New health care reform proposals?

With the clock running down, the President has put forward several health care proposals. Although these may be overshadowed by other events, it’s worth taking a step back and considering them. 

Starting with the end in mind, the objectives of health care reform should be to improve health outcomes, reduce cost, and enhance the experience of the patients and the providers who serve them (the much discussed and ever-distant Quadruple Aim).

The ACA, while far from perfect, was a thought-out, complex piece of legislation with many interdependent elements designed to improve health care (which, as it turns out, is complicated). As I’ve written, tinkering with the parts individually is like trying to change one ingredient in a recipe for chocolate chip cookies, after you’ve mixed up the batter.

As far as I can tell, the recent announcements have 5 components:

Two programs that will legalize and encourage importation of drugs that are approved in the U.S. This is a price arbitrage play and maybe can save Americans money in the short term, though I wouldn't bet on outsmarting pharma companies on pricing in the long run. I ask my colleagues on LinkedIn with more expertise in prescription drugs than me to comment in more detail. A third part of the announcement was the annual release of MA and Medicare Part D 2021 pricing, which looks good for most seniors.

I will comment in more detail on the remaining announcements:

Proposal #1: Maintain protections against pre-existing condition restrictions. Great concept, that most people support (seems unfair to most of us that someone who had cancer might not be able to buy health insurance that would cover them if they get sick again). But, it’s hard to put this into effect on its own (e.g., if the rest of the ACA were repealed or ruled unconstitutional without a comprehensive replacement). The challenge goes back to the most basic principle of insurance: pooling risk. Either we need to have a big enough pool (with mostly healthy people) or people with pre-existing conditions won’t be able to afford insurance. 

Here’s what will happen (it’s already happened many times) … as less healthy people buy insurance the price goes up, then healthier people drop coverage, leaving a less healthy risk pool, which drives prices up, causing more people to drop coverage, etc. …. the underwriting risk spiral (sometimes called the death spiral, an unfortunate but literally accurate choice of words). This is not an academic concern. Prior to the ACA, states that limited pre-existing condition restrictions without programs to encourage everyone to buy insurance (e.g., coverage mandates, premium subsidies) had small and shrinking individual and small employer insurance markets. Some states tried high-risk pools for people that couldn’t buy traditional health insurance, but these consistently fell apart because this approach runs contrary to the basic principle of insurance and the law of large numbers. The costs were consistently higher than projected and States either closed the risk pool to new people or stopped funding them. 

If we want to actually protect people with pre-existing conditions, we need as many people as possible to have health coverage. The ACA was one approach, the (very similar) Massachusetts program was another, and there are many variants used around the world to maintain a sustainable risk pool, mostly a blend of public and private sector programs. 

Proposal #2: Prescription Discount Cards for Seniors. Affording prescription drugs is a challenge for many people, and seniors do need more prescriptions than younger people (on average). It’s hard to tell what this proposal is, but here are two possibilities I thought of: 

1. If this is a discount card (like GoodRx) and if it works as well as GoodRx it probably will help some people save money, but it's nothing that people can't already access (did I mention that GoodRx already exists? and it’s free to patients, even if it reinforces the unintuitive and black box nature of prescription pricing).

2. On the other hand, if this is a gift card, meaning it’s a form of cash that can be used for prescriptions it could save people money, but it reinforces current prescription drug pricing. And if it’s like cash, it needs to be funded with cash, so that means taxes or debt (which means future taxes) or taking money from some other program that also benefits seniors (like Medicare or Social Security). If it's just a cash advance let's at least be transparent about it (here's some cash, you can pay me back after the election).

Of course, poking holes is easier than proposing solutions. So here’s where I’d start: we can’t change the law of large numbers…so do whatever we can to get more everyone covered. 

Having addressed the 9th inning proposals, let me suggest some ideas that could make a real difference

My thoughts:

Medicare buy-in at age 60 would be among the easier, yet impactful options especially if it includes Medicare Advantage. It would improve the MA risk pool (by bringing in younger people) and improve the commercially covered risk pools (by removing some of the older people). And MA gives people choices that drive competition on prices, service, and covered benefits. It would increase labor flexibility, allowing people to change jobs without losing coverage -- something that would particularly valuable in this uncertain economic environment. It will cause some angst about the risk of the people who move to MA versus those who stay with other coverage, but actuaries are really good at figuring those things out even if it takes a few years (note that after some early losses, many health plans figured out how to make money on the exchanges). Would this be a step on the path to Medicare for all? I don't know, but it would give us some facts to inform the discussion.

Further Medicaid expansion/enhancement also would get more people covered and address health equity and social determinants of care. And, since many people covered by Medicaid are young children, it’s an opportunity improve lives for years to come. Moreover, many states have made significant progress in improving the quality of their Medicaid programs yielding better outcomes and slowing costs.

Continued shift to value based care should be encouraged by government and large employers. Some of this is just buzzwords, but there are examples where health outcomes are better and costs sometimes even go down. This should include greater emphasis (meaning more money and other resources) for primary care and behavioral health services. These services are a pre-requisite to focusing more on health and prevention and less on health care interventions once people are ill.  

Look at the facts to understand what worked well and didn't under the ACA. We have a current real life experiment and lots of data, let's use that to inform future policies and business decisions (read more here).

Make the relationship between health care financing and delivery more integrated and patient-centered. A lot of time and activity that happens under the banner of health care reform is actually health insurance or health care financing reform (and I take responsibility for contributing to this, even with this article). If we work backwards from what people need to achieve their health (and life) goals we can create an experience that's better and focus resources on what works. Many organizations (both payers and providers) are moving down this path, and collaborating more than they used to, but there's more work to be done.

Finally (and maybe firstly), renew investments in public health. When public health is working we may not notice it but, like the bridge that collapses because we didn’t maintain it, when it breaks we know it. Based on economics, this is a public good that the private sector will (and has) under-invest in. May the COVID-19 pandemic at least teach us that public health investments save lives and have a good return on investment.

Even with these actions, there would be a lot more to do ... and we'd still need a level of informed discussion about values and tradeoffs to inform longer term choices and actions. Health care is indeed complicated, but it's also too important to do nothing or criticize what we don't like, without presenting alternatives.