In part three of this three part series, John Dalton, Advisor Emeritus at BESLER, discusses his “seven starters” for moving the healthcare debate forward.
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Today, I’m joined again by John Dalton. John is a senior advisor emeritus here at Besler Consulting who has joined us to discuss his topic, American Healthcare – Worst Value in the Developed World.
John recently completed 13 years on the board of trustees at the St. Joseph’s Healthcare System where he chaired the Strategic Planning Committee. He serves as honorary trustee at Children’s Specialized Hospital where he is a former board chair. And most recently, he was named by the New Jersey Hospital Association as its 2017 Hospital Trustee of the Year.
Welcome back, John.
John Dalton: Thank you, Mike. It’s nice to be here again.
Mike: John, in part two of the series, we looked at data from France, Germany and the United Kingdom which provided us with some clues about how their approaches produce better quality healthcare at lower cost than the US.
Let’s start out. Which of their approaches produces the best results? And are there lessons we can glean from all three?
John: Yes. As you know, from the earlier part of the series, France uses the two-tier system as an approach to universal healthcare; Germany, the insurance mandate, which is sort of what we have in the Affordable Care Act; and the UK is a single payer system.
When we looked at all of the data about their approaches, we found that the single payer countries produced the best results. Whether you love them or hate him, the senator from Vermont was right. Single payer produces the best results.
And among the single payer countries, the Brits do it best.
Single payer is not likely to happen here in the US because it’s highly reliant on taxation for funding. But interestingly, we already have two single payer systems here in the US. That’s both the Veterans Administration and the Indian Health Service. Those are single payer systems.
Are there options available that will produce better outcomes and start to help us close the gap with the Organization of Economic Cooperation & Development countries? I think so.
There are some elements that we can apply from France, Germany and the United Kingdom to help us achieve the triple aim. There are a lot of lessons that we can learn from our colleagues in the United Kingdom, France and Germany. But first, let’s also look at some of the issues we’ve already tackled and how they compared to what France, Germany and the UK do.
You heard earlier about the frustration in France and Germany with unlimited freedom of choice. Well, unfortunately, ever since the HMO movement started in the 1980s, we Americans have had to learn how to live with limited freedom of choice and narrow networks. So that’s one issue that they have that we’ve already tackled.
The common elements: we already have many Americans who receive healthcare coverage through their employer just as in France and in Germany. The Affordable Care Act did include an insurance mandate (as the Germans do), but it was a watered down one.
One of the key issues facing us now is that only 28% of the 18-34 year old demographic actually are in the risk pool. So that’s one of the reason why there’s been instability with the insurance exchanges.
We already have an essential health benefits package mandated through the Affordable Care Act. That includes doctor services, in-patient and out-patient hospital care, prescription drug coverage, pregnancy and childbirth, mental health and rehabilitation services. So we already have that in common with France, Germany and the UK.
What could we learn or adapt from those three countries? Well, I put together a list of seven starters that I think are worth debating and, hopefully, will be part of the ongoing debate as something replaces the Affordable Care Act.
One, as a country, we need to move even more aggressively to get to full interoperability to reduce the administrative cost. The French got there in 1998, the Germans in 2008.
We could emulate the French approach of a mandated core benefits package and allow the opportunity to purchase supplemental insurance for expanded coverage. That’s an approach that I think would work well in America.
Or look at Germany’s employer-based insurance mandate and couple that with competition among not-for-profit insurers for base coverage.
We could either copy France’s patient payment at time of service approach—and as someone who’s spent his career in the revenue cycle, that’s appealing to me—or Germany’s patient co-payment approach, one or the other.
From all three countries, we need to maintain primary care providers as private practitioners. I think that’s part of the reason for their success. Unfortunately, in the US, we only have 35% of our primary care providers; 65% are specialists. It’s the reverse in those countries.
We need to provide incentives for medical students to select primary care. For example, forgiveness of student loan debt over 15-20 years to correct that current imbalance. We’re already on our way to doing that. There are several programs. Texas Tech University has one at their medical school that makes sure that medical students who select primary care will have their student loan debt repaid.
But finally, the seventh one is the toughest one. We need to encourage our not-for-profit healthcare leaders to engage more closely with social services providers in the communities that they serve.
Mike: John, your seven starters are thought-provoking and I think are well-worth debating. How do you think they’ll be received inside the beltway?
John: Well, that’s when things start to get tangled up—competing interests and conflicting priorities and the K Street lobbyists hitting congressmen and senators. We’ve seen a lot of that through the course of this year.
As you know, in July, the Department of Justice filed suit to block the proposed Anthem-Cigna and Aetna-Humana mergers contending that “they would leave the multi-trillion health insurance industry in the hands of three mammoth insurance companies.”
Aetna responded with the corporate equivalent of a hissy fit, eliminating its Affordable Care Act coverage in 11 states, claiming that they have $430 million in losses since January 2014. So, we get that force.
On the other hand, I take heart from folks like Bernie Tyson, CEO of $61 billion Kaiser Permanente, a not-for-profit provider, he’s sticking with the exchanges long-term. Here’s his quote:
“I view it through the lens of my mission. It obligates us to figure it out, not to get out.”
He further noted that the market is unstable given adverse selection and under-pricing by some plans to capture market share.
“Over time, it’s going to work itself out. This is not rocket science.”
So, Tyson seems to have a pretty clear view of how this can be made to work.
Then we have big pharma. There has been a lot of press over the last year about drug pricing. The EpiPen has been around since 1977, but Mylan Pharmaceuticals acquired the auto-injector in 2007 when they were selling for $57 each.
EpiPens now cost more than $600 for a 2-pack. And people who suffer from anaphylaxis (as does one of my granddaughters) need to keep them handy at all times.
Turing Pharmaceutical’s Martin Shkreli, the most hated man in America, bought Daraprim in 2015. They raised the price from $13.50 to $750 a pill. And Daraprim was the only cure for taxoplasmosis. That’s a disease that strikes people whose immune systems are suppressed or compromised—for example, with AIDS patients and cancer patients.
Then there’s Valeant Pharmaceuticals. They’re Canadian-based although they’re very active in the United States. They boosted the price of the diabetes drug, Glumetza, by about 800% in 2015.
They also acquired Carac Cream in 2011. It’s used for cancer (skin conditions). That rose by 1700% in six years.
To our government’s credit, all three CEO’s had been held before Congress for congressional flogging. But still, the drug prices are escalating at an unbelievable rate here in the US and something’s got to be done about it.
Mike: So John, looking at the seven starters and some of the elements you’ve just discussed, where do you think Democrats and Republicans inside the beltway can come together?
John: As we know, we had a very divisive presidential election with clear polar opposites in terms of health policy—Secretary Clinton espousing to expand and embrace the Affordable Care Act, and President Trump advocating, “Let’s repeal and replace it with something terrific.”
Looking at the two platforms post-election, I looked then to see where there might be some common ground and what are non-starters. Well, clearly, when you look at Secretary Clinton’s platform, she was advocating universal quality, affordable healthcare for everyone in America (which would include undocumented aliens). Clearly, that’s a non-starter;
To allow families to buy health insurance on the health exchanges regardless of their immigration status. Clearly, a non-starter;
Her platform also talked about defending access to reproductive healthcare and doubling funding for community health centers. Probably non-starters;
On the Republican platform, the number one priority was to completely repeal ObamaCare and replace it. Some of the other issues raised there would allow sales of health insurance across state lines. That’s been in the Republican platform for a number of years, but has a very lukewarm response from the big five insurance carriers, so that’s not likely to happen.
It also talked about allowing individuals to deduct health insurance premium payments from their tax returns and using health savings accounts and to accumulate unused portion as part of the individual’s estate and requiring price transparency from all providers—ideas that are worth debating.
Looking at both platforms, there are some areas of common concern. The Republican platform talked about removing barriers to entry into free markets for drug providers that offer safe, reliable and cheaper products. And believe me, I’d much rather buy my Crestor from Canada than have to pay $350 for a 90-day supply here in the US.
On the Democratic platform, there were three items that was drug cost. One was to bring down the out-of-pocket cost, reduce the cost of prescription drugs, and protect consumers from unjustified prescription drug price increases.
So, I think one area for the battle inside the beltway would be to identify big pharma as a common enemy and attack that. It should be very popular with Pres. Trump’s voting base.
Secretary Clinton’s Democratic platform also talked about expanding access to rural Americans who often have difficulty finding quality, affordable healthcare. And as we know, critical access hospitals struggle consistently.
Well, that should be very appealing to the president’s voting base. That’s something that I think both Democrats and Republicans can agree on tackling.
In terms of the health savings account issue and the health insurance premium payments deductibility, there is an attempt for comprehensive reform of the tax code. So those probably will roll into the debate.
Personally, I find those interesting and intriguing and worth debating. But my question on those is how they will play out for the folks who were employed at Walmart and McDonald’s.
We’ve seen the experience with folks opting into 401Ks and now we have a whole generation heading for retirement with inadequate retirement savings. I feel that the same kind of problem would affect them on those two proposals.
But we’ll have to see how it goes. If on January 21st, the Affordable Care Act is repealed with a 2-year replacement period, I think when we get down to the weeds, there are so many pieces of it that are necessary in any health reform legislation that’ll bog down in some process in both the House and the Senate.
We’ll know a lot more come February or March. We just learned today that Dr. Tom Price, the Republican representative from Georgia, will be nominated as the next HHS secretary. And he’s an orthopedic surgeon. Some of his proposals include allowing folks to opt out of Medicare and Medicaid for tax credits, but where will he be in terms of things like the Comprehensive Joint Replacement Program and the like.
When we look at the Affordable Care Act, we’ve already heard that the provision allows kids to stay on their parents’ policy. Until age 26, they will stay. We will continue to have guaranteed issuance, no pre-existing conditions.
There are other provisions that I think as the debate goes forward, we’ll wind up being carried forward as part of whatever reform takes place. I don’t think anybody wants to go back to the days when insurance carriers could spend more than ¢15 out of every dollar on administrative expenses now that we know France, Germany and the UK spend less than ¢5 out of every dollar on administrative expenses.
The 31 states that have benefited from Medicaid expansion already are making noises that they want to retain, that it’s worked well in their states. Many of them have Republican governors as we do here in New Jersey, we know that Gov. Christie is in favor of continuing Medicaid expansion.
So those are the areas that will be debated. We’re certainly not going to revoke the patient protection provisions that have already improved quality with significant reductions in both central line-associated bloodstream infections and surgical site infections over the last several years.
So, I think a lot of what is contained down in the weeds is going to be retained. Hopefully, what issues out of this is something that includes all American citizens at a reasonable cost.
Mike: So, there’s going to be continued battles inside the beltway for some time to come on the nuances of healthcare policy. But John, what can those of us involved in not-for-profit healthcare do to advance the seven starters that you mentioned engaging more closely with social services providers in the communities that they serve?
John: Well, the good news is that a lot of that work already has begun. There’s an article in the May 2016 issue of Health Affairs that talked about variation in health outcomes. It did a deeper dive into the role of spending on social services, public health and healthcare.
It actually looked at the first decade of the 21st century, 2000 to 2009. Even in that period, they found that states that have a higher ratio of social to health spending had significantly better subsequent health outcomes for adult obesity, asthma, mentally unhealthy days, days with activity limitations and mortality rates for lung cancer, AMI’s and type II diabetes.
The article also pointed out that many of the states with those higher ratios were in the west, while those with less healthy spending patterns were in the south. So the western part of the US is already ahead of the curve on that.
In revealing 74 research studies, the article reported that there type of services are particularly meaningful—supportive housing, nutritional support (that includes Meals on Wheels and the WIC Supplemental Nutritional Services and certain case management and outreach programs). And they concluded:
“Broadening the debate beyond what should be spent on healthcare to include what should be invested not only in healthcare, but also in social services and public health is warranted.”
Here in our area, we already started. Organizations like the Mount Sinai Health System, New York Presbyterian already have major initiatives going forward on population, health and community involvement.
A couple of quotes from Dr. Kenneth Davis, the CEO of Mount Sinai, illustrate both the success and the problem. Here’s Dr. Davis:
“If a patient attributed to us has diabetes, and we keep that person out of a hospital, we are rewarded in a population health model. But if we invest in preventing community residents from ever getting diabetes in the first place, we’re paid nothing extra.”
“Even under the most advanced population health models, there’s no way to get paid for improving the long-term health status of the community. Nonetheless, Mt. Sinai is going forward with some of these initiatives and is at risk for doing so.”
Dr. Steven Corwin, CEO of New York Presbyterian, they have a major initiative going forward in Washington Heights on population health. There’s about 250,000 folks in that population as well as throughout the healthcare system.
Here’s Dr. Corwin:
“If you visit the home of an asthmatic child, and you remove mold and allergens from that home, it dramatically reduces that child’s likelihood of coming into the emergency room.”
So, I tend to be a cock-eyed optimist even though I’ve been advocating for universal healthcare for almost forty years and still far from achieving it. I think that the not-for-profit leadership of our major health systems are going to continue to move us forward at an appropriate pace to achieve that triple aim.
It means we have to go beyond our comfort zones. We already, in healthcare, excel in diagnosing, treating and curing the patients who seek care in our hospitals. But improving the health of the population in our service areas does require us to reach out into the community services, social services safety net in order to foster better health habits among consumers, something over which providers have little or no control currently.
I take heart from examples like the Geisinger Health System in Danville, Pennsylvania who have been into population health very deeply for a number of years. Part of their success is attributed to the fact that they own a health plan, they have a very large multi-speciality physician practice and the healthcare system. So they’ve got the three pieces working together.
But even there, they will tell you that it took several years to be able to change consumer behavior. The key to that in that in many instances was placing nurses in doctors’ offices—nurses not funded by the health system, but by the health plan.
There are many, many other examples out there like Geisinger that we need to emulate.
I believe that the hospitals that succeed in providing better care while fostering healthy behaviors in the communities they serve will lower the per capita cost of care and produce better outcomes on the key health indicators and begin to help us close the gap with the rest of the developed world.
Mike: Well, John, the triple aim is certainly an objective worth striving for, helping to reduce the gap between the US and the rest of the world when it comes to quality of healthcare.
So, thanks for enlightening us and providing this most thought-provoking series.
John: You’re quite welcome, Mike.