It’s a legitimate question.
Studies show healthcare affordability is an issue to voters as medical debt soars (KFF) and public disaffection for the “medical system” (per Gallup, Pew) plummets. But does it really matter to the hospitals, insurers, physicians, drug and device manufacturers and army of advisors and trade groups that control the health system?
Each sector talks about affordability blaming inflation, growing demand, oppressive regulation and each other for higher costs and unwanted attention to the issue. Each play their victim cards in well-orchestrated ad campaigns targeted to state and federal lawmakers whose votes they hope to buy. Each considers aggregate health spending—projected to increase at 5.4%/year through 2031 vs. 4.6% GDP growth—a value relative to the health and wellbeing of the population. And each thinks its strategies to address affordability are adequate and the public’s concern understandable but ill-informed.
As the House reconvenes this week joining the Senate in negotiating a resolution to the potential federal budget default October 1, the question facing national and state lawmakers is simple: is the juice worth the squeeze? Is the US health system deserving of its significance as the fastest-growing component of the total US economy (18.3% of total GDP today projected to be 19.6% in 2031), its largest private sector employer and mainstay for private investors? Does it deserve the legal concessions made to its incumbents vis a vis patent approvals, tax exemptions for hospitals and employers, authorized monopolies and oligopolies that enable its strongest to survive and weaker to disappear? Does it merit its oversized role, given competing priorities emerging in our society—AI and technology, climate changes, income, public health erosion, education system failure, racial inequity, crime and global tension with China, Russia and others.
In the last 2 weeks, influential Republicans leaders (Burgess, Cassidy) announced plans to tackle health costs and the role AI will play in the future of the system. Last Tuesday, CMS announced its latest pilot program to tackle spending: the States Advancing All-Payer Health Equity Approaches and Development Model (AHEAD Model) is a total cost of care budgeting program to roll out in 8 states starting in 2026. The Presidential campaigns are voicing frustration with the system and the spotlight on its business practices intensifying.
So, is affordability to the federal government likely to get more attention? Yes. Is affordability on state radars as legislatures juggle funding for Medicaid, public health and other programs? Yes, but on a program by program, non-system basis. Is affordability front and center in CMS value agenda including the new models like its AHEAD model announced last week? Not really. CMS has focused more on pushing hospitals and physicians to participate than engaging consumers. Is affordability for those most threatened—low and middle income households with high deductible insurance, the uninsured and under-insured, those with an expensive medical condition—front of mind? Every minute of every day.
Per CMS, out-of-pocket spending increased 4.3% in 2022 (down from 10.4% in 2021) and “is expected to accelerate to 5.2%, in part related to faster health care price growth. During 2025–31, average out-of-pocket spending growth is projected to be 4.1% per year.” But these data are misleading. It’s dramatically higher for certain populations and even those with attractive employer-sponsored health benefits worry about unexpected household medical bills. So, affordability is a tricky issue that’s front of mind to 40% of the population today and more tomorrow.
Legislation that limits surprise medical bills, requires drug, hospital and insurer price transparency, expands scope of practice opportunities for mid-level professionals, avails consumers of telehealth services, restricts aggressive patient debt collection policies and others has done little to assuage affordability issues for consumers. Ditto CMS’ value agenda which is more about reducing Medicare spending through shared savings programs with hospitals and physicians than improving affordability for consumers. That’s why outsiders like Walmart, Best Buy and others see opportunity: they think patients (aka members, enrollees, end users) deserve affordability solutions more than lip service.
Affordability to consumers is the most formidable challenge facing the US healthcare industry–more than burnout, operating margins, reimbursement or alternative payment models. Today, it is not taken seriously by insiders. If it was, evidence would be readily available and compelling. But it’s not.
Paul
Quotable
Re: non-profit hospitals singled out for patient debt collection policies:” Some of the most aggressive and widespread debt collection tactics in the United States are those taken on behalf of nonprofit hospitals. Increasingly, these hospitals, granted tax exempt status partly because of the benefits to society they purport to convey, are teaming up with for-profit debt collection companies and employing some of the most notorious tactics, from aggressive phone calls to lawsuits and wage garnishments.
Some 100 million Americans—roughly one in three, and closer to 40% of adults…are saddled with some amount of medical debt, while the number of Americans who live just one unlucky medical bill away from accruing such debt is even larger.
The numbers are even more staggering when it comes to people of color, particularly Black Americans, with 56% owing money for a medical or dental bill…
Our healthcare system is now generating medical debt on an industrial scale…
Despite the magnitude of the US medical debt problem, its scope—and the role played by hospitals, mostly nonprofit institutions, in creating and monetizing that debt—has remained largely hidden. But reporting in recent years has shed new light on the extent to which medical debt has become big business and the role nonprofit hospitals have played as a driving force behind the change…”
Despite the evidence of their role in the creation and collection of US medical debt, nonprofit hospitals are not accustomed to being perceived as being on par with for-profit credit and collection companies. These hospitals, after all, are often viewed as pillars of their host communities—charitable institutions serving the public good.
… the issues driving medical debt are complex and deeply rooted in the American system of mostly private healthcare… But by casting blame elsewhere… hospitals have downplayed or ignored their own role in saddling their own patients with debt and aggressive debt collection.”
Isaish Thompson “Nonprofit Hospitals Pursue Aggressive Medical Debt Collection” September 5, 2023 https://nonprofitquarterly.org/nonprofit-hospitals-pursue-aggressive-medical-debt-collection/
Re: ageism in Congress, Campaign 2024: “No one should feel good about seeing that, any more than we should feel good about seeing [California Democratic Sen.] Dianne Feinstein, any more than we should feel good about a lot of what’s happening or seeing [President] Joe Biden’s decline. What I will say is, right now, the Senate is the most privileged nursing home in the country.”
GOP presidential candidate Nikki Haley on Thursday Haley: The Senate is the ‘most privileged nursing home in the country The Hill August 31, 2023 https://thehill.com/homenews/campaign/4182440-haley-the-senate-is-the-most-privileged-nursing-home-in-the-country/
Re: factors influencing longevity: “The observation of individuals attaining remarkable ages, and their concentration into geographic sub-regions or ‘blue zones’, has generated considerable scientific interest. Proposed drivers of10 remarkable longevity include high vegetable intake, strong social connections, and genetic markers. Here, we reveal new predictors of remarkable longevity and ‘supercentenarian’ status. In the United States supercentenarian status is predicted by the absence of vital registration. In the UK, Italy, Japan, and France remarkable longevity is instead predicted by regional poverty, old-age poverty, material deprivation, low incomes, high crime rates, a remote region of birth, worse health, and fewer 90+ year old people. In addition, supercentenarian birthdates are concentrated on the first of the month and days divisible by five: patterns indicative of widespread fraud and error. As such, relative poverty and missing vital documents constitute unexpected predictors of centenarian and supercentenarian status, and support a primary role of fraud and error in generating remarkable human age records.”
Saul Newman “Supercentenarian and remarkable age records exhibit patterns indicative of clerical errors and pension fraud” Australian National University September 5, 2023 https://doi.org/10.1101/704080doi:bioRxiv preprint
Re: AI-enabled diagnostics: “Precision diagnostics isn’t science fiction. Ten years from now, physicians will require fewer surgical knives, poisonous therapies and toxic medications to treat their patients. Over the next decade, precision diagnostics will change medicine as we know it. The healthcare industry will dedicate far more resources to prevention and far fewer resources to acute care treatments. Health systems must adapt or risk losing market relevance.
Keeping millions of Americans healthy will enable the nation’s providers to create sustainable business models that truly put patients first. As Ben Franklin first observed, “An ounce of prevention is worth a pound of cure.” With reduced reliance on expensive hospital-based technologies and treatments, health systems will achieve better outcomes at lower costs. Value-based care delivery will become a reality, not just a dream.”
David Johnson, 4Sight Health “The end of traditional nonprofit healthcare business models?” HFM September 5, 2023 https://mcusercontent.com/8a4bf5d1617f86a90e5a909f0/files/80487c95-81a5-a578-8278-282aae86ddab/HFMA.Johnson.Diagnostic_Determinism
Re: consumer sentiment: “Although Americans report being worried about their finances, they are behaving as flush as ever—and in economic forecasting, actions speak louder than words. When used to project future spending rather than consumer sentiment, the same battery of economic variables has fully maintained its forecasting power since 2020. In contrast, since covid began, the correlation between sentiment and both current and future spending has vanished.
Our results should assuage concerns that a vibecession today spells a recession tomorrow. The gap between sentiment and economic reality has finally stabilized after growing steadily from 2020-22. Bad vibes may be the new normal.”
The pandemic has broken a closely followed survey of sentiment The Economist September 7, 2023 https://www.economist.com/graphic-detail/2023/09/07/the-pandemic-has-broken-a-closely-followed-survey-of-sentiment
Re: trust: “Leaders betrayed and disdained the people, and partisanship and social media didn’t help. At the heart of America’s political and cultural turmoil is a crisis of trust. In the space of a generation, the people’s confidence in their leaders and their most important institutions to do the right thing has collapsed. The federal government, big business, the media, education, science and medicine, technology, religious institutions, law enforcement and others have seen a precipitous decline.
That will require change—first from the leaders of the institutions themselves. Government and law-enforcement authorities need to be more transparent. Media companies must strive for greater ideological diversity. Schools and colleges must do the same—or be compelled to. Business leaders should return their companies to their core economic objectives and stop acting as vehicles for cultural and social change. Technology companies must protect their users’ privacy and mental health. Public-health officials and scientists need to stop acting like infallible authorities and convey the latest evidence and data with the humility that the scientific method demands.”
Gerald Baker “How American Institutions Went From Trust to Bust” WSJ September 8, 2023 https://www.wsj.com/articles/american-institutions-went-from-trust-to-bust-media-schools-business-promises ttps://www.wsj.com/articles/american-institutions-went-from-trust-to-bust-media-schools-business-promises
Congressional Action
House Budget Committee focus on health costs: “On August 22, 2023, the House Budget Committee established the Health Care Task Force to examine key drivers of our nation’s health care spending and solutions to improve health outcomes while bending down the debt curve.
The Task Force will lead the Committee’s work examining key drivers of health care costs to the federal budget and proposals to improve outcomes while reducing health care spending. The Task Force will prioritize work to modernize and personalize the health care system, support innovation, and increase patient access to quality and affordable care. The Task Force will also examine the Congressional Budget Office (CBO)’s modeling and projection capabilities to ensure policymakers are equipped with the best available data when evaluating potential impacts of health policies to Americans and the federal budget.
The Task Force will convene members of the Committee as well as independent experts and stakeholders from across the health care sector to examine challenges facing our health care system and the root causes of out-of-control spending.”
Budget Committee Task Force August 25, 2023 https://mcusercontent.com
Senate HELP Committee Ranking Member White Paper: “As the U.S. Senate begins to consider legislation to address AI, we must account for the specific context in which AI’s capabilities are applied. A sweeping, one-size-fits-all approach for regulating AI will not work and will stifle, not foster, innovation.3 To use an analogous example, there is no federal department of software, nor should there be: software is regulated based on how it is used, whether in power plants, airplanes, or X-ray machines. Likewise, we must adapt our current frameworks to leverage the benefits and mitigate the risks of how AI is applied to achieve certain goals. And only if our current frameworks are unable to accommodate continually changing AI, should Congress look to create new ones or modernize existing ones”
White Paper U.S. Senate HELP Committee Ranking Member Bill Cassidy, M.D. “EXPLORING CONGRESS’CONGRESS’ FRAMEWORK FORFRAMEWORK FOR THE FUTURE OF AITHE FUTURE OF AI THE OVERSIGHT AND LEGISLATIVE ROLE OF CONGRESS OVER THE INTEGRATION OF ARTIFICIAL INTELLIGENCE IN HEALTH, EDUCATION, AND LABOR” Senate Committee on Health, Education, Labor and Pensions https://www.help.senate.gov/help-committee-gop-final-ai-white-paper
Health System Transformation
Study: HHS matriculation from industry roles: Of people appointed to the Department of Health and Human Services between 2004 and 2020, 15% had been employed in private industry immediately before their appointment. At the end of their tenure, 32% exited to industry. The greatest net exits to industry were from the Centers for Disease Control and Prevention and the Centers for Medicare and Medicaid Services.
- More than half of departing appointees at the CDC, CMS, and the Office of the Deputy Secretary went directly to industry.
- While 8% of CDC appointees came from industry, 54% left for industry jobs.
- Those appointed by Republican presidents were more likely to come from industry (18% vs. 11% for Democratic appointees), but there was no partisan difference in those taking industry gigs.
Kanter, Carpenter “The Revolving Door in Health Care Regulation” Health Affairs September 2023 https://doi.org/10.1377/hlthaff.2023.00418
CMS proposes hospital global budgeting: Last Tuesday, CMS unveiled the States Advancing All-Payer Health Equity Approaches and Development Model (AHEAD Model)—an 11-year total cost-of-care reduction model that will be implemented in to 8 states:
“The AHEAD Model builds on lessons learned from existing state-based models, including the Maryland Total Cost of Care Model, the Vermont All-Payer ACO Model, and the Pennsylvania Rural Health Model. The Model’s flexible framework capitalizes on existing state innovations while testing one suite of interventions across all states. It offers additional states the opportunity to curb growth in health care spending, improve population health, and advance health equity by reducing disparities in health outcomes. AHEAD differs from previous Innovation Center models in three specific ways: establishing a specific goal of increasing statewide primary care investment in proportion to the total cost of care, pairing hospital global budgets with advanced primary care, and offering a flexible framework to implement advanced primary care in alignment with the states existing Medicaid primary care program activities. For more information, see the below graphic comparing the Innovation Center’s primary care models.”
AHEAD Model Frequently Asked Questionshttps://www.cms.gov/priorities/innovation/ahead/faqs
Hospitals
Study: Out of pocket spending for intensive care: “Intensive care units (ICUs) are increasingly used for hospital care, yet out-of-pocket spending for ICU hospitalizations remains poorly understood, particularly among the nearly half of the US population with commercial health insurance. Using 2008–19 MarketScan data, we compared 1,441,810 hospitalizations involving ICU services with 13,011,208 hospitalizations that did not involve ICU services. Average cost sharing, adjusted for patient and admission factors, increased from $1,137 per hospitalization in 2008 to $1,539 in 2019, or a 34% increase. This was driven by increasing deductibles, which rose by 163%. Across twenty clinical conditions whose hospitalizations commonly occurred in both ICU and non-ICU settings, ICU admission was associated with $155 higher cost sharing (13.0% higher) relative to cost sharing in non-ICU hospitalizations. Patients with high-deductible plans faced the highest cost sharing relative to those with other plan types. Patients who received out-of-network hospital care encountered higher cost sharing relative to those admitted to in-network hospitals with in-network clinicians.”
Kannan et al “Growth in Patient Cost Sharing for Hospitalizations with And Without Intensive Care Among Commercially Insured Patients” Health Affairs September 2023 https://doi.org/10.1377/hlthaff.2023.00419
Study: safety net hospital characteristics vary: Researchers analyzed characteristics of hospitals recognized as safety-net hospitals (SNHs) and those receiving Disproportionate Share Hospital (DSH) funds. Findings:
“Our sample of 5955 US hospitals included 31.87% rural hospitals (n = 1898), 20.44% (n = 1217) nonfederal government (defined as public) hospitals, 26.88% for-profit hospitals (n = 1601), and 52.68% nonprofit hospitals (n = 3137). More than 56% are small hospitals (6-99 beds) and 61.43% were in states that expanded Medicaid. The mean (SD) CMI was 1.63 (0.01). The first DSH definition identified 11.42% of hospitals (n = 680) as SNHs compared with 14.79% (n = 881) using the second (Medicaid inpatient discharge) definition, 31.50% (n = 1876) using the third (Medicaid discharge or public hospital) definition, 55.18% (n = 3286) using the fourth (public hospital or teaching hospital) definition, and 20.44% (n = 1217) using the fifth (public hospitals) definition. The first definition captured the fewest (n = 185, 27.21%) rural and the fewest public hospitals (n = 144, 21.18%). The fourth definition had a CMI above the mean (SD) of 1.68 (0.01), captured the greatest numbers of small hospitals (n = 1316), nonprofit hospitals (n = 1643), and hospitals in Medicaid expansion states (n = 2112) …
Given these differences, a universal SNH definition or an index that incorporates a wider range of measures may be needed. For example, a multi-stakeholder collaborative in California developed a Hospital Social Needs Index using publicly available geographic social needs measures combined with hospital specific information…”
McNeil et al “Variance of US Hospital Characteristics by Safety-Net Definition” JAMA Network Open September 6. 2023;6(9):e2332392. doi:10.1001/jamanetworkopen.2023.32392
Public Health
Study: Generational differences in affordability: “In an aging US society, anticipating the challenges that future seniors will face is essential. This study analyzed the health and economic well-being of five cohorts of Americans in their mid-fifties between 1994 and 2018 using the Future Elderly Model, a dynamic microsimulation based on the Health and Retirement Study. We projected mortality, quality-adjusted life years, health expenditures, and income and benefits. We classified individuals by economic status and focused on the lower middle and upper middle of the economic distribution. Outcome disparities between people in these two groups widened substantially between the 1994 and 2018 cohorts. Quality-adjusted life expectancy increased (5%) for the upper-middle economic status group but stagnated for their lower-middle peers. We found that the combined value of the current stock (financial and housing wealth) and the present value of the expected flow of resources (income, health expenditures, and quality-adjusted life-years) after age sixty grew 13% for the upper-middle group between cohorts, whereas people in the lower-middle group in 2018 were left scarcely better off (3%) than their peers two decades earlier. The relatively neglected “forgotten middle” group of near-retirees in the lower-middle group may require stronger supports than are currently available to them.”
Chapel et al “The Forgotten Middle: Worsening Health and Economic Trends Extend to Americans with Modest Resources Nearing Retirement” Health Affairs August 23, 2023 No Access https://doi.org/10.1377/hlthaff.2023.00134
Study: Obesity death rate triples: The rate of obesity-related heart disease deaths in the U.S. tripled between 1999 and 2020, increasing from 2.2 per 100,000 population to 6.6 per 100,000 over this time, Deaths were highest among African Americans (6.7 per 100,000) compared with any racial group, and they were about 1.75 times the rate for American Indian/Alaska Native adults (3.8 per 100,00). Black women had the highest rate of deaths among any group, even as men had more deaths than women in all other racial groups.
CDC Overweight and Obesity www.cdc.gov
Re: loneliness as a design flaw: “For decades, Americans reported spending about 6 ½ hours a week with friends. But from 2014 to 2019, it suddenly dropped by 37%, to four hours a week. (2014, not coincidentally, was the year smartphone ownership in the US passed 50%.) Instead, we spend much more time online, alone. Instagram, Twitch, and podcasts are the new, placeless third places…
The dwindling of places to spend time together is a catastrophe for our communities and for us, exacerbating what US Surgeon General Vivek Murthy calls an epidemic of loneliness…
There are all kinds of ways to combat loneliness, from individual lifestyle changes to national public investments. The surgeon general has called for a multipronged approach, including investing in paid family leave and accessible mass transit; training healthcare providers to address social disconnection among patients; and reforming digital safety rules. The first pillar of his approach, though, is bringing people together through social infrastructure. Fundamentally, society needs places where people aren’t alone.”
Eliza “Loneliness is a design flaw” September 6, 2023 https://www.businessinsider.com/loneliness-epidemic-decline-in-third-places-friends-parks-community-2023-9?utm_medium=newsletter
