Both markets and the government are needed to fix health care

The most common dividing lines in the national discourse on health care reform simply miss the mark. If one looks beyond the partisan posturing, each side has valid points, but also glaring weaknesses. We may need to work together to get health care right.

I was recently invited to a political gathering to discuss health care reform. The room quickly divided along traditional lines.

From left of the political spectrum, there were supporters of single payer who argued that our current multi-payer for-profit system is wasteful and that a single government non-profit payer is necessary to reduce waste and control costs. They argued that government is not the problem.

From the right, there were arguments that government is the problem; it is incompetent and excessive government regulation increases unnecessary health care costs. Deregulation is needed to free the markets to fix the system.

Both sides are right, and both are wrong. A recent appointment sheds light on the issues.

The patient has high blood pressure. He had labs drawn prior to the appointment.

He wondered if I had added a new test to his usual labs. I had added a PSA (prostate cancer test) to his usual metabolic and annual cholesterol panels. He explained that he had to pay for any testing, and had noticed the extra expense. He was paying cash for his appointment, as well.

I asked if he had health insurance. He does. To avoid government penalties, he had purchased a policy for him and his wife on the Obamacare marketplace. He chose the most affordable plan, which was offered by Geisinger, a growing Pennsylvania company that is both a provider of care (hospitals and medical practices) and an insurer. Geisinger is aggressively gobbling up Pennsylvania market share.

The patient’s share of the premium is $70 per month, which is affordable. The government subsidizes the rest, paying Geisinger over $2,000 per month! Prescriptions are not covered. The policy has a $2,000 deductible.

The plan only covers care in Pennsylvania. The patient lives a few miles from the Pennsylvania-Maryland border. My office is about a mile into Maryland. The closest Pennsylvania lab is at a small hospital about twenty miles away.

At that hospital’s lab, the metabolic and lipid panels, two very basic tests, cost nearly $300 (four times the cost of a typical Medicare appointment with a family doctor)!

The patient instead crossed the state line to a lab in Maryland, where he paid about $150 for the same tests. He and his wife also travel to Maryland to see me. His wife takes medications that cost them about $400 per month. They cannot afford all of this.

The patient’s blood pressure was a little elevated. It would be in his best interest to have it lowered. It is also in my best interest because the government’s new “value-based payment” program, MACRA, penalizes physicians whose patients’ blood pressure data is not lower than the national average.

But because of the cost barriers the patient faces, we made a perverse decision. We decided not to change his blood pressure medication, or order any further tests, until he gets Medicare two years from now, and can afford such things.

In summary, Geisinger receives exorbitant payments. The patient gets nothing. Physicians face the added burdens of MACRA’s vast data collection and penalties for taking care of challenging patients.
As this case shows, in the current system, both government and private industry are problematic.

Our national experience is that a system of multiple for-profit insurance companies doesn’t work. When Obamacare requires that private insurers provide comprehensive coverage for all comers, they charge excessive premiums often coupled with prohibitive deductibles. Even with insurance, patients don’t get the care they need. And despite government subsidies, insurance companies are pulling out of the market. But when Republicans remove requirements for comprehensive coverage (their 2017 reform proposals), insurance may be more affordable for some, but no longer covers necessary care.

In addition, the administrative burdens and extra costs associated with having multiple private insurers, each with its own idiosyncrasies, are intolerable.

There are other factors adding to excessive health care costs. Huge health systems and other corporate health care conglomerates are limiting competition and driving up costs.

But government is also extraordinarily problematic. Heavy-handed bureaucracy, like the MACRA program, previously discussed, creates incredible waste, increased costs, and perverse incentives. It also leads to physician burnout, and increasingly, is driving them out of practice.

Here is what is needed.

Patients need affordable, comprehensive care with a cap on out-of-pocket costs. They need the freedom to choose their physicians and where they receive care.

A single, not-for-profit government insurance system may provide the best framework to deliver those things. A large single payer would balance risk in ways that smaller insurers cannot, and limits administrative waste we see with multiple payers. And current single payer legislative proposals guarantee care for all patients, where one set fee covers everything, eliminating typical insurance premiums, co-pays, and deductibles that limit access.

But far more details are needed to ensure successful reform. The devil is in those details. Beyond insurance markets, other health care market(s) (hospitals, health systems, radiology, labs, etc.) would benefit from a more competitive environment. We may need anti-trust enforcement to level the present overly-consolidated playing field. Price transparency and more freedom of choice would help. But in a more functional system, competition would also revolve around quality and accessibility.

Physicians badly need deregulation and administrative simplification: removing complicated coding and documentation requirements; simplifying payment and billing systems; eliminating prior authorizations for most medical care; streamlining wasteful and counter-productive HIPAA guidelines; freedom from excessive certification and licensing requirements; and elimination of wrong-headed value-based payment schemes like MACRA.

All of this is needed to give Americans the care they need, and to enable physicians to provide that care. But it is not government or more competitive markets, one or the other, that will bring this to pass. It is more functional government balancing more competitive markets, together, that will fix American health care.

Matthew Hahn is a family physician who blogs at his self-titled site, Matthew Hahn, MD.  He is the author of Distracted: How Regulations Are Destroying the Practice of Medicine and Preventing True Health-Care Reform.

Image credit: Shutterstock.com

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