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ACA Agonistes
One Year Out, No Consensus on Fixing the ACA

Fifteen wonks walk into a room to fix Obamacare. That’s not a set-up to a joke, but an experiment Politico ran as the first installment of its new venture “The Agenda,” a series about important policy questions driving legislation and public debate. It convened former bureaucrats, current politicians, and health care experts to assess how the law is doing and what policymakers should do next. 

As Politico points out, the 15 participants agreed “that health-care costs in the United States are too high.” They disagree widely, however, about the degree to which the ACA has helped with that problem, and strategies for addressing it going forward. Liberals generally support malpractice reform, and conservatives call for loosening the restrictions on catastrophic plans. Some wanted to tweak or replace the norm that employers provide insurance, which seems like a necessary and important step.

But none were as straightforward as we would like about the real need here: a functioning marketplace that encourages reforms in how health care is delivered. Two came closest. Here’s former HHS Secretary Donna E. Shalala: 

We have been moving in the right direction by placing greater emphasis on shorter hospital stays, outpatient services, home health care and skilled nursing facilities as an alternative to hospitals and nursing homes. But there are tremendous savings still to be realized through further adaptations to our health-care system to tackle the challenges of an aging and sicker population, a shortage of primary care providers, lack of preventive care and continued, skyrocketing costs. These include greater coordination of care between physicians, nurses, specialists, hospitals and other centers patients turn to for health care. We must expand access by ensuring that highly skilled nurses are full partners with doctors and can practice to the highest level of their training

And here’s former Senate Majority Leader Tom Daschle:

The health-care marketplace needs to be far more transparent on both cost and quality. No sector of the economy can operate efficiently without an ability to compare data….Today we are experiencing the Wild West in technological advancement, with vast new data troves, as well as new products and services that hold great promise for health care. But greater patient engagement with these technologies, encouraged by more user-friendly infrastructure and better interoperability among different databases, is essential. It falls to the government to synchronize our policy and regulatory framework with advances in technology. Telehealth, for instance, holds great promise for health care delivery, including the return of the house call. But regulatory and licensing obstacles continue to obstruct meaningful progress.

Both of these entries get some of the elements right: empowering nurse practitioners, increasing price transparency, and moving towards innovations like telehealth (and, we would add, clinics). That one served under a Democrat, and one was a key Democratic leader while on the Hill, shows that these kinds of reforms have bipartisan support; price transparency has long been important to the health care policy right, for example.

If the next health care reform debate can focus on the big picture of market innovation and service delivery reform instead of minute tinkering with federal subsidy levels, that would be progress indeed. That only two out of the 15 entries broached these issues, however, doesn’t give us much cause for optimism. 

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  • Fat_Man

    I had my annual flu shot at a CVS minute clinic today. It was a very good experience. Handled quickly, professionally, and pleasantly by a very competent nurse practitioner. CVS waived the co-pay, and gave me a 20% off coupon for shopping in the store.

    Two Thumbs Up.

  • Andrew Allison

    Perhaps instead of convening a panel of those responsible for the current mess, Politico should have assembled a panel from outside the medical/pharma/political complex. The first step, namely remove the barriers to more use of NPs and clinics. The unconscionable use of out-of-network contract physicians by hospitals (a blatant scam) is another piece of very low-hanging fruit. Another very effective approach, high deductibles and co-pays is already in effect for the self-insured.

    • ljgude

      G’day Andrew. As people here realize the fix is in. We are caught between full gospel regulatory capture and the fear of death.

  • wigwag

    The policy wonks are about as useful as political pundits when it comes to offering anything of value in the health care arena or an other area. This is just more evidence that America’s elites are, by in large, laconic, lazy and lugubrious.

    Obamacare is largely irrelevant when it comes to health care costs; it doesn’t lower health care costs as its most ardent admirers claim and it doesn’t lower health care costs as its most caustic critics maintain.

    Concentrating on the demand side of the cost equation is all well and good, but it distracts attention from the supply side which is where a maximal impact could be achieved relatively quickly. So by all means; implement reforms which reduce demand but make an especially robust effort to reduce costs by increasing supply.

    1) Professor Mead is right; nurse practitioners should be permitted to offer primary care. But the supply of family doctors should be dramatically increased. Set a goal of doubling or even tripling the number of practitioners allowed to hang up a shingle as primary care providers. How do you do it? Thousands or even tens of thousands of physicians licensed in other nations would be thrilled to move to the United States to practice medicine, if the licensure requirements made it feasible. The door should be open wide for primary care physicians who trained in nations where the medical education system is as good (or even better) than ours. Stop letting the doctors lobby limit the number of physicians who can practice in our country. Focus on primary care doctors but also make it easier for specialists from other nations to be licensed here. If the number of doctors (or other providers) searching for patients goes relative to the number of people seeking the services of physicians, the price they can charge plummets.

    2) Reform medical education. The faculty and administrators at American medical schools are ripping off our entire country; they’re picking our pockets. Practicing medicine isn’t nearly as complicated as its cracked up to be. Medical schools are far too selective. Require medical schools to dramatically increase the number of students that they admit each year. Tens of thousands of qualified students are turned down by medical schools. Convince medical schools to significantly increase the number of students that they admit. How do you bully them into complying? It’s easy; without exception every medical school in the United States receives enormous amounts of money from the American taxpayer. On top of grants for medical research, the federal government (through medicare) pays in full for residency training programs and taxpayers subsidize the loans that most students need to attract so they can afford to go to medical school. Threaten to cut of the money spigot and the medical schools will have little choice but to succumb and increase their student bodies.

    One of the reasons physicians charge so much is because they leave medical school hundreds of thousands of dollars in debt. Why is medical school tuition so high? It’s simple really; medical school faculty (at least those devoted to teaching as opposed to biomedical research) are over-paid and underworked. As a faculty member to stand in front of students more than six hours a week and they freak out. If faculty members taught more classes, fewer faculty members would be needed and tuition could be reduced. And then there are the good for nothing administrators who all need to be paid. What are they paid for? Basically for doing nothing of value. Of course, online learning and other technological innovations could reduce costs. Most importantly, a year could easily be chopped off medical school with little to no impact on the quality of young physicians who graduate from medical school. How could the government force medical schools to reduce costs? The overall contribution made by federal taxpayers to American medical schools is enormous. Threaten to take away the feeding trough and the medical schools will have no choice but to comply.

    3) Drug discovery is out of control. There was a time that pharmaceutical companies were the envy of the world for the amazing new medicines being discovered on an almost daily basis. Those days are gone. Today the pharmaceutical business faces a crisis like never before. The major problem is that the cost of drug discovery has gone through the roof; that’s why new medicines are priced so highly, not because of the greed of big pharma.

    Problem number 1 is to be found in Europe and Asia. Most of the nations in these continents base payment for medicines on the cost of manufacture (Canada is just as bad). Manufacturing medicines cost bupkis; the expense is all to be found in the extraordinarily high risk and expensive process of discovering new medicines. The United States pay virtually all of the drug development costs for the entire world; that is to say, American consumers do. This is not only unfair, but it leaves pharmaceutical companies with less money than they need to do R&D. How can this problem be solved? We should start dropping bombs on Europe and Asia (metaphorically speaking) until they raise drug prices enough to pay their fair share of pharmaceutical R&D costs. This would allow these companies to actually reduce the price paid by Americans.

    Problem number 2 is that the FDA is a disaster. Rules and regulations imposed by the FDA have made the cost of conducting clinical trials of new compounds so expensive that very few of these clinical trials are actually conducted in the United States. In fact, pharmaceutical companies almost never conduct their own clinical trials any more; they farm the management of trials of their compounds out to CROs (clinical research organizations). These CROs specialize in exactly one thing; finding inexpensive venues to run clinical trials. Most Americans would be surprised to learn that the vast majority of clinical trials of new drugs are done in places like Bulgaria, Moldova, Romania, the Philippines and China. Is the medical expertise or medical infrastructure in these nations good? Nope. But they do have the benefit of doctors and hospital who are willing to work cheap; very cheap. To run a clinical trial in the United States costs on average about $100,000 per patient enrolled. To run a clinical trial in Moldova costs a tiny fraction of that. Considering that to bring a drug to market often requires trials utilizing several thousand patients, the costs really savings really add up.

    This is all tragic; many of the compounds abandoned for lack of efficacy might actually have worked if competent physicians were enrolling patients and supervising the trial. Many of the compounds that are approved but end up killing patients and being taken off the market are approved because the trialists in these third world countries don’t know what they are doing.

    But its not just the FDA; the number of lawyers and bureaucrats hired by pharmaceutical companies and hospital and universities to comply with the FDA’s cumbersome regulatory structure drives up the cost of discovering drugs so substantially that it is little wonder that pharma charges so much for new medicines. Of course, American universities and hospitals are also to blame; the featherbedding and exorbitant salaries paid to health care professionals involved with American clinical trials is mind boggling.

    There are a hundred ideas that could reduce American health care costs; you don’t need to be a genius to figure out what they might be. Unfortunately policy wonks and pundits seem too dumb to figure this all out.

    They are part of the problem; not the solution

    • Anthony

      WigWag, comprehensive and well done; recommendations and observations cutting straight to heart of our healthcare delivery system (demand, supply, R&D, structural interests, access, etc.). As been said before, “expecting our current massive, very well-financed, high-revenue, high-margin, high-growth, high-cost health care infrastructure to voluntarily take steps to reduce costs and prices” is to overlook the obvious: from an economic perspective healthcare providers are economic winners; from a pure business perspective, the system is making a bundle of money – why give it up.

      • wigwag

        I agree Anthony. The problem is that Democratic and Republican leaders are both clueless when it comes to identifying solutions. Democrats pretend that Obamacare cuts health care costs when at best, it provides modestly improved access to healthcare. Republicans focus aggressively on curbing demand as the only thing that matters; curbing demand is consequential though its hard to ignore that many Republicans are cheered by the thought that demand can be curbed by denying care to destitute cancer patients.

        Neither Democrats or Republicans ever focus on the supply side of the equation. The reality is simple, health care providers in the United States, especially doctors, earn way too much money. If the average physician salary in the United States was 30 percent less than it is, American health care costs would plummet. Physicians make as much as they do because the number of physicians is kept artificially low by the refusal to allow foreign trained physicians to practice in the United States and by keeping medical school admissions far lower than they should be. By the way, its not just doctors; dental care would cost far less than it does if there were more dentists.

        Republicans and Democrats are both complicit. The GOP genuflects to American health insurance companies; just think back to how they carried water for these companies during the debate over Obamacare. The GOP is also the go-to political party for the physician guild(s) and hospitals and always has been.

        The Democrats receive overwhelming support from America’s colleges, universities and the faculty who work for them. Given the size of the American academic industry, this is important. It is the higher education sector that refuses all attempts to cut costs and operate more cost-effectively and efficiently. Why should they when they can raise tuition whenever the whim strikes them because taxpayer subsidized student loans facilitates students ability to take on increasing debt. This is doubly true for medical (and dental) students.

        American faculty, who are overwhelmingly leftists, are the laziest group of good-for-northings that you will ever meet. They are dramatically underworked and they are dramatically over-paid. Medical school faculty (at least the teaching as opposed to the research faculty) are no different. Medical education costs are kept high by the rampant feather-bedding in medical schools and by bloated bureaucracies that would boggle your mind.

        To make matters worse, medical schools are co-conspirators when it comes to keeping physician fees high by limiting the number of practicing physicians. Many thousands of qualified applicants are rejected by medical schools each year just to insure that a glut of physicians doesn’t cause physician salaries to decline. Grossly inefficient and expensive higher education institutions will never reform because Democratic legislators can be counted on to stymie reform.

        It’s not good. The American people have their eye on the wrong enemies. It’s not illegal immigrants or even ISIS that poses the greatest threat to American prosperity; it’s America’s doctors, hospital administrators and university faculty that we should be worrying about.

        • Anthony

          You covered a lot of sectors (politics, academia, immigration, bloat, …) and I find very little to dispute. I am inclined to say the reimbursement “systems” for interests you cite are all motivated to maximize their respective costs. Specifically though, the healthcare reimbursement system creates incentives to maximize costs – subsidized tax-deductible employer provided coverage, reimbursement for procedures and services offered not healthy outcomes, hospitals being paid more money not because they do great work and release patients in better shape but because the sicker the patient the longer the stay, and duplications of testing, examinations, record keeping, etc. You’re right, It’s not good. So, how do we break through?

          • wigwag

            To be honest, I doubt that we will ever break through. What we need are political activists on the right and the left who actually realize that they have more in common than they think. Tea Party acolytes, occupy Wall Street types and average apolitical Americans all understand that there is something politically very wrong in our country. And they all understand that American elites have abandoned patriotism in favor of obnoxious self-interest.

            What we need is for the left and the right to stop demonizing each other and make common cause. Tea Party activists on the right may hate Obamacare but they also understand that our health care system is profoundly broken. Activists on the left, including trade unions and public service unions, understand that increasing health care costs are strangling their members. The reason cities cant afford to make pension payments is because health care costs are causing them to go broke. The reason wage growth in the private sector is so stagnant is because health care costs are crowding everything else out.

            Our two corrupt political parties love the division; they want their “bases” to hate their opponents to motivate turnout and fundraising. American elites who fund the parties are laughing all the way to the bank. They don’t care which party is in power; it’s heads, they win; tales everyone else loses. All they care about is that Americans are too distracted about things that don’t matter so they don’t focus on things that do.

            We need an entrepreneurial and enterprising political leader to come along who can bring disruptive change. He or she needs to motivate the left and the right need to marshal their forces to work together instead of trying to destroy each other.

            We all know something is dreadfully wrong; solutions exist. To enact them we need a brand new approach to politics.

            Personally, I am not optimistic that this will ever happen.

          • Anthony

            Experience, concern, and perception certainly can induce less optimism (I understand clearly). Yet WigWag if not for my sake (I’m done), then generational I want to “believe” a direction towards more comity (not kumbaya) nationally is approachable. I recognize that’s a huge endeavor and not a one man/woman task – perhaps IT can do more than facilitate/entertain distracted citizenry. You often in your commentary try to get at how and why things happen and its that inquiring spirit needed among populace in order to definitely see that Occupy and Tea Party may have more commonality than at first appears. But even so, crafty/slick/myopic men as you cite work overtime to keep divide intense. A key for me is keeping idea in forefront that we are largely governed by our emotions (despite our claims to rationality) which rightly or wrongly color our perceptions. The elites you reference know this well – politics is itself a political act, containing little that is neutral. Above all, I am going to remain optimistic and while able pick my fights.

          • Fred

            gay marriage doesn’t matter. Illegal immigration doesn’t matter
            Nonsense. Cultural issues absolutely matter (in an objective sense, not just for those who care about them), arguably more than any others. Our political and economic rot is, in large part, the result of our cultural rot. Of course health care costs and political corruption matter, but they are symptoms, not the disease. To mix metaphors, your assertion is like arguing that the roof and walls of your house matter, but the foundation doesn’t. In fact, if the foundation is broken, the house will fall, no matter how or how often you patch the roof and walls. The differences between “left” and “right” also matter. Those of us old enough to remember the social, economic, and foreign policy disasters of 1979-80 look in alarm on the wholesale rush to return to the policies that caused those disasters. Arguably, the financial crisis of 2008 can be attributed as much to those sorts of policies (CRA anyone?) as they can to corporate greed and political corruption. The facile cynicism of “a plague o’ both your houses” is too easy and ignores too much. God knows neither party is perfect and corruption mars both, but there are real differences, not just in the approach to politics and economics but on the more fundamental questions of what human beings are and what they’re for, what kind of world we live in and what kind we want to live in. Those questions are ultimately far more consequential than ephemeral wonkery.

    • Boritz

      It is impossible to implement worthy remedial measures within a framework of “fixing the ACA”.   Pearls and pigs.

  • Charles Hurst

    This isn’t really that hard. And I would know as I’m an ex provider. Return all routine to fee for
    service. They tried that in Oklahoma and reduced costs by 80% for most
    services. But that means the days of the professional parasite on welfare
    getting unlimited healthcare for free are over. They have to pay too. That
    means they don’t get to come in every other day because of their back pain and
    obesity due to their lethargic lifestyle. And that is most of the welfare
    recipients. Not all–but most. Medicaid is draining the entire system. So they
    have to pay as well. And for the truly needy and disabled there are charity
    organizations. And most of us will take pro bono. What we shouldn’t take is the
    professional parasite living off of our taxes because they are lazy. Then you
    have catastrophic insurance for injury and illness. Reduced rates across state
    lines because few would use it like few use car insurance. Break your arm–pay
    the deductible like car insurance and you’re covered. Or if you have cancer.
    But that means the welfare group has to pay too. Again–they no longer get it
    all for free. And that is the problem. The Progressive doesn’t want to say
    let’s make it fair. ACA wants one man to pay more so another pays less–or not
    at all. And this plan may result in the predicted collapse I write about–based
    on this little thing called history.

    Charles Hurst. Author of THE SECOND FALL. An offbeat story of Armageddon. And creator of THE RUNNINGWOLF EZINE

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