The new Chief Executive Officer of the United States of America Inc. will take office January 20th and likely make good on his promise to repeal the Patient Protection and Affordable Care Act. It only requires a majority in both houses of Congress to pass and that’s assured based on the election results last week.
Immediately, the focus will shift to its replacement which is certain to be more complicated. Speculation about how his healthcare team will craft its own version of health reform 2.0 is at fever pitch. Questions are swirling about pieces of the law that might be carried over and those that might get the ax….
- Will the Trump C suite align its replacement policy with Speaker Ryan’s “Better Way” though the positions of the two seem somewhat at odds, especially around reforms to Medicare including its transition to a premium support plan that encourages seniors to purchase coverage from private insurers with subsidies up to $8000 per senior?
- What’s to become of the ACA’s insurance mandates for employers and individuals? Do they go away?
- Will excise taxes paid by insurers, medical device manufacturers and increased personal income taxes paid by U.S. federal taxpayers be refunded since they were included in the ACA as a means of funding the trillion-dollar program?
- How will President Trump deliver on promises to make healthcare affordable while keeping the ACA’s guaranteed issue restrictions on insurers?
- How will Medicaid expansion be a funded in the 31 states that chose to accept the federal deal in the ACA, and what’s it mean for the 19 states that didn’t?
- What becomes of alternative payment programs like accountable care organizations, bundled payments, value-based purchasing and others that have consumed a considerable time and attention by provider organizations?
- And as the fourth marketplace enrollment period nears ends in January, what’s to become of the tax subsidies for the 12 million expected to enroll?
And beyond the ACA’s repeal, speculation about appointments to the Supreme Court and key healthcare agencies, strategies to allow importation of prescription drugs, how the Justice Department will weigh in on industry consolidation, private inurement and many other issues is running high as the team Trump’s health policy agenda takes shape.
President Trump is the second USA-CEO in modern times who brought no background in elective office joining Ike Eisenhower in that rarified distinction. Throughout the campaign, Candidate Trump reminded voters he is a dealmaker and successful business executive. It’s clear it helped get him elected and certain to be foundational to how his administration governs.
Management gurus cite a CEO’s grasp of their market and vision for their organization’s future as marks of strong leadership. The most successful deftly navigate trends and disruptive changes resulting from innovative technologies, competition, regulatory constraints and customer demands. Often, they conclude transformation is necessary, and chart a new course that’s a departure from the status quo and unsettling to insiders. That’s what CEOs do. They understand their market, decide on a vision and strategy for their organization and sell it to their board and shareholders.
That’s where we are with the U.S. healthcare system. Views about its future are wildly variable: politicians and think tanks break rank quickly because there is no consensus about a vision and strategy for its future. The most basic questions about our health system remain unanswered, sparking political discord and public division. Because answers to fundamental questions about its role are unanswered, our healthcare system is easily politicized and factionalized by special interests that seek to protect themselves. Its shareholders—taxpayers—are confused about it how it operates, what its role should be and where major investments should be made.
So, before answering “how” the ACA will be replaced, CEO Trump should seize the moment to ask the “should” questions about what our health system should be. Otherwise, the effort to replace the Affordable Care Act will quickly devolve into political mudwrestling and divisiveness. The seven basic questions that should be answered are these:
1-Should healthcare in the United States be approached as a fundamental right or a privilege? In the constitution, life, liberty and the pursuit of happiness are guaranteed. Is access to a healthcare system a fundamental right for all in this country or is it reserved for those who can afford its services? In our system of government, we’ve concluded that education is a fundamental right for all. Is healthcare akin or different? And what’s included in that assurance: basic services for all, or exactly what?
2-How should quality, affordability, access and value be defined? Each sector and special interest in healthcare defines these differently and discredits contrarian views. Measurement is limited because none is consistently defined. In the business world, the Public Company Accounting Oversight Board (PCAOB) sets standards for financial reporting: in the U.S. health system, consistent definitions for terms like quality of care, access, affordability, access and value are needed as a baseline for measuring and monitoring its performance consistently.
3-Should the healthcare system be about total health? The U.S. health system is a complex collection of preventive, chronic, acute and post-acute services that are loosely integrated and hardly navigable. And we operate these alongside a collection of public and veteran’s health programs for those of lesser means and our retired military. Most of the resources in the system are spent on treating illness and injury; substantially less in preventing disease and maintaining health. Should the health system be focused on total health? Should public health, veterans’ health and community-based health services be integrated? Is total population health management our aim, or treatment of episodic disease and injury?
4-What role should the federal government play? The federal government is the direct purchaser for 122 million shareholders (52 million in Medicare, 62 million in Medicaid and Children’s Health Insurance Program for which it provides 57% of its funding, 15 million in Veterans and military health, and 3 million federal employees). It also serves as provider operating a system of 155 hospitals and outpatient services for veterans, clinics and public health programs for underserved populations and more. And it’s the rule-maker: it creates the rules that define how the system operates and what constitutes regulatory compliance. But it’s complicated and constantly changing. The Food and Drug Administration regulates drug and device manufacturers deferring oversight of retail pharmacies to states. Health insurance is largely state-regulated, though the Affordable Care Act added federal oversight of benefits design (essential health benefits) and the formula for premium pricing. Should the federal government continue to play its three-in-one role or focus on its role as purchaser and regulator, leaving delivery to the private sector or states? Should the federal government expand its role as provider? Is dual public-private system our aim, or something else? What’s the federal government’s role?
5-What should the role of hospitals be? Hospitals are ground zero for every issue that faces the system. They are the only sector required by law to accept patients without regard to their ability to pay. They are the hub of community health programs and the employer of choice for the majority of physicians whose security is threatened. They are the gatekeeper to innovative technologies and specialty drugs that work miracles, absorbing mounting costs while margins thin. Should hospitals be accountable for person-centered, affordable, evidence-based care in our communities? The majority of Americans assume it’s the case, but the economics of the system threaten the solvency and sustainability for most hospitals.
6-How should health insurance work? Ours is a pluralistic payer system wherein 155 million are covered through an employer-sponsored plan, 135 million are covered through a state or federal insurance program, and 30 million are without. Is the role of insurance to protect individuals against catastrophic loss or provide a financing vehicle for every encounter regardless of severity? Is private insurance purchased through employers the right formula for maintaining a workforce that’s stable and productive? Can individuals make decisions about the level of financial risk they can bare objectively or are protections required? If cost management is shifted to providers as is current health policy via shared risk arrangements with employers, Medicare, Medicaid and insurers, what is the role for private insurers?
7-How should individual accountability for lifestyle choices factor into the health system’s performance? The data is clear: living healthier lifestyles is conducive to improved health and lower costs, but it’s challenging. Many individuals live in unsafe and unhealthy environments due to income disparity. Genetics predict susceptibility for many health risks that contribute to lifelong struggles with chronic diseases like obesity, depression, and others. The ACA called out smoking as a destructive habit and funded expansion of primary care services to tackle unhealthy lifestyle as the pandemic it is. What should the government do to change individual behavior? And what’s the right balance of sticks and carrots between promoting healthiness and risk avoidance.
Each stakeholder in our system answers these seven differently. Academics have studied them and political pundits opine fervently: there’s no shortage of opinion but lack of consensus among shareholders.
A CEO’s strength is the ability to filter noise, navigate conflicting opinions, understand their market and set direction for their organization’s future. Donald J. Trump is our new CEO. USA Healthcare Inc. is a subsidiary that employs 17 million, consumes 30% of the entire federal operating budget and touches every shareholder (you and me).
Now is a good time to step back and re-think what our health system is and should be. Replacing Obamacare without a vision and strategy that’s premised on a long-term view will simply expose traditional partisan fault lines and sectarian bickering.
Mr. Trump was elected to “clean the swamp” in order to “Make America Great Again”. He confidently offered that he is beholden to no one, including the insider-interests in healthcare that are influential in setting its direction. Re-hashing the Affordable Care Act through the same politically divisive mechanisms with the same people at the table will not make us stronger as a nation nor address the future of our health system effectively.
Healthcare is the USA Inc.’s biggest subsidiary. Its future is uncertain. A fresh vision and strategy are needed led by our new CEO. Perhaps Team Trump will take the opportunity to build consensus among shareholders by leading a national discussion about answers to these seven questions.
P.S. This Friday, I have the honor of speaking at the 32nd Annual Rosslyn Carter Symposium on Mental Health Policy in Atlanta. Mental health problems impact every family, school and workplace directly and profoundly. But federal policies that address these have been ineffective in managing its growing demand and clinical complexity. More to say in subsequent Keckley Reports. Stay tuned.
Excellent article. There are few easy answers to these questions. The healthcare industry experiences some unique and potentially unfortunate economics and incentives. These aren’t anyone’s fault, but:
–Hospitals benefit from sick people filling their beds and diagnostic equipment, not healthy people out and about in the community.
–Pharmaceutical companies tend to benefit from chronic disease.
–Parents of sick children (or children of sick parents) do not price shop–they want "whatever it takes"–healthcare is one of the only industries in which technology actually increases prices.
–Billions of dollars are spent persuading Americans to consume unhealthy things, sometimes based on faulty federal dietary recommendations.
There’s so much to consider, deconstruct, and ultimately fix. Trump probably represents a unique chance for free market leadership to address the problem, but it remains a daunting task nonetheless. One would expect powerful political and corporate forces to go all out to protect their interests in this $4 trillion industry.
Thanks for the article. Very helpful and insightful assessment.