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Commentary: Our health care system is running out of airspeed and altitude

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James H. Suddeth Jr.

James H. Suddeth Jr.

Fighter pilots use airspeed and altitude to prevent crashes. If they lose both, they fall back on their training for good ideas. If you run out of airspeed, altitude and ideas, it is over, you crash.

COVID-19 is causing the U.S. health care system to lose its financial airspeed and altitude, and unless we start implementing good ideas, quickly, it is going to crash. We need all hands on deck to solve this problem. We need a “Manhattan project” for health care. Here are the facts.

An article by 4sight Health mentioned that, prior to COVID-19, the April 2020 Medicare Trustees report predicted that the Hospital Insurance Trust fund would be insolvent by 2026. Payroll taxes provide the funding. COVID-19’s potentially enduring unemployment problems could cause insolvency in 2023. A recent Congressional Budget Office estimate predicts insolvency in 2024.

States are assessing the effects of COVID-19 on their tax revenues. Reductions in taxes and increased spending on public health and Medicaid are causing large budget deficits in health care expenditures. The problem gets worse as more people become eligible for Medicaid.

Employers that provide coverage for about 160 million employees and their families have laid off millions of workers due to COVID. These workers will transition to COBRA, Medicaid, ACA exchanges or remain uninsured. These employers are going to cut costs to get back to profitability with health care being one of the main cost items.

When the healthcare delivery system returns to pre-pandemic operations our cost structure will be the same, but our financing system will be in trouble. The US budget deficit will have advanced by a minimum of $3 trillion taking us back to WW II ratios of deficit to GDP. Currently health systems are paid twice as much for services by private corporate and exchange plans as Medicare according to Kaiser Health News because they cannot survive on governmental plans. Private plans cannot absorb more costs. Neither political party has a cogent plan to address “costs” in healthcare.

For the free market to solve our cost and quality problem, the first thing needed is transparent pricing and quality measures made public. If you need a procedure you should know the costs before the fact. Today, insurance companies and providers keep this information secret. If you have coverage through an exchange your premium is directly related to the money being sent to providers for your medical bills and other members of your insurance plan. You do not have a direct payment relationship with the health systems so “financial” loyalty is with the insurance company. Remember, they, on average, get twice as much from your insurance company as Medicare.

Every doctor’s office contracts with about 50 different insurance companies and networks of providers. And each of the 50 have multiple health plans with different benefit structures and compliance rules. Hospitals contract with far more. It gets so complicated that billions of dollars are spent every year by hospitals on consultants to teach them how to bill. It is known as revenue cycle management. It's a total waste of money.

Total billing and insurance related costs in 2019 using a National Academy of Medicine study was $496 billion; $440 billion was attributed to physicians and hospitals while $56 billion was attributable to public programs. The public plans are administratively much more efficient. Eliminate all the insurance company and provider network complexity from our system and we will reduce our costs by $248 billion.

Every provider should be able to tell precisely what it costs to do a procedure and compete for the public’s business and not insurance company networks. This is known as direct contracting, and insurance companies are throwing up roadblocks at every turn.

Pay health care providers to keep us well. It starts with primary care. About 87% of all health care dollars are spent on chronic disease best handled with a robust patient-centered medical home model, and 65% of the population have at least one chronic condition. Primary care teams should be our health care foundation. When they perform well, fewer expensive specialists and facilities are needed. Primary care teams can provide care 24/7/365, negating the need for urgent care centers, minute clinics and 80% of the visits to emergency rooms. Part of the projected $500 billion needed over 10 years to bail out Medicare can be used to bring primary care to its rightful position.

Eliminate opaque pricing, get the insurance company noise out of the system, have providers direct contract for patients and promote primary care to a dominant position. It will be hard, but incremental change is off the table if we want to afford health care in this country.

James H. Suddeth Jr. is a former chairman of Palmetto Richland and vice chairman of Palmetto Health, currently Prisma Midlands, and CEO of Suddeth Healthcare Solutions, LLC. 

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