Our national debate over the unaffordability of health care is bringing “Medicare for All” back to the forefront, especially in the Democratic Party’s primary debates. There is a split between the candidates on whether Medicare for All or retooling the Affordable Care Act will solve the problem. The Republicans have no plan, although most of their discussion seems to center around increased competition among insurance companies.
The problem both parties have is that no proposals are getting to the heart of the cost problem: How do you incentivize the provider community to deliver care at lower cost with better quality? Cost reductions are going to have to come from the provider community.
There are two distinct problems to be solved in our health care system: access to care and the cost of care. The Affordable Care Act and the proposed Medicare for All address access to care but not much about the cost of care delivery. Both systems, to a great extent, address the cost problems by lowering reimbursement to the provider community rather than providing incentives for the provider community to become more efficient. A 2012 study by the Institute of Medicine determined that a full one-third of all medical procedures in the U.S. are a waste. The provider community needs incentives to curtail this excessive utilization. Physicians make utilization decisions, not insurance companies.
Sixty percent of the working insured population with chronic diseases forego care due to high costs coupled with their high deductibles and copayments (Kaiser Health Foundation, 2019). About 87% of expenditures in private and public self-insured plans are for chronic conditions, so cost and affordability problems are real and highly detrimental conditions.
Universal access to health care is required or we will not be able to effectively achieve a national reduction in the cost of care as a percentage of gross domestic product, which is at 18%. (The closest developed western nation to us is Switzerland at 12%.) Access is essential with 60% of the population having at least one chronic condition and 42% having two or more (Rand Corp. study, 2019). Without access to primary care providers, these chronic conditions will ultimately result in excessive hospitalizations and expensive specialty care. It’s counterintuitive to suggest we can get a grip on cost without universal access. With a universal health care system three characteristics need to be present:
1. Everyone needs to participate, sick and healthy. This achieves a spread of risk allowing the healthy to subsidize the sick. At some point, the healthy are going be on the receiving end of this risk-spreading subsidy. Bold financial incentives are needed to make this happen.
2. Every covered individual must participate in financial incentives to stay healthy.
3. Medical providers need financial incentives to manage utilization and be completely accountable for the health status of a population.
As a nation, we have a massive underutilization of primary care resulting in extreme overutilization of expensive specialty care. Family and internal medicine providers, along with pediatricians, are the front line in the management and prevention of chronic disease. Patients with chronic conditions need access to primary care and they need to comply with their care plans without cost being an obstacle.
A retooled Affordable Care Act or Medicare for All could solve the access problem, but which one is going to solve the cost problem? I believe a retooled ACA has a much better chance of success:
1. Private and public employers retain their health plans and these employers can provide financial incentives for their employees to control their health risk factors and stick to their chronic disease care plans, thus reducing care costs. This represents over 150 million people under age 65 that will be entering the Medicare system much healthier.
2. Within the individual market, where coverage is purchased through exchanges, financial incentives can be created to capture most of this population. With the risk spread over the healthy and the sick, medical providers can be incentivized to manage population groups within geographic regions.
3. Competition is going to come from the medical provider community as it seeks to capture various populations while being financially rewarded for doing a good job.
The right mix of government mandates to achieve universal access to care, coupled with financial rewards for the provider community to deliver less costly, higher quality care, can produce remarkable results.
James H. Suddeth Jr. is a former chairman of the board of Palmetto Health, Richland (currently Prizma Health, Midlands) and CEO at Suddeth Healthcare Solutions LLC, a health care consultancy.