Tag Archives: Craig Hasday

An Open Letter to the Trump Administration

As your transition team morphs into your operations group, I thought I would take a moment to give my thoughts on ACA as a seasoned consultant to this industry. While I hear the blustering about repeal and replace, it is my strong belief that any successful bi-partisan remake of healthcare will need to build from the success of President Obama’s signature legislation.

In building consensus, President-elect Trump may wish to throw a bone and acknowledge that reducing the ranks of the uninsured was a win, and it was not the only one. Here is my scorecard for the ACA:

High marks:

Facilitating the shift from fee-for-service to fee-for-value healthcare by supporting the Accountable Care model is important. Comparative effectiveness research, which creates national models for best practices in care delivery, has moved the cost of care, albeit too slowly, in the right direction. For example, a recent study in the Annals of Internal Medicine establishes that reimbursement penalties for hospital readmissions have reduced these by 77 out of 10,000 admissions.

Eliminating pre-existing conditions, benefit maximums and coverage rescissions is a critical change effected by ACA that must be retained. If coverage is purchased under the rules as developed, it is unconscionable that an insurance policy can simply no longer respond.

See also: What Trump Means for Health System  

Average grades:

Coverage for all children to age 26 added coverage for millions of our healthiest population. Uniform coverage for children who have yet to be established as adults is important. But to what extent? Should employers also have to cover the non-dependent adult children of their workers? The extended coverage is a generally good idea, but a small tweak would move it to the high marks section: require that the child be a tax-qualified dependent no older than 26.

We should have a coverage mandate; however, to make this effective it should have teeth. In Australia, the penalty for not having coverage is significant enough that younger adults wouldn’t consider the risk/reward tradeoff of “rolling the dice” to be a viable option. We should do the same and also provide age-banded rates that are not as punitive to the younger insured. Everyone has to be in the system because opting out has a backstop, too. Even prior to ACA, Americans had a coverage stopgap. If one was sick enough and needed care, pre-ACA, it would have been dispensed in the hospital.

Medicaid expansion is an excellent way to bring basic benefits to Americans who simply can’t afford healthcare. However, any new healthcare initiative has to find a way to mandate national standards for providing care for the indigent. Providing coverage for those with income at 18% of the federal poverty level or less is absurd, yet is a standard in two states for eligibility. Someone at that level can’t even afford food – there is no way they would pay into a healthcare system. Care should be basic and should have individual accountability built in – even the poor need to help control healthcare expenditures.

Employers should have to provide coverage meeting minimum standards, but the convoluted state-mandated benefits should be simplified and national standards should be established. This would also facilitate selling coverage across state lines and increase competition.

Failing grades:

Community rating makes sense in the small group marketplace. Standardized plans and rates simplify this market. But eligibility leakage such as association plans and PEOs (professional employer organizations), which are allowed to underwrite risk, “cherry-pick” the risk pool and ultimately create an insurance death-spiral.

The Cadillac Tax is a stupid way to finance healthcare change. Instead, the plans should have an actuarial value threshold that sets deductibility limits. If a business wishes to provide a higher level of benefits it should be able to, but the deduction would be disallowed. There is no reason an employer should be taxed for older demographics or a sicker work force that might increase premiums above the “Cadillac” premium limit.

The administrative complexity of ACA has to go. The exchanges are a bureaucratic nightmare. The reporting structure consumes needless resources for very little benefit. Policing the new system would be simple. The states would determine Medicaid eligibility, and the tax reporting system would capture those individuals without coverage.

See also: What Trump Means for Healthcare Reform

Other suggestions:

Establish price controls on brand name drugs that take into account financial incentives for inventiveness. A single drug available to treat a medical condition is like a monopoly, and it is against public policy for a monopoly to set rates (for example water or electric rates), so why should a drug company set an unconscionable price for a drug that cures hepatitis C or cancer? If one has that condition, he will pay anything to cure it. But it is the employer or the insurance carrier that bears the bigger financial burden. Perhaps there should be a separate award for that inventiveness not paid by the direct users — instead, a drug and medical innovation tax on insurance policies.

Drug price transparency should be immediately introduced. Drug rebates that obfuscate the true cost of medicine and either hide pharma profits or shift money back to the employer or plan administrator are ridiculous. Get rid of them.

It is an incredible time to be in healthcare!

Shifting ‘Healthcare’ to ‘Well Care’

New York City has been a leader in the future of healthcare. Listing calories on menus, banning soda sales in sizes larger than 16 ounces and now requiring a designation on menus for any items with more than 2,300 mg of sodium (or a teaspoon of salt) are, if you haven’t figured it out, great ideas. While they seem a bit big brother-ish, I applaud the intent.

Today’s healthcare is a losing battle. Incentives are completely misaligned. Providers get paid for dispensing care, and we keep introducing better — and more expensive — solutions that cure health conditions that inevitably develop as we age.

Today’s usage of the word “healthcare” is “care for the sick.” The only way we are going to solve our cost crisis is to change healthcare to mean “well care.”

By aligning incentives to encourage well care, the system will be a lot less frictional. So, how would this work? The HMOs of the 1980s and 1990s had it right. Provider reimbursement rates would be based in part on compliance by their patients. And providers would be free to decline to treat patients who, because of lifestyle choices, would affect their compensation.

Public awareness and support of this new well care normal can be tied to affordability, and I would envision a new class of coverage developing for those who opt in to a well care lifestyle. Accountability would be directly tied to affordability and also to provider choice. Seemingly insurmountable issues call for creative solutions. We need to change course now.

How End of Life Is the Real Healthcare Crisis

To contend with ever-escalating healthcare costs, Americans will need to come to grips with the cost of end-of-life care. Right now, it’s my reality. I am seeing, first hand, rampant and seemingly uncontrollable costs of sustaining life in a system that lacks any semblance of common sense.

My mother is 90 years old and, other than some spending on five healthy sons, has expended very limited healthcare dollars in her lifetime. That is, until now. Suffering mild dementia, she is a resident in a very pleasant assisted-living facility on Long Island. The facility takes good care of her creature comforts, but, medically, she appears to be a case study in why we are all facing a cost crisis. Two of my brothers are medical professionals, and we have a concerned, knowledgeable, family that oversees her care, but we are not with her all the time to manage treatment, and that’s where things break down.

At the first sign of an issue, the facility phones an ambulance and ships her off to the nearest emergency room — three times in the past few months. The first was because of the flu. She weathered the illness but, because of scarcity of resources, was bedridden for a week. As a result, she needed more than a month of inpatient rehabilitation to restore her ambulatory skills. I am guessing that this episode cost in excess of $50,000. The doctor believes that the next two episodes – which occurred in the past 10 days – relate to an allergic reaction, and he has been trying to rule out possible culprits. He took her off Prilosec, and soon thereafter she complained of chest pains, which turned out to be indigestion. So the hospital sent her home. She burned through about $3,000 in costs to figure that one out. Then, after some tinkering with her medication, her blood pressure spiked to 200/113. This has resulted in another in-patient stay. We are planning to keep her moving to avoid another costly rehabilitation; so, for this one, Medicare and her supplemental insurance will probably spend less than $20,000.

The medical expenses she has experienced could have easily been reduced. The problem is that our Medicare system pays for services rendered and not for care management. Care management would have resulted in a much better outcome for my mother, for our family and for U.S. taxpayers.

I am convinced that the Affordable Care Act is not the answer to solve the healthcare crisis, which can only be fixed if we change the way we deliver care at the end of life. And those who lobby for Medicare for all can consider my mother’s experiences. That’s certainly not the answer.