were already going to save took advantage of the tax break—and that may be the whole story. With the HSAs, there’s a case that people don’t know how to spend their own money, but that’s the negative case. The pro case on health savings accounts... let’s say that we didn’t get the subsidies but people got a funded health savings account, that would take away the notion that people didn’t have the means to put money away. Second, they could just go buy services directly when they need them, instead of having to navigate insurance to access care. And if you watch the flow of things, if services are going to get paid for directly, that means that that private insurer is not going to pay it, which means that their claim experience is going to go down. Again - in theory or hallucination - their premium should start walking its way down. At least with an HSA, people could pick their own doctor because it’s cash.
Nate Kaufman
But see, that’s the whole problem. The whole issue is picking your own doctor - based on what? The theory is if people have the money they’re going to become educated shoppers. I’m a pretty educated shopper. I’ve mentioned this before, I have a friend who’s got leukemia. How does he shop for that? The number one issue for leukemia is what’s the mortality rate for a bone marrow transplant? Well, there’s no data on that. You can’t... you call each place and beg them for that information, and some of them won’t even give it to you. So what are we shopping for? Remember, 10% of the population consumes 80% of the healthcare dollars. They are not shopping. So this whole notion of, if you give people money that they’re going to shop; they don’t have the information, they don’t have the expertise. And when you’re sick you’re going to try to find out where’s the best place to go to get healed. You’re not going to be shopping like you do for other products.
Rich Helppie
Those are great points. But also, if you take the average household income - $52,000 - the people that are getting really slammed by the Affordable Care Act increase in premiums, with one side of the aisle saying let’s throw more money at the subsidies and put this false economy in place, think about giving that family $3,000 - $1,500 for each of the parents - now they’ve got $3,000 available. If their child has an earache, they don’t have to say what about the deductible? What about the co-pay? Instead, I’ve got $3,000 and it’s there for medical care. I’m going to go get my child taken care of and just leave it outside the insurance system, versus washing it through Aetna or Cigna or any of them, and having them scrape profit off before the doctor and the pharmacy gets paid. That’s where an HSA could go. Again, we’ve got to do something. And I understand - I couldn’t find anything on it today - that there was a discharge petition out of the House that said, let’s do both; let’s extend the subsidies and let’s fund HSAs. And you know what? At this point, why not try everything until we can fix the problem?
Nate Kaufman
Well, I sort of agree, but remember, the deductible is $7,000, it’s not $3,000 and that family with $51,000 has to pay premium for catastrophic care, at least. Again, it’s very complicated. There’s a thing called direct primary care, where it’s like a health club, but it’s for a primary care doctor. You pay $60 a month, and they actually do that. Unfortunately, they limit their capacity, so less people would have primary care doctors if we move to direct VPC (value-based primary care) models.
Richard Helppie
And the supply would come in, but let’s save that for another day. Anything else about subsidies versus HSAs? When we get this out, hopefully it is helping people understand the issue a little bit. Anything else that we’re going to wrap up with here?
Nate Kaufman
Yes, we’ve got to deal with facts and not feelings and opinions. Again, it gets back to the Healthcare Bridge. The facts are from insiders, people that actually deliver care and work with people that deliver care. And unfortunately, what we have are people that don’t understand the business and don’t understand the interrelationships pontificating about how to solve a very complicated problem.
Richard Helppie
Amen, and I’ll just close with in the middle - between the people that want the prevention, the diagnostics, the treatment, and the people that provide those services - there’s a big, ugly system sucking money out of it that’s not helping either side.
Nate Kaufman
Well, there’s a bunch of middle people that are like these lamprey eels that aren’t adding value, that are really sucking the dollars out, that need to be put back into care delivery.
Richard Helppie
But they’re on the fortune 50. So with that, with my good friend, my colleague and the host of the Healthcare Bridge, Nate Kaufman, this is your host, Rich Helppie, signing off on a special edition of The Common Bridge.
