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A physician’s health policy advice to Donald Trump

Dr. Saurabh Jha
Policy
April 11, 2016
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It is possible that in a few months from now, only Nate Silver’s prediction models will stand between Donald Trump and the White House. I will leave it to future anthropologists to write about the significance of that moment. For now, the question, “What will President Trump be doing when he is not building a wall?” has assumed salience.

This is relatively easy to answer when it comes to health policy. Just ask what people want. Seniors don’t want Medicare rescinded. Even the free market fundamentalist group, the Tea Party, wants Medicare benefits as they stand. At one of their demonstrations against Obamacare a protester warned, without leaving a trace of irony, “Government, hands off my Medicare.”

Rest assured, Trump will protect Medicare. Even raising the eligibility age for Medicare may be off the cards as far as he is concerned. He has promised that no one will be left dying on the streets. That people no longer die on the streets, but in hospitals, because emergency rooms must treat patients regardless of their ability to pay, is irrelevant. The point is that Mr. Trump knows that the public values their health care. Trumpcare will show that Trump cares.

But it gets complicated. Yes, the public want top notch health care for themselves. No, the public don’t want to die on the streets. Yes, the public want a government which looks after them. The problem is that the public doesn’t really want to pay more for these services. Not much more at least.

How will Trump manage people’s contradictory desires? Trump recently released his health care manifesto. Here are its seven pillars:

  • repeal Obamacare
  • allow purchase of insurance across state lines
  • allow people to deduct insurance from taxes
  • expand health savings accounts (HSAs)
  • require price transparency for medical goods and services
  • block-grant for Medicaid to the States
  • more free market for pharma

Trump’s first test will be repealing Obamacare. It is clear Mr. Trump doesn’t like Obamacare. He says about Obamacare that “people have had to suffer under the incredible economic burden.” What will he do about people with pre-existing conditions who insurers must cover by law thanks to Obamacare? Will we return to the days when insurers turn down patients because they have co-morbidities, or yank their premiums so high that they cannot afford insurance?

Trump wants to take care of everyone. To fund a system which takes care of everyone, without the insurance market imploding, he must a) raise taxes, and b) make people buy insurance. Raising taxes is not part of #MakeAmericaGreatAgain. And he says “no person should be required to buy insurance unless he or she wants to.” So Trump is on a sticky wicket with his first pillar. Alternatively, he could just erase “Obamacare” and write “Trumpcare.”

Trump wants a more market-driven system to lower costs and raise quality. He will let people buy insurance across state lines, so long as it complies with the laws of the state in which the person lives, which sort of defeats the point of buying cheaper insurance in another state. It’s like being able to buy stuff tax-free from Delaware only if I pay the taxes I would have had to pay in Pennsylvania.

It is important not to dismiss an idea just because Donald Trump likes it. For example, expanding tax benefits to those outside employer-sponsored insurance is not as egregious as some say. It levels the playing field, and weakens the grip of employer-sponsored insurance, arguably the most potent force preserving status quo. And reigning in big pharma is a small idea whose time came a long time ago, and never left; I am amazed that left-leaning health economists or Clintophile health policy wonks are not pushing for more boots on pharma.

His idea of expanding health savings accounts (HSAs) is not new and has been proposed by economists such as John Goodman. HSAs encourage people to be thrifty with health care expenditure. This can lead people to do two things: skip necessary care and skip unnecessary care. Will there be net saving? It depends on the necessity of the care skipped, and the cost of the unnecessary care skipped. If you wait too long to seek medical attention you might not save costs for yourself or the system.

Trump wants people to be able to pass HSAs to their children. This is an interesting twist. Theoretically, this would motivate people to stay healthy so that more funds are available for their children. You can imagine a father saying to his son before going for his daily jog, “Son I’m running for your life, not mine.” But the flip side is that people may skip necessary treatment in their twilight, for fear of depriving their children of a financially secure future. Neither of these scenarios may occur, but you get the gist. For every positive in health policy, there’s an equal and opposite negative.

HSAs won’t last long if they’re decimated by high hospital charges. Hospitals are known for their markups, which are so feral that they make price gouging water in the Sahara desert a noble endeavor in comparison. Obamacare has done precious little to control these charges. Trump says he will demand price transparency from providers. The theory is that when people know the prices of medical goods, they will shop for the best care, and competition for patients will drive the prices down and quality up.

Price transparency is one of those policy suggestions that sounds so good that you have to ask why it hasn’t worked yet. It doesn’t comes under the genre of, “Hey, I have a great idea, let’s cure global poverty,” but it’s not too far from it.

There are caveats with price transparency. Optimism must be tempered. For instance, if you’re having a heart attack there isn’t much time to google prices.  And there is so much in the care bundle to consider, such as the price of the stent to open the coronary artery, blood thinners to keep the stent opened, saline, oxygen and many more details such as the price, skill, industry relationship and conflict of interests of cardiologists, that it would be difficult to meaningfully shop for the best deal for “heart attack care” while your heart muscle is slowly melting, and fluid is filling your lungs, making it difficult for you to breathe.

Suffice it to say that when it matters the most, when the charges are the highest, which is when you’re acutely and seriously unwell, price transparency is rather useless. When you’re dying, you will call the ambulance, not place a bid on Priceline. If you want a clever way of rephrasing this: health care is price inelastic when it matters most.

It will be difficult for the market to control the prices, even if Trump injects a dose of genuine capitalism in health care. That is unless the market rations care based on ability to pay, which happens in countries like India, which has a robust free market health care. Government health care is abysmal in India. The rich get the best care because they can afford it, and the poor get the worst care because they can’t afford it. This is rationing by price. People die sooner because they don’t have enough dosh.

I doubt Americans will put up with explicit rationing of health care that an amoral free market may create. Imagine the headline on pro-market Fox News: “Patient expires because of expired credit card: 20-year-old college student from Minnesota dies because of clot in lungs. Doctors refused to treat patient because her MasterCard had expired.” Then all the pro-market (and anti-market) people will run to the government for help. The government will enact regulations, making it compulsory for hospitals to treat patients regardless of their ability to pay, thus killing the market. Sorry, I forgot, that was EMTALA.

But the point is that genuine free market health care won’t last long in modern society which is now used to a certain level of security. Let’s accept that as a basic fact whether you think health care is a right or not.

Here’s my advice to Mr. Trump. Have an adult conversation with your supporters. Tell them some home truths. Tell them that it costs to make people live longer. Let no health economist, or Sarah Palin, tell you otherwise. This is why smokers are a bargain for a health care system. As medicine gets better at diagnosing and treating diseases, health care gets more, not less, expensive, because there are new diseases to treat. Equality costs. Fairness costs. Safety costs. Prevention costs. Being prepared for potential epidemics such as Ebola costs. New drugs cost. New discoveries cost. Reducing health care costs also cost; such is the cruel irony of health care.

Where are the savings? Maybe in the Kingdom of God. In the Kingdom of George, Barack and Donald, it’s all costs, costs, costs, costs.

The market can reduce costs by rationing care by ability to pay. The government can reduce costs by refusing to pay for certain medical services, or for price fixing hospital charges, or by negotiating with pharma. Beware of using the government approach, Mr. Trump. Some of your supporters will call you a death panelist. Your more punctilious supporters, with a superficial understanding of Adam Smith, will say you’re abandoning the principles of the free market.

So ask your supporters not just what they want, but how much they are willing to pay for what they want. Then Mr. Trump, design Trumpcare.

Saurabh Jha is a radiologist and can be reached on Twitter @RogueRad.  This article originally appeared in the Health Care Blog and 3 Quarks Daily.

Image credit: Joseph Sohm / Shutterstock.com

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