Health Care and the Midterm Elections: Will the fight and stalemate continue at both the federal and state level?

Confrontation that leads to a stalemate

The Midterm elections are now over and we a have Democratic-controlled House and a Republican-controlled Senate. At the state level, we have a mixed bag of legislators and governorships from both parties.

Healthcare-related issues at both the federal and state level will continue to dominant the legislative agendas.

While the political parties lambast each other at both levels of government, we have millions of Americans suffering from the deficiencies that are inherent in our healthcare system: high healthcare costs, inconsistent quality and access to care issues.

Adding fuel to the fire, lobbyists representing various healthcare sectors will narrowly focus on legislation and regulation that benefit their clients’ slice of the pie, and potentially at the expense of the societal good. Remember, healthcare costs are someone else’s revenue. 

There are no silver bullets

We do face multiple challenges in the healthcare world from a cost, quality and access perspective and, despite what you hear in the media and from some of our elected officials, there are no silver bullet answers. There is also no perfect healthcare model as all countries to different degrees are facing healthcare related challenges. In fact, many of the nationalized healthcare systems are turning to a hybrid model of both public and private insurance (Brazil, South Africa, China, some of the European countries, etc.).

In some ways, these silver bullet answers are masking the real truth: most any potential solution for our healthcare challenges will cause some pain of various degrees and types to Americans or, more accurately, the electorate. Now, you can understand why these “tough” issues are rarely addressed at the federal or state levels of government due to these potential political ramifications.

Soundbite answers that are pleasing to the voters may not be the right answers, but at least will not hamper reelection efforts. In reality, sometimes the real answers are the tough ones that may not initially be agreeable to the voters but, in the long run, may be in the best interest of society.

The Political tug-of-war

In the U.S., there are cries from the right that the cure-all is a market-based system. There are even those who would like to get the government out of all healthcare including Medicare and Medicaid.

On the left are the strong advocates of a nationalized healthcare system or, as it is now called, Medicare-for-All.

The market approach - is it the easy answer?

When “shopping” plays an integral role within a local community, it sets the stage for ongoing cost-efficiencies and quality. Suppliers recognize that in order to be successful in a competitive market they need to demonstrate perceived and actual value to potential purchasers.

This concept applies to cars, computers and cell phones and, in theory, it can also apply to healthcare.

The market approach can possibly work, but there are still both supply- and demand- side barriers that prevent it from having a material positive impact on our healthcare system:

·      Supply-side barriers that create challenges for new entrants as well as for existing smaller local healthcare stakeholders to compete in the local marketplace are still rampant.

·      On the demand-side, although improving, we are still faced with the lack of user-friendly cost and quality transparency tools for consumers. In addition, for the market approach to work, consumers would need to have a vested self-interest to shop for services. This vested self-interest is usually in the form of money from their own pockets. 

While the consumer-driven healthcare model has increased in recent years in the form of Health Savings Accounts (HSAs) it is not close to playing a role of transforming most Americans to become prudent purchasers of healthcare services. Politically, it is also a hard sell to convince voters that they need to have more financial “skin” in the game in order to transform them into healthcare shoppers.

Medicare-for-All, is that the answer?

As I discussed in my blog titled, “Medicare-for-All vs. Medicare Advantage-for-All: Let the fight begin,” Medicare-for-All is far from a panacea.

In fact, Medicare’s payment policies and regulations, historically as the largest payer (the 800 lb. gorilla), has played a major role in shaping the high cost and inconsistent quality healthcare system that we live in today.

Traditional Medicare, through its reimbursement policies and regulations, has also been accused of stifling competition in local markets. One example would be reimbursement policies that favor hospital-based outpatient facilities over free-standing independent physician practices/ambulatory surgery centers. See Avalere Health white paper commissioned by the Physician Advocacy Institute.

As Michael E. Porter, Harvard Business School professor and author of Redefining Health Care: Creating Value-Based Competition on Results, said: “The only way to truly reform healthcare is to reform the nature of competition itself.” We need to transition from competition that is tied to the "medical arms race" to one that is based on value.

We have found the enemy and it is us

As I discussed in my historical review of our healthcare system in the blog titled, "Lessons learned, a quick walk down memory lane" Medicare is the 800 lb. gorilla.  

The key "lesson learned" during that walk down memory lane was that “A healthcare system is shaped by what you pay for and how you pay for it” and, as the largest payer in healthcare, Medicare is the 800 lb. gorilla. Since Medicare is the largest payer, healthcare providers will follow out of self-interest any incentive built into a payment system, including “the more you do the more you make" incentive vs. one ideally based on value-based care.

One could point the finger at providers of care for the high cost of healthcare in the U.S. as well as the inconsistent quality, but the real culprit historically has been the healthcare payers, and specifically the 800 lb. gorilla, Medicare.

Many of the blemishes associated with Traditional Medicare can be traced back to Congress's unwillingness to take on difficult issues that would negatively impact revenue streams to major healthcare stakeholders.

Given Traditional Medicare's size and lineage (product of the federal government), Traditional Medicare could have played a leadership role in providing value-based care which would have had a positive impact in reducing healthcare costs and improving quality in our society. Instead, it has lumbered along, ignoring sage advice along the way from such trusted experts as MedPac (the think tank for Congress).

Also, the need for Congress to institute real Medicare reform is not a recent revelation. We have known since the introduction of Medicare in the 1960s that the aging baby boomers would create major financial challenges to this program.

Benevolent Confrontation

My message to the far left and right is that the healthcare-related issues impacting millions of Americans today, as well as our society from an economic perspective, needs to be addressed today. Don’t let your philosophies become a barrier to real communication and collaboration and potential solutions to today’s problems.

Each side can learn from the other. This does not mean that compromise is always the right answer, for the right answer may indeed have more of a liberal or conservative bent. The right answer may not also exist today but, unless there is that “benevolent confrontation,” that is confrontation to make things better, there may not be the opportunity to discover a better way.

Also, when you identify an innovative approach or an initiative that would benefit the majority of society, you do not scuttle it because of the negative impact for a small percentage, you implement the initiative, but simultaneously develop a strategy to address those people who will be negatively impacted by it.

What are the common ground issues?

“Repeal and replace” with the House controlled by the Democrats is off the table. We now need to focus on healthcare-related issues and related legislation that will benefit Americans both in the short-run and possibly lay the foundation for more positive changes in the future.

If you live in the Midwest, like I do, you find a way to get to Florida for a period of time during the winter. Some people go by plane, others by cars using various routes to get there. There is not right or wrong way of transportation. The one common theme is that, you ultimately find a way to get to Florida.

We need to develop that same mentality in Washington D.C. and our state capitals. We need to focus on the end goal and then have that old “benevolent confrontation” to find the best way to get there. Now, if the other side wants to go to Maine and not Florida, you have a more difficult challenge.

The following are, I believe, some common ground issues that should be addressed by both parties at the federal and state levels where applicable that would go a long way toward addressing today’s healthcare cost, quality and access to care issues. 

As with, the trip to Florida, there is not just one way to address these issues, so I will hold off at this time to providing you with my “own best route” to success in getting to our final destination.

·      Transparency of health care prices is not a silver bullet that will solve all of the market’s problems, but you cannot have a market without transparency. It is the foundational step that, when missing, continues to cause us to stumble in our quest to improve the affordability of health care.

·      Medicaid: Most states, including my own state of Ohio, have a constitutional requirement of a balanced budget each year. Medicaid represents approximately 20% of Ohio’s budget, and probably plus or minus similar percentages in many other states. Medicaid is far from perfect, but it clearly serves an important role for our seniors (long-term care), our mentally and physically disabled and our poor. There is no silver bullet to fix Medicaid but, given the beneficiaries of this program, we all (Democrats, Republicans, and Independents) have a vested interest in working together to right the ship.

In addressing the challenges with Medicaid there should be open and honest communication regarding all approaches to make the program more effective and sustainable. This process would include objectively looking at “controversial issues” such as block grants, work requirements, Medicaid expansion, etc. Some of these issues could be potentially tied to together, such as agreeing to pursue Medicaid expansion, but there would need to be some form of a work/social service requirement tied to it.

We will explore some of these “controversial issues” relating to Medicaid in future blogs.

·      Social determinants of health Kaiser Family Foundation : One of the key take-a-ways from my series of blogs on this subject is the appreciation from all of the stakeholders (including Democrats and Republicans) and, most importantly, the payer side that social determinants of health have a major impact on the overall health status of our population. 

Both Medicaid and Medicare Advantage plans are proactively taking steps to address social determinants of health and, while much has been done, we have a long way to go.

·      Medicare Advantage: Medicare Advantage plans provide the opportunity for the federal government to enter into a risk relationship with a third party to manage the care for our elderly. By transferring the Medicare risk to third parties, the federal government will be better able to financially address other societal priorities, both in the short- and long-term, that are championed by both Democrats and Republicans to different degrees (jobs, national defense, environment, social programs, etc.).

·      Pre-existing/high risk: These interrelated issues are a political time bomb. There is definitely no easy answer, but any solution most take into consideration both our societal responsibilities in taking care of our population in need, and at the same time not develop a system that enables poor lifestyles.

·      Opioid epidemic: On paper, this is an issue that both Democrats and Republicans should embrace. There are multiple reasons why, as a society, we are facing such a challenge and, in turn, there needs to multiple strategies in place to address it. Also, this problem overlays into other challenges we are facing including those that fall under the umbrella of Medicaid. 

·      Risk/Value-based payment: We need to move beyond pilot programs and implement real payment reform to create real financial incentives that are tied to risk for providers to transform their organizations and services to become value-based.

As discussed in a prior blog, some form of financial accountability and risk needs to be incorporated in our payment systems, otherwise there will be no real incentive to address the long-standing structural issues on the cost side of the equation. Greater financial accountability would encourage providers to promote preventive care and look for ways to cut waste.

·      Electronic Medical Records (EMRs): One of the more frustrating issues that have had a negative impact on healthcare costs, quality and access to care, has been the lack of interoperability of EMRs. Other countries, including our own VA system, have had interoperable EMRs since the 1990s. Sadly, healthcare stakeholders have used EMRs in different ways to protect their own piece of the pie, rather than to promote interoperability.

Increased interoperability of EMRs will provide consumers with greater healthcare choices, which would stimulate “shopping” for healthcare services. 

The increased interoperability of EMRs will also enhance the value of the primary care medical home as the true hub for all care information about the patient. This will, in turn, have a positive impact on healthcare quality and outcomes and play a key role in our transition to a risk/value-based healthcare system.

·      Essential benefits – Now is the time to take a step back and evaluate some of the different aspects of the Affordable Care Act. One example would be essential benefits. We are in the position to have a track record of data to objectively evaluate each of the essential benefits to determine from a cost-benefit perspective if they should continue to exist as is.

Message to the healthcare sectors and organizations

We cannot continue to adhere to the status quo. We must allow our sick care system to evolve to a true healthcare system. Lobbying efforts at the national and state level to preserve the status quo cannot continue. We must allow positive disruption on both the supply- and demand-side of healthcare to occur.

Will your sector and organization be a Winner or a Loser in this new world of healthcare? A Loser holds on to the past and denies the realities of the future. A Winner not only recognizes this future value-based world, but embraces it.

Concluding thoughts

As a country, we have limited resources to address all of our societal priorities, and the longer we continue to dedicate funding to our costly sick-care system, the more challenging it will be for this generation and future generations.

As noted in prior blogs, if we want our healthcare system to evolve into a more value-based system, we need to start with substantial changes to Medicare's payment policies and regulations.

We need to use that “benevolent confrontation” in our approach to substantive changes to Medicare to make it viable, as well as with other legislative issues, some of which have been previously discussed in this blog.

Now is the time for real leaders at the federal and state level to stand up for this generation and future generations and take on the challenging healthcare-related issues that plague us.

Thomas Campanella is the director of the Health Care MBA and an associate professor of health economics at Baldwin Wallace University near Cleveland, Ohio.

If you are interested in receiving a monthly summary of all of my healthcare blogs, you can respond to me on LinkedIn or e-mail Tom Campanella ([email protected]) with your contact information.

Source of pictures: pixabay.com & pexels.com