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Richard Helppie
This is your host, Rich Helppie, on The Common Bridge. I’ve got with me today the host of the Healthcare Bridge, Nate Kaufman. Nate, it’s good to see you. How are you doing today?
Nate Kaufman
It’s going well, my Bridge brother.
Richard Helppie
Alright. Well, listen, right now the federal government is closed for business, and one of the issues on the table is that the Senate Democrats say they are not going to vote for a continuing resolution unless and until the Republicans agree that the covid era extensions of the healthcare exchange subsidies are extended beyond the end of this year. Nate, I thought it might bear some explaining to folks what’s in this policy. You and I have looked at the Obamacare - as it’s captioned - legislation and all the changes that have gone on in the last 15 years. I think people can see that it’s an amazing coincidence - and I’m sure it’s just a coincidence - that when the government gets involved with subsidizing things prices do not go down, they just go up, and that cost is added in. Witness manufacturing, witness college educations, witness healthcare now. We’ve all been saved by the largess of federal taxpayers like us. But what are these subsidies for the healthcare exchanges that are so contentious right now?
Nate Kaufman
The theory was that you would create these exchanges, either by state or the federal government, in which health plans would compete with each other to attract individual members who may not have access to healthcare from their employer. That’s the theory. It turns out that there’s not a lot of competition. They all raise their rates. By the way, this population tends to be a higher risk population from an actuarial standpoint, and so in the early years of Obamacare the insurance companies priced these products pretty competitively, and they lost a lot of money, so they basically have increased the prices. Essentially, in theory, you would go and you would buy these insurance products on the exchange, and market forces would happen. But the cost of healthcare is so expensive now, and the cost of a premium for a family is so expensive that they needed some support in order to get access to their own health insurance, and so the government stepped in with these premium subsidies. I mean, the premium for an average family of four - I just finished my speech on this subject - it’s something like $26,900. That’s what it costs for an individual to buy insurance for him or herself and their family. Obviously, there aren’t a lot of people out there that can afford that entire premium and so the government solution was, we’ll step in and we’ll subsidize that premium based on that person’s income.
Richard Helppie
And wait, there’s more. After you pay the premium, there’s a deductible, so that family may come out of pocket another $8,000-$12,000 before they see the doctor one time, and they’re going to have co-pays on things. So you kind of have to question what’s being purchased for that $26,000. When we looked at the Patient Protection Affordable Care Act in 2010 I wish we would have saved some of our conversations, because all the punch lines were that it wasn’t protecting patients or making healthcare affordable, but it was going to be enriching some of the market participants. Now the healthcare exchanges, if my memory serves me correctly, were first introduced by a senator from Louisiana, John Breaux, who happened to be a Democrat. His idea was if we made insurances available to people where they could shop online they would choose something that fits them. But some of the barriers included the fact that under the Patient Protection Affordable Care Act all of the health plans had to be designed the same way. They all had to cover the same things, so that there was really no differentiation in product. It would be like if there were computers or car manufacturers or cell phones or whatever, yeah, you can go to the exchange and buy it, but they’re all exactly the same. They all have to have the same features. And then they went into what you could price it at. So now you’re not even talking about market forces on price. Take that family that’s paid $26,000 in a true exchange, and instead of having to go buy this standard product, maybe they’re saying I’ll be responsible for my primary care and my first wave of specialists but, hey, cover me for catastrophic things, anything that puts me in the ER, my kid falls and breaks their arm. Cover me for any devastating disease, God forbid I develop a cancer or something. Go ahead and insure for that, those are not foreseeable events. But leave me to myself to go buy my own primary care services and my own drug services up to a certain level.
Nate Kaufman
Here’s the problem with that. It’s a good idea, and it makes sense. The problem is, when you do that, what you’re doing is... the largest component of bad debt in a health system right now is not people without insurance, it’s the co-payments and deductibles for people with insurance. That’s where the bad debt is. So if I’m a physician and I’m in high demand and short supply, and somebody comes in and says, I want to pay cash because I’ve got this issue, or I want to have a physical, the answer is, okay, pay cash now, or you’re not coming in. With insurance, at least you get to bill your co-payment and so on and so forth. So, I mean, it’s a whole different world, and their barriers to care could actually increase, which, again, is just part of our crazy healthcare system. People say all the time... well, this one professor from Johns Hopkins says, well, just let the people pay cash because the cash prices are so much lower than the insurance prices. Well, the minute there’s a lot of people paying cash, prices go up. So I think it’s a good idea from a provider standpoint, I just don’t know if they’re going to be thrilled about it.
Richard Helppie
The cash payment, it’s not legal for a physician or healthcare provider that accepts Medicare to take that payment for a Medicare eligible person; you’re locked into that system. But somebody that is not Medicare eligible going to the physician directly and saying, look, I’m going to pay cash, that’s a good thing for the physician, because they don’t have to go through all the paperwork and wait for payment and have denials and things like they would with the insurance company. And for the individual, you’re not sending your money to a third party and having a portion of it go to buy the thing that you wanted to buy in the first place. You just go there direct, so it can work. Nate, another thing on these exchanges that got in the way was that a lot of insurance is licensed and approved at the state level. So if someone had a great idea to insure motorcycle riders across the United States and put them in a pool, you can’t do it because you’ve got to get certified and licensed in every state you want to sell that insurance product.
Nate Kaufman
There are a lot of other issues about this “marketplace.” Today, Lehigh Valley, a big health system in Allentown, Pennsylvania, just announced they’re out of network with United or going out of network. Johns Hopkins is out of network with United Healthcare. Since this is Halloween season, there’s this thing called ghost networks, where the payers say they have providers, especially in mental health, but if you do a secret shopper and call up, you find out that those offices aren’t taking that insurance. So one of the other challenges you have is when you’re buying insurance from a company, you’re buying a network, and that network may either be limited - and limit some of the providers that you would really want to see - or inadequate, and there’s no way to know about that.
Richard Helppie
So if you’re going to have an exchange and let people pick insurance products, let the insurance products get designed and let them deliver that. We do have some good things out of the Patient Protection and Affordable Care Act. You can’t discriminate based on somebody’s pre-existing conditions, and as long as they’ve been paying into the system, that’s a good thing. It should not be used in an abusive way, like, hey, I’m not going to buy any insurance, and, oh, I’ve gotten sick now I can go buy a plan that can’t deny me on pre-existing conditions. Then I’ve spoken about this often, Australia has a catch-up premium for those kind of things, and as does Medicare Part D for prescription drug coverage here in the United States. But this notion that we can continue to throw more money at this absolutely broken system with one more subsidy is insane. That money never comes back to the consumer. It just gets absorbed into the system in a tax favored basis by the likes of United Healthcare, who can’t even come to terms with a prestigious place like Johns Hopkins, but that’s what’s being funded today because of lobbying.
Nate Kaufman
The system is clunky and it’s based on politics, not rational delivery of healthcare, and I don’t see that getting better. That being said, the thing that bothers me most right now - and I’m apolitical about this - is the fact that insurance rates on the exchanges have gone up 30%, most people can’t afford it, there aren’t going to be any premium subsidies, and there’s going to be lots of people with little children that don’t have insurance and need care, and that is going to be devastating to their families, and it’s going to be devastating to the provider community, who still has to see these people in the emergency departments or wherever and provide the care and get no reimbursement. And so while we’re not going to fix our nation’s healthcare system by just solving the ACA problem - the premium subsidy problem - we can’t let people in this country go without healthcare.
Richard Helppie
One hundred percent, Nate, and it’s tragic. When a segment of our population... when a child gets a normal thing like an ear infection, a strep throat, bronchitis, oh, sorry, you go to the ER and sit there for hours to be seen while your kid’s in agony, then get a prescription that you may or may not be able to fill, it’s obscene. While we’re here, I’m just going to go over again what you and I and many other knowledgeable people think is the way to go, if only we had the political will. Let me go ahead and say it and then you can be the color commentary. And remember this is not within the bounds of political possibilities, it’s just a sensible way to solve the problem. First of all, we take every tax supported part of our healthcare insurance: that’s Medicare, Medicaid, potentially the VA, TRICARE, and MICHIP and we say it’s one plan. Every person that is a citizen, every person that is in the country with a green card, they get that level of care. It gets paid for from our 1040 taxes on a sliding scale so there’s a base there. The second layer, if private insurance wants to provide a product above and beyond that level of care, like in every other country that has a centralized plan, they are legally able to do that. But the catch is, if your employer provides it to you that is compensation. Challenge those people at United Healthcare to come up with a relevant product that benefits people that is not simply taking advantage of this crazy patchwork that we have today. Thirdly, allow everybody into Medicare Part D for prescription drug products effective today - every man, woman and child in the United States - that one is working great, it’s a fair fight, it pits the insurance company against pharmaceutical. If we did those things, then we would have a reformed healthcare system that would deal with cost, quality and access in a sensible way.
Nate Kaufman
Well, I think there’s one other component of it. I’ll give you an example. If an anesthesiologist, who’s the most important person when you’re having surgery, because they basically keep you alive (Richard Helppie: And keep you knocked out.) and pain free hopefully. If an anesthesiologist just accepted Medicare and Medicaid, they would make $150,000 a year. That’s because Medicare and Medicaid under-fund rather than increase taxes or increase premiums. So my issue is... I like the idea of what I’ll call a hamburger plan for everybody. The key is, though, you have to make it attractive for physicians to provide their services. Right now it is not. When we design this consolidated plan, we need to raise the reimbursement for high value services so that the physicians are willing to take the average person or population and not limit their practice to concierge type people and so on. It’s a good idea and we need to explore it.
Richard Helppie
The hidden question there is, where would the money come from? Let me start with there’s no subscriber work that needs to be done. It’s just like when we went on Medicare, we signed up one time, and it’s not an annual hunt for new customers and subscribers. I’m aware of in at least one state, Nate, that there is a for-profit company that is doing very well, and their job is signing up people for Medicaid. They get hired by the hospital. Someone comes into the ER without insurance, they get admitted, the hospital is going to get zero reimbursement. I mean, they can bill them, but people don’t have any money, so the hospital hires a third party to go through the labyrinth of eligibility and get Medicaid so the patient gets something. You wouldn’t need to have that anymore, because that business would be gone. All the denials that go in through the for-profit healthcare insurers, that infrastructure would come down and the insurers would have to compete on plan design, price and quality, and they’d have to say we’re better than the hamburger plan by this much. Finland, England, Germany, every place does that, and they mandate that the physicians work in the public system, but they’re allowed to have a certain percentage of their practice in the private system. There’s nothing stopping us from doing that here.
Nate Kaufman
You mentioned the for-profit company doing the eligibility for Medicaid. We have like this huge population of lamprey eels - of which I guess I’m one of them - who profit off of the current healthcare system and the chaos and the complexity. If we could just simplify the healthcare system, we could save so much money. To me, the first way you do that is you sit down with doctors. It’s still the case that whoever has the best doctors wins, and great doctors perform miracles. We need to get back to that whole concept in whatever design that we have, and stop having all these policy people who hallucinate about ways things can be better. Let’s make it simpler,
Richard Helppie
Exactly, and it has gone into the bureaucracy, and that’s really central to why the federal government is closed for now. It’s because one side says, let’s keep funding that dysfunction, and the other one says, you know what, we only agreed to do it to the end of the year. So we’re going to just sit here like this. I sure hope they can find a way to legally pay people that are required to come to work, like air traffic controllers, instead of saying, you have to come to work but you can’t get a paycheck. Again, that’s more dysfunction. It’s brought on by lobbying, and the only thing that’s going to stop it is if we quit buying into this insane binary view of politics and pivot to focusing on policy and demanding that the people that we hire to fix these problems actually do it, instead of just trying to win for their team and rake in money for themselves.
Nate Kaufman
That’s the problem in healthcare. We have the largest health benefit provider in the world which is the federal government. They are driven by politics, not necessarily the best policy, and we have the most complicated healthcare delivery system on the planet. It’s just clunking, and it’s not getting better. Even within the policy community, you have a bifurcation of people who think that hospitals are evil, and then people like me who think that insurance companies are evil and all that. There’s no convergence on like, hey, let’s talk about patients and doctors and how to make this thing better. I see no discussion in that area at this point in time.
Richard Helppie
Well, look, the marketing budgets for the health plans are now starting to attack the hospitals. Hey, the problem is hospital prices are going up they say, as they’re making $30 million a year for the CEO. That’s the problem says the guy running a small ambulance service making $450,000 a year. That’s not the problem. The problem is that we have put a massive bureaucracy in a tax favored way between all of us that are patients - and we’re all patients someday - and the people that provide the care. As to the effectiveness of a public sector, the government doing something, I do not know one person that’s become Medicare eligible that’s ever said, I can’t wait to get back to my private health plan.
Nate Kaufman
By the way, John Oliver just did a rant on Medicare Advantage that’s worth listening to. But that’s another story altogether.
Richard Helppie
Who knows? Maybe John Oliver lifted our 15 minutes on that where we broke it down for people. Nate, I can tell you this, most of the people that are writing the policy don’t have a clue, including those people that champion the Affordable Care Act; I don’t think they understood what they were doing. They were like a monkey with a handgun, just running around crazy and causing more damage than problems that they were fixing.
Nate Kaufman
Well, that’s it’s absolutely true, and unfortunately, the message is it’s not going to get better anytime soon. You need to worry about your own healthcare, and you need to make sure that your family’s covered in some form or fashion - hopefully well - properly and exercise so you don’t have to go into a hospital and let this thing play out. I mean, I’ll just leave this, you mentioned the insurance companies advertising against hospitals. I don’t know, it must be my demographic, but every TV show that I watch two out of three commercials are about pharmaceuticals. I mean, it’s just amazing how many advertisements there are and the cost. Who’s paying for those advertisements, I mean, it’s huge. And these are like, little diseases that not a lot of people have, okay, you can live three months more if you have this kidney cancer if you take this drug and, oh, by the way, now let’s spend the rest of the commercial telling you all the side effects. I mean, it’s just, I’d say, unbelievable. People are going to be driven by the market and the market is allowing this to happen.
Richard Helppie
Well, first of all, Nate, I can tell you, it is your demographic. That’s why you’re seeing those. And you know you’re too far gone if you start humming the jingle to one of these pharmaceutical ads in your car. But yeah, every one of those ads has been developed by an agency. It’s been focus group tested. It’s been put out there with the idea to sell you that drug whether you need it or not. And then on the other end, you’re paying a premium to an insurance company who’s got an incentive to not pay for that drug. Here we are in the middle and Washington stuck in neutral.
Nate Kaufman
Well, hold on a second, they have an incentive not to pay for the drug, but if they do pay for the drug, they get a 30% rebate at the end of the year, so the insurance companies can actually make money through their pharmacy benefit managers by having you use that drug. The incentives are all over the place.
Richard Helppie
Yeah, they are, and none of it does any good for us. I always like to ask, when I see something going on like that, who’s the chump at the table? When I look over at who’s around the table, I’m going, wait a minute, I think I have the answer to this. Anyway, I hope that citizens don’t fall into this trap of, oh my gosh, we’ve got to let these subsidies rise because that’s going to solve anything. No, that’s like putting out a fire by pouring gasoline on it, it’s just going to make a bigger blaze. We need to get to the root of systemic healthcare reform. We need to talk to our providers and make sure they understand that their growth plan of taking market share away from someone else is not going to work because everybody in your market is trying to do the same thing. Meanwhile, you can see the healthcare insurance groups out there counting their billions while our tax supported money is going into their coffers. It’s an incredibly stupid way to do things. I know you get last word, and then I’ll read us out with Winston Churchill, and we’ll go on from there.
Nate Kaufman
When you think about stupid, some of the worst things I see are coming out of academics who’ve never set foot in a hospital, never tried to run one. So unfortunately, we can’t rely on - I was going to say knuckleheads, but I shouldn’t - the policy makers and the academics to come up with a solution. We can’t count on the politicians ultimately. You’re right, we’re the guy at the table that everybody is making money off of, and we need to stand up and try to demand a better system.
Richard Helppie
Absolutely, and as an internal optimist, I have a favorite quote attributed to Winston Churchill; that Americans will always do the right thing after they’ve tried everything else. I think we’re just about at that point where we’ve tried everything else. I look at these geniuses in the academic world and the policy making world, and I’m often reminded of a famous quote that I employ very frequently, that the only difference between genius and stupidity is that even genius has its limits. And with that, with our guest, the host of the Healthcare Bridge, part of The Common Bridge family, Nate Kaufman, this is your host, Rich Helppie, signing off on The Common Bridge.
