What’s Going Unsaid About The Healthcare Pitches from Our Presidential Candidates

Each of the candidates for President has put forward a plan about how, if elected, he or she would approach the all-important issue of healthcare in the U.S. The differing views include calls to "repeal and replace" the Affordable Care Act, modify the law with incremental, market-based reforms, or shift to a universal, government-financed, taxpayer-funded healthcare scheme.

Three concepts derived from the current system are intrinsic to many of the candidates' recommendations. The first is "single payer," which most often means that the government will provide health care insurance for all, but may be responsible for care delivery as well. A second is "Medicare for all." This would be a subset of “single payer,” but specifically use one of the alternatives offered today to those over the age of 65. The third concept, labelled "prepaid healthcare," is one of the variations often under the rubric of "pay-for-value," as opposed to fee-for-service, and is specific to how physicians and hospitals are reimbursed.

Although all three overlap in how they might be financed and implemented, there are as many differences as similarities. For this reason, an important step in the discourse is clarity not only about what each of the concepts mean, but also what is being left undisclosed about all three.

Political discourse in an election cycle can include a mix of truths, half-truths and complete fabrications. Candidates frequently make promises they know they’ll never be able to keep. As a result, the electorate has a tough time comparing the positions each candidate espouses on healthcare, and can't be sure of the implications for themselves and their families.

When it comes to these three catch-all terms – single payer, Medicare for all, and prepaid healthcare – voters will need a deeper knowledge than they have today, especially if, as a nation, we want to achieve consensus on the best approaches for the future. Ideally, with an understanding about the meaning and implications of each, we can move the healthcare debate forward both thoughtfully and constructively.

SINGLE PAYER

What is it?

Today, health care coverage is often obtained directly from or through contributions from a variety of payers. Most Americans receive insurance through employers, although a growing number are covered by the government, and millions of others buy insurance themselves.

By “single payer,” proponents mean that everyone in the U.S. would have health care coverage provided through the state or Federal government. In some proposals, the government would provide the insurance directly, as they do in Medicare today. But in others, the government would furnish a voucher to people enabling them to shop among competing health systems. The goal of a single payer system, similar to that of the newly created federal and state health care exchanges, would be a simpler reimbursement system, universal coverage requirements and the ability of purchasers to compare total and out-of-pocket costs.

What’s going unsaid?

Even though a single payer system sounds simpler, important questions abound. How much would be paid by this single payer, and how would reimbursement rates be determined? What services would be covered and who would decide? How would access to care be assured? And above all, would government serve only as the source of payment or would it also take responsibility to organize and deliver healthcare?

With so many such questions unanswered, many physicians, hospitals and health care consumers worry that a government-funded system will fall short of expectations and fail. They fear that the process will become overly political, leading to arbitrary pricing unrelated to true cost. They point to other industries in which government attempts to control costs through price regulation quickly devolve into a two-tier system with "haves" and "have-nots."

They worry even more that if the government assumes responsibility for care delivery, then quality, access and service will deteriorate. They predict that the combination of more governmental regulation and a growing bureaucracy would result in long lines for routine services, and rationed care for complex, expensive specialty care.

What’s the bottom line?

“Single payer” can have multiple meanings – on one hand, some people assume that the government's role will only be to fund all of health care, while others will want the government to run the delivery system itself.  We can expect that if the government sets prices, they might be lower than today, but the result would be diminished access. We also can predict that, in parallel, there would be the creation of private, supplemental coverage. This is the reality in most other countries in which health care is provided and financed by the government. And as a result, those dependent on the public coverage alone would be moved behind those with private insurance.

 MEDICARE FOR ALL

What is it?

Since Medicare was implemented in 1965, the federal government has insured Americans 65 and older, and qualified individuals of any age with disabilities.  The Medicare program is funded through payroll taxes, beneficiary premiums and contributions from the general fund.  

Beneficiaries have two options today for access to Medicare coverage.  

The original, traditional form of Medicare is a fee-for-service program. The Centers for Medicare and Medicaid Services (CMS), the agency that administers the program, sets reimbursement rates for office visits, tests, procedures and hospital admissions, and pays for services based on fee schedules it has established. Individuals can make an appointment with any physician and obtain care from any hospital they select as long as the physicians and hospitals participate in Medicare. The vast majority of physicians and hospitals in the U.S. participate and accept the fees from CMS as full payment for services. Enrollees, though responsible for some out-of-pocket costs for physician services, hospitals, emergency visits and drugs, are relatively protected against major healthcare expenses.  

With Medicare Advantage, the other option available, a health plan contracts with a network of physicians to deliver medical care through either a coordinated system of physicians and hospitals or via a looser arrangement between a private health plan and select hospitals and physicians. This involves a “risk contract” through which the insurance company is paid by CMS on a monthly basis, and is responsible if the cost of care exceeds the agreed-upon amount. The insurance company then contracts with the individual physicians, medical groups and hospitals to deliver care, and monitors the quality and access provided.  

What’s going unsaid?

At first blush, the idea of people of all ages receiving healthcare services through a traditional fee-for-service Medicare-type program, at minimal cost and from a nearly unlimited choice of providers, sounds attractive. But expanding this Federal program would be inordinately complex and bring multiple unwelcome consequences.  

Here’s why. The Medicare program today already pays out significantly more in fees than it is collecting through payroll deductions. The Medicare Trustees have predicted that the program will run out of money by 2030. If we expand the program to all, we risk the possibility that in the near term, we’ll have coverage for none – unless taxes are increased substantially – or the choice of doctors and hospitals will be limited to providers willing to accept much lower fees.

Both scenarios present problems. Some hospitals worry that further reduced payments would force them either to subsidize care for Medicare beneficiaries by negotiating higher reimbursement from private payers and insurers, or risk bankruptcy, and some physicians question whether, in the face of decreased payments, they would continue with the program.

In many countries where the government pays for health care for all citizens, private insurance options have entered the market as supplemental coverage options. And predictably, those with private insurance move to the front of the line – ahead of those with government-provided coverage alone. The same would happen here in the U.S.    

What’s the bottom line?

Implementing Medicare for All will require either higher taxes to fund very broad coverage or reduced payments that could force many doctors to exit the program. The former could spell political trouble. The latter could lead to an inadequate number of physicians willing to see Medicare patients, reducing access for all regardless of age. Either way, there is likely to be significant dissatisfaction among the middle class.

PREPAID HEALTH CARE

What is it?

The U.S. healthcare system often pays physicians based on fee-for-service (FFS). This model rewards doctors for higher volume, regardless of whether the services are appropriate or necessary, and irrespective of the quality of outcomes that result. If doctors and hospitals are paid more to perform more – and increasingly complex -- procedures, even when their value is minimal or non-existent, they are likely to do so. And if unnecessary tests and procedures and duplication of services are reimbursed, getting physicians to make the investments in technology and changes in practice needed to eliminate them will prove difficult.

For that reason, some policy experts have recommended a move to alternative approaches grouped under "pay-for-value," including "prepaid health care." Pay-for-value spans a spectrum of reimbursement schemes from capitation for an entire population of patients to “bundled” payments for procedures like a total joint replacement and, finally, to a single payment for all costs incurred with discrete episodes of care for a particular medical condition such as diabetes.  

Prepaid health care, or population-based capitated payment, is typically associated with Health Maintenance Organizations (HMOs) and the "coordinated care models" available through Medicare Advantage. In both formats, health plan and provider organizations are closely affiliated and collaborate to improve quality, ensure access, and manage the total cost of care.  

What’s going unsaid?

The concept of prepaid health care is appealing. Aligning the interests of physicians, hospitals and consumers while creating an incentive to implement comprehensive electronic health record unites the pieces needed to improve quality and lower costs. Policy experts agree that moving from pure fee-for-service to pay-for-value will positively impact not only individual patient healthcare outcomes but also the total health of the nation as a result.  

Prospective payments for a population of patients and reimbursement through a bundled payment give hospitals and physicians an incentive to focus more aggressively on prevention, early intervention and avoidance of complications. Even so, except for a few integrated, physician-led multi-specialty groups, the full benefits of this model have yet to be achieved. The challenge for many doctors and hospitals proves to be how to make the transition from a system that rewards personal volume to one that requires collaboration, coordination and greater efficiency.

What’s the bottom line?

A high-functioning prepaid approach aligns incentives, but requires rightsizing the delivery system and paying doctors differently from today’s system. Transitioning from one approach to the other is disruptive and keeping the status quo often proves easiest.

WHICH IS THE RIGHT HEALTHCARE CHOICE?

Again, although all three of these approaches share similarities, there are important differences. "Medicare for All" and "single payer" are likely to require higher taxes to fund in order to maintain broad choice. Alternatively, both programs could be financed by decreasing provider reimbursement. But were this to happen, physicians would likely drop out of the program, reducing access for patients. In contrast, prepaid health care offers the best solutions. By aligning incentives, these approaches create the opportunity to provide patients with higher quality at lower cost.  The challenge will be in helping doctors and hospitals to navigate the journey from fee-for-service to pay-for-value. To date, this switch has proven difficult for many who have tried.

With the Presidential race increasingly divisive, opinions are frequently shaped by which side of the aisle a candidate sits on. Hopefully, when it comes to something as important as healthcare, we will figure out a way to move beyond partisanship. The health of our nation requires it.