Continued Disruption of the Healthcare Industry
(Is it true or is it a bad thing?)
Michael C. Gosney, DVM, MD, JD, MBA*
* Disclaimer: Michael C. Gosney, MD is a small-town anesthesiologist in the South. The opinions expressed in this series of articles are his own. In Dr. Gosney’s words, “I am an avowed advocate for physicians and physician-led medical care. Although the views expressed will try to be even and true, there will be an inherent slant toward promoting smaller government and physicians.”
I have been asked to look into the future and see what is in store for those of us who take care of patients, provide care 24/7, and try to work within the healthcare system designed by legislators, regulators, and private insurance companies.
With the election of Donald Trump as the 45th President of the United States, the healthcare world is again faced with the distinct possibility of change. I, for one, embrace this change because I believe the Patient Protection and Affordable Care Act of 2010 (PPACA) needs much tweaking to be more effective, cost efficient, and sustainable or it must be repealed and replaced. There is another narrative involving less centralized government control. With the passage of the PPACA, health care in the United States was changed in very profound and fundamental ways. This comprehensive governmental intrusion and takeover of an industry comprising almost 20% of the gross domestic product (GDP) was ambitious, broad, overreaching, packed with unintended consequences, and passed Congress with no bipartisan support. Such broad legislation without bipartisan support or compromise is usually not ideal legislation. The PPACA truly had to be passed to find out what was in it. I am not certain that it protects patients or it is sustainable and affordable. The PPACA succeeded in accelerating the reporting of “quality” measures, driving payment risk methodologies, and encouraging practitioners to embrace high-cost electronic records; funded organizations to drive innovation and research into evidenced-based medicine and population health; and made changes to the healthcare financing scheme. The insurance coverage component drove millions into Medicaid and developed an individual insurance market that was as ambitious as it was unsustainable. The cost of PPACA implementation is in the trillions of dollars and continually increasing. The financial impact of the PPACA is just beginning to affect beneficiaries with increased costs – 100% of federal subsidies of the Medicaid state expansion expire this year and states will begin feeling the cost of this expansion soon. With the stability, tranquility, and cost curve bend of the last 6 years in mind (Yes that is sarcasm), I look forward to exploring the potential opportunities ahead with the hope that we will have sensible, lasting, sustainable changes in the healthcare system.
What do we know?
We know that Republicans were/are against the ACA because they believe that it is government driven and central control over health care and that Republicans were not consulted or even asked to participate in the development of healthcare reform at the beginning of the Obama administration and the passage of this legislation by then House Speaker Nancy Pelosi and then Senate Majority Leader Harry Reid. Additionally, there are alternative philosophies from central government-controlled policy and more private, less centralized government-centered policy. Relying upon government subsidies and governmental payer payments is expensive and less patient friendly according to some views. As is, Democrats are not united on the ACA; many see portions of the PPACA that need to be eliminated, altered, modified, or changed. Republicans, including the President-elect, want it repealed and replaced.
What is likely to happen?
In this first article, I want to explore the landscape of health care and opine about the likely path forward.
The Macro View
1. The PPACA will be repealed probably over a 2- to 3-year period. An outright repeal would leave many without options for health care and Republicans would be blamed for removing insurance coverage from our most vulnerable citizens and the poor. This will not happen. There will be a phase out and gradual replacement by alternative payment schemes. All of the calls for “gloom and doom” are just political rhetoric and should be ignored.
2. Pre-existing conditions will continue to be covered. This is the most costly coverage issue, with a small number of individuals with expensive chronic conditions making up a significant consumption of the healthcare cost.
3. Young people will be covered under their parents’ policies until age 26 (or some other number). This is a very popular provision of the PPACA and again would be taking away a right of young people to be covered under perceived “free” insurance by the young.
4. How will the interim be financed? The devil is truly in the details and will be further detailed as financing schemes emerge.
What has President-elect Trump indicated he wants to do?
He is for repeal and replace.
1. President-elect Trump’s timeline for repeal is within his first 100 days.
2. Mr. Trump has indicated that insurance for young people covered by their parents’ policies is not something he wishes to change.
3. Mr. Trump understands that pre-existing conditions are a major issue and will need to be addressed in the repeal.
4. Mr. Trump does indicate that he is for gradually replacing the PPACA with common sense financing and insurance schemes that are affordable, sustainable, and reasonable for the all people needing health insurance.
What has President-elect Trump done?
Look at Mr. Trump’s nominees for the two most important positions in charge of government healthcare oversight.
1. He has nominated Dr. Tom Price for Secretary of Health and Human Services (HHS). Dr. Price has been a constant and consistent opponent of the PPACA. He has continually introduced his plan for repeal and replace over the last 6 years. The Empowering Patients First Act is the plan for the repeal and replace that embodies Dr. Price’s vision of healthcare reform.
2. He has nominated for Director of the Centers for Medicare and Medicaid Services (CMS) Seema Verma. Ms. Verma, who worked for Vice President-elect Mike Pence, ran the Medicaid program in Indiana, known as the Healthy Indiana Plan (or HIP 2.0). HIP 2.0 requires contributions to a health savings account (HSA) by Medicaid recipients.
Republicans in Congress
Speaker of the House Paul Ryan tasked Chairmen of House Committees responsible for the oversight of health care to develop a plan and present this plan to the American people. The House Republicans’ healthcare reform replacement plan is called “A Better Way.”
1. Medicare will stay virtually “as is”. Payment methodologies will remain in flux with a shift to “Value,” “Quality,” “Outcome,” and “Risk” linked payments. With Dr. Price as Secretary of HHS, hopefully the transition period to a Merit-Based Incentive Payment System (MIPS) and Alternate Payment Methods (APM) will be extended and requirements will be further simplified and improved. Much of the turmoil in Medicare payment methods is a result of the Medicare Modernization and CHIP Reauthorization Act (MACRA), a bipartisan replacement of the Sustained Growth Rate (SGR) methodology promoted by the American Medical Association. MACRA is a separate issue from the PPACA repeal and replace.
2. Medicaid will see a shift from federal government mandates and control to state “block grants” with broad requirements. This will allow states to experiment with different payment and treatment options to cover the eligible population in their states. These would not be “one size fits all” central government plans; rather, each state can determine how it delivers health care to its Medicaid recipients.
3. Commercial (private) insurers
a) Employer and group plans will remain virtually the same.
b) The individual market will gradually change from all federal direct subsidies to a blend of subsidies for low-income and poor recipients and tax credits for others.
c) Health plans will be sold across state lines. This will supposedly allow for more competition and allow more plans in each state. Presently, many insurers are pulling out of the individual market leaving many with no options, one option, or very limited insurance options.
The one thing that you can count on is every single special interest group will have its opinion on the PPACA repeal and replace. Everyone will be looking out for themselves and bemoan the largesse they negotiated in the PPACA. The sky is falling everywhere for these special interests, and you will hear them all. The media will make sure every negative possibility and potential pitfall are exaggerated to their fullest. I encourage you to take a deep breath and relax. I also ask that you please let us know what you want to hear about and we will try to explore the possibilities.