Sunday, November 17, 2019

Cutting the Gordian Knot: Why a “Public Option” Won’t Work

A friend of mine is adamant in his belief that the American health care system simply cannot be fixed to operate with some semblance of humanity and rationality. Bill has become convinced that “it will never, ever work.” What does it matter if other health care systems in other countries are less crazy, cruel, convoluted, or costly? He is convinced we are FUBAR and cannot get to anything better from here.

This seems to me a nihilistic, despairing, and illogical view. Yet, Bill is right that strong, interlocking structures hold the existing order in place.

So many promising efforts in the past to reform things have been distorted, stymied, and twisted, and have not improved matters. The HMO movement comes to mind. Originally non-profit and medically-focused, it changed into something quite different, angered patients and doctors, and was a striking failure.

If the healthcare system is to be radically improved, it won’t be easy, and figuring out how to weaken structural forces that buttress the current system is a crucial part.

With this in mind, let’s consider the currently popular goal of “Medicare for All.” The most popular “compromise” path – now espoused by every candidate in the Democratic field but Sanders – involves adding a “public option” to current ACA plans alongside private insurance. Pete Buttigieg and now Elizabeth Warren have rhapsodized about how this would provide a “glide path” to real single-payer reform, because people would prefer the “public option” to private insurance plans.

But, giving people the choice between public and private health plans simply won’t work. Real single-payer eliminates an unneeded, expensive middleman – the insurance companies. A “choice” leaves the insurance companies – and the additional layer of complication and expense they add – firmly in place.  If true single-payer is implemented, administrative overhead would be reduced, because hospitals and doctors wouldn’t have to deal with dozens of differing insurance plans and their varied requirements. One set of billing procedures, forms, one drug formulary and rules, etc. would majorly lessen overhead. Adding a new “public plan” would only increase complexity, not reduce it.

A “public plan” that exists alongside private plans also will not have the leverage to reduce medical prices, including pharmaceutical prices, that the government would have in a true single-payer system. Without the cost savings from overhead reduction and better pricing, the public plan will not realize any of the potential gains that could enable substantial systemic improvement.

Crucially, if some are on private plans and some on public, adverse selection is certain to occur. Insurance companies will game the system as much as possible to retain the best risks and offload the medically needy onto the public plan. Even before such games get into play, if people who work for large employers keep their current plans, those people have a more favorable risk profile than the population at large. Warren’s means-tested initial transition plan extends coverage to those below 200 percent of the poverty level – are these going to be good risks? So, the public plan will be saddled with a population that will inevitably be costly.

For all these reasons, after implementation, the public plan won’t be in a good position to present a favorable profile compared to the cream-skimming private plans, which will offer sets of benefits designed to attract younger and healthier people. This will raise the cost of the public option and together with the lack of administrative savings, will be a financial disaster.

The government will pick up more of the tab for the sick; people will NOT prefer the “public option” to private insurance; and the leaders of the insurance companies, pharmaceutical companies, and hospitals will continue making our healthcare "system" complicated, expensive, and corrupt. The suffering it imposes will continue. And my friend Bill will be confirmed – again - in his belief that American healthcare will “never, ever work.”

The truth, of course, is that American healthcare does work, superbly, for its overarching purpose – to make money for capitalists. At that, it is indeed the very best in the world. But if we want it to work for other purposes, we have to cut the Gordian knot, rather than try to untie it gradually. The rapid, drastic, and successful implementation of the National Health Service in Britain after World War II affords an example.

A tweet from @SableViews makes the point in a different way that incrementalism can be a horrible strategy:
You can't leap a chasm in two bounds. So what does [Warren] suggest? Break the leap into two bounds so that M4A falls down the damn chasm never to make it to the other side.
"Getting to the other side" is possible – but it can’t be done in the way proposed.


Dr Joe said...

I have my doubts about Medicare being immune to the focus on profit that afflicts US Healthcare. My sense is that the people who make the regulations for Medicare are in the pocket of hospital and pharmaceutical corporations. The Medicare system is set up to reward poor health care.

The whole RVU system is gamed to reward procedures over caring for patients. So more and more I see patients who have procedures donw by "specialists" who then turf any problems elsewhere so their corporate employer can maximize revenue from them.

When I refused to participate in "meaningless use" none of the private insurers docked my reimbursement, but Medicare did. Federal guidlelines forced docs to use EHR's. The Press Ganey score being tied to reimbursement seems to come from Medicare.

Clinical guidelines seem to be set by people with severe conflicts of interst and have become ever more Procrustean and more to do with pushing people toward taking more medications than being healthy. The website the NNT has a number of examples of practices that Medicare seems to pressure docs to do and are clincially inappropriate.

I have patients who are healthcare providers and the Medicare documentation requirements are overwhelming and pointless from a patient care perspective. The CPT coding system is asinine with complexity being determined by the number of "bullet" points which then direct the course of the visit rather than the patient's need.

So I conclude that even if no other option were available, Medicare for All would do nothing to change the current system, except make more money available to hospital corporations and pharmaceutical companies.

The problem ass I see it is greed. The cure for greed is enlightenment. In the absence of a cure, the treatment is taxation.

APeticola said...

Dr. Joe, I agree with every specific criticism you have of Medicare. The RVU system is a very poignant example of how a reform designed to benefit PCPs was twisted by special interests and the AMA's appointments to the RVS Update Committee to do precisely the opposite of what was originally envisioned.

It is important to realize that "Medicare for All" (where those who truly want it like Sanders and Jayapal are concerned) is not today's Medicare extended to cover everyone, but an IMPROVED Medicare for all. I am happy to tell you that the House Medicare for All bill (see section 903) ALREADY envisions eliminating meaningful use incentives, as well as eliminating value-based and pay-for-performance programs previously encouraged by the ACA and MACRA.

As well, if I understand Section 302b(2), Medicare Advantage programs will be abolished. This doesn't address every item you brought up (CPT coding, RVUs) but I think it is important to push for those sorts of reforms also as part of the health system overhaul.

Don't forget the benefits to patients also. Real M4A will eliminate people rationing their insulin because of cost, people unable to get treatment for cancer (unfortunately not uncommon in my home state of Texas where so many are completely uninsured), or people who rack up huge bills and lose their savings even though insured through co-insurance and surprise bills.

There's nothing magical about the reform, though. I never said a new system would be "immune" from lobbying interests making their hardest pitches. But the new structure can provide a framework where the public and doctors both have more leverage to keep those forces checked as they are NOT today - it will still be a battle to enact the system and to keep it functional once enacted - but it's do-able if we can "cut the Gordian knot."

Unknown said...

Everyone please read
The Public Option is a Poison Pill

Covers many additional points beyond those raised by Roy Poses in this blog

Roy M. Poses MD said...

Please note that the above post was written by Anne Peticolas, not me (Roy Poses).

APeticola said...

Thanks, Unknown! Great link at The Nation; and you are right it covers many more salient reasons than I went into about how a public option is a bad one. Very important that rational planning and global hospital budgets are not possible with a segmented system. Also loved the points it makes about Medicare Advantage; also about how German or Swiss or Dutch insurance coverage is not remotely like coverage offered by American insurers because of the different natures of the insurance companies, so cannot be a model for healthcare in the U.S. To get to sanity, we do need to eliminate private insurers in the U.S. - Anne Peticolas