Last week, President Trump told reporters that efforts to repeal and replace the Affordable Care Act (ACA) were hampered by the complexity of the industry itself. He shares that view with the majority of Americans who believe it beyond their ability to navigate our health system effectively without help.
For Republicans tasked with replacing the ACA, the post-repeal realities are these: healthcare is a third of total federal spending ($1.1 trillion) and by 2025, it will be 40%. Spending for healthcare is growing faster than our economy overall as a result of increased utilization, aging baby boomers and medical inflation. Employers, who cover half our population, will shift cost increases to the employees they cover via high deductible plans or curtail health insurance benefits altogether. The federal government will limit its shortfalls in Medicare funding by shrinking reimbursements to providers and transfer Medicaid obligations to states while adjusting its payment model (FMAP) downward. Private insurers will leverage their balance sheets and infrastructure to be intermediaries for managed Medicare and Medicaid and in risk sharing relationships with hospitals and physicians. Device manufacturers will focus their efforts on smart devices and global opportunities. Drug manufacturers, who have been granted market access for 203 new drugs since the ACA’s passage, will count on the FDA approval process to protect their patents while hoping lawmakers don’t press for importation, price controls and direct purchasing by Medicare. And for consumers, out of pocket costs for healthcare will exceed housing and force one in four to go without insurance coverage due to cost. That’s what’s ahead unless the GOP replacement offers a fresh approach to the financing and delivery of health services in the U.S. system. It’s complicated!
In 1994, I conducted a study (U.S. Agency for Healthcare Research and Quality “Seven Core Beliefs of Healthcare Consumers”) about how consumers access and use information about our health system—how they choose and compare hospitals, doctors and plans, how they assess the efficacy and effectiveness of drugs, and so on. It was in the early days of e-health and only a handful of healthcare apps were in use (compared to 165,000 today). My major conclusion was this: consumers think healthcare is too complicated for them to understand. Thus, they depend on their caregivers to educate them and are predisposed to be dependent on what they’re told. It hasn’t changed. In this digital health age, only one in eight consider themselves well-informed and capable of navigating the system. It’s too complicated for most Americans and perhaps even more for the GOP lawmakers seeking to transform it in an environment of intense media scrutiny and partisan rancor.
For the majority of Americans, it’s simple: they believe most hospitals and doctors perform reasonably well and having insurance is a hedge against personal financial ruin. They believe most diagnoses are accurate, the drugs we’re prescribed work and the procedures we undergo necessary. They associate ‘quality of care’ with how their providers treat them and convenient access to of the services they use more so than actual outcomes and errors. And they think Repeal and Replace is political football, preferring repairs to the ACA that lower insurance premiums and assure coverage for pre-existing conditions. That’s it.
The GOP lawmakers tasked with the ACA’s replacement have offered six plans upon which they’re placing their political bet: Healthcare Choice Act (Cruz 5/5/15), Empowering Patients First (Price 5/13/15), Patient Freedom Act of 2017 (Cassidy, Collins 1/23/17), Obamacare Replacement Act (Paul 1/24/17), The Patient Choice, Affordability, Responsibility & Accountability Act (Burr Hatch & Upton 2/5/17), and A Better Way (Ryan (2/24/17). The elements common in most are these:
• Immediate elimination of the individual and employer mandates to purchase coverage.
• Cuts in how Medicare is funded and federal Medicare dollars are spent.
• Cuts in federal cost-sharing for Medicaid along and delegation to states for its oversight via block grants, capitated payments and waivers.
• Concessions to private insurers around essential health benefits, funding for high risk pools and individual market reforms.
• Provision for age-based tax credits to assist consumers to purchase insurance (replacing premium subsidies).
• Continuous coverage requirements for individuals with pre-existing conditions to limit insurer risks.
• Provision whereby consumers can shop for insurance across state lines.
• Medical liability reform for physicians.
• Replacement of traditional coverage with high deductible health plans and health savings accounts as the basis for insurance coverage.
• And a pledge to replace federal oversight of healthcare with individual accountability.
The sausage-making will start in the House of Representatives where three committees– Energy and Commerce, Budget and Ways and Means—will piece together bills and executive orders as their plan. Then the spotlight will shift to the Senate where the politics will be sticky. It’s a process only a handful of pundits, policy wonks and journalists understand. It’s complicated.
Can healthcare be simpler? Yes. The ACA offered star ratings as a way to simplify the performance of hospitals, nursing homes and Medicare Advantage plans. It included administrative simplification so health insurer terminology, policies, procedures, and forms were consistent. It funded a mechanism whereby the effectiveness of drug and therapies could be compared side by side (comparative effectiveness research) and deemed the National Quality Forum its agency to standardize and validate quality measures. Simplifying healthcare was an aim of the ACA, but it’s harder to achieve legislatively than anyone has imagined. Complexity is inherent to healthcare:
• Diagnosing a medical problem is complicated: knowing individual signs, symptoms, risk factors and co-morbidities including unique genetic signatures and lifestyle is key to an accurate diagnosis and appropriate treatment plan.
• Insuring a population is complicated: predicting what might happen years ahead, or how an asymptomatic problem might present, or when accidents occur is an educated bet.
• Treating patients in the emergency room is complicated: 80% have problems that are non-urgent but they’re no less insistent on attention, the medical history for one in five is unknown and one in eight will have no means of payment.
• Finding a drug that remedies a hard to treat problem is complicated: the science of large molecule-based therapies takes years to replicate and almost as long to move from bench to bedside. There are 7000 in the R&D pipeline today including 450 targeting rare diseases: many will never see the light of day.
• Getting objective information about any healthcare topic is complicated: there are 20,000 websites from which to choose and the emergence of social media has produced an avalanche of misinformation.
• And how the industry’s 5000 hospitals, 890,000 physicians, 4000 device manufacturers, 1200 insurers, post-acute providers, drug makers, regulators, lenders, investors, alternative health, legal, accounting and advisory services organizations relate to each other is complicated.
Leonardo da Vinci observed that “Simplicity is the ultimate sophistication.”Albert Einstein urged that “everything should be made as simple as possible”. Lockheed engineer Kelly Johnson coined the KISS acronym around the imperative “Keep it simple stupid” and Apple icon Steve Jobs said “Simple can be harder than complex: You have to work hard to get your thinking clean to make it simple. But it’s worth it in the end because once you get there, you can move mountains.”
Making healthcare simpler is a mountain that must be climbed. Maybe the process of Repeal and Replace should start with meaningful efforts to simplify how healthcare works. Simplifying Medicare so Parts A, B, C and D are integrated and comprehensible could be a start. Paring down the voluminous publicly reported performance measures about hospitals, physicians and post-acute providers into a few metrics that matter would help. Defining access, affordability, quality and costs consistently across sectors and regulatory authorities would elevate understanding. And offering that Repeal and Replace is an ACA repair job in reality or a top-to-bottom transformation of the health system would be welcomed, because it’s complicated!
The complexity of our system is fixable, but only if industry leaders, regulators, journalists and consumers make it a priority. Politics aside, it’s the most important challenge facing our industry and its regulators.
P.S. Last week, the Kaiser Family Foundation released survey results showing health care has become less affordable even among those with health insurance. Since 2015, larger shares of people with health insurance say they have a difficult time affording their health care costs: from 27% to 37% for premiums, 34% to 43% for deductibles, and from 24% to 31% for copays and prescription drugs. The issue of affordability cuts across households with and without insurance. While most Americans are confused by our system, they know it’s expensive and unpredictable. It’s that simple.