Written: March 10, 2017
Edited and Republished: October 23, 2021
The following article was published in LinkedIn four and a half years ago. Except for price transparency, which has not yet been fully complied with, not much has happened. Americans are struggling to pay the continually increasing cost of drugs and Congress continues to be the beneficiary of millions of dollars donated by special interest groups. Politicians who wholeheartedly supported allowing Medicare to negotiate the cost of drugs are now saying such a move would jeopardize research and development spending by the pharma industry. A preposterous belief. What they are really saying is they appreciate the checks which pour in from the lobby to support their reelection campaigns. Our Congress puts their reelection to cushy jobs with golden healthcare plans and generous retirement packages ahead of the citizens they are supposed to be representing. Following is the almost five-year-old article. Some details may have changed slightly, but I stand behind all the directions described in 2017.
By John R. Patrick, DHA
Healthcare is approaching 20% of our economy and touches every American. You could say the problems in healthcare have been caused by action or inaction by one party or the other. You could say Republicans want this and Democrats want that, but I don’t think labeling should be the focus. The problem is Congress (both parties) are tied to special interest groups. Insurers, medical device manufacturers, pharmaceutical companies, and legions of lobbyists created our unaffordable healthcare system with the help of Congress. We need a balanced approach which is best for citizens, not best for special interests. That is what our elected officials are supposed to do.
The most prominent solutions so far have come from two extreme positions. One suggests the repeal of Obamacare, every word of it. The other suggests we eliminate the 35 major health insurance companies and provide centralized government-controlled healthcare for every American. In my opinion, both solutions have a zero probability of being adopted. There is plenty of room for a middle of the road set of solutions. What we need are some commonsense healthcare proposals. Following are five examples of solutions to the real problems.
Problem 1: The number one problem in American healthcare is the high cost. It is not the cost of the insurance, it is the cost of the healthcare. Billions of dollars are spent on legal fees to settle suits brought against providers. The result is providers practice defensive medicine. They change how they practice medicine by adding extra and medically unnecessary tests and procedures some estimate to cost between a half and one-and-a-half trillion dollars per year.
Solution 1: Expand the use of accountable care organizations (ACOs). Under the ACO model, providers are paid a fixed amount per month for each consumer under an ACO contract. This provides an incentive for providers to eliminate unnecessary tests and procedures. ACOs are in operation and are producing savings. The ACO model needs refinement, but it has proved it can work and it should be expanded. It is part of Obamacare, but let’s not throw the baby out with the bath water.
Solution 2: Enact tort reform to limit settlement amounts and eliminate frivolous lawsuits.
Solution 3: Encourage publication of best practices for medical tests and procedures. Numerous studies show what tests and procedures are unnecessary. A strong body of evidence showing the best practice for various situations should provide good legal defense for providers. Incorporate best practices findings as part of the tort reform.
Problem 2: The total cost of American healthcare per person is 50-150% higher than other developed countries. With 10,000 new seniors turning 65 and joining Medicare every day, our country cannot afford the out-of-line cost.
Solution 1: Let the Centers for Medicare & Medicaid Services (CMS) attack fraud more aggressively. Congress requires CMS to pay bills from providers within 30 days, even if they are suspected of fraud. Major U.S. companies do not pay their bills in 30 days even for impeccable vendors. Engage Google, IBM, Microsoft, and other technology companies to apply their Big Data and Analytics tools to assist in identifying fraud more quickly.
Solution 2: The inefficient administration of healthcare by the government adds hundreds of billions of dollars to our healthcare cost. A single payer is not practical. It would be too big. Economies of scale would become diseconomies of scale. The VA has shown how size matters. It is so big it is hard to modify. Healthcare.gov showed what happens when a national approach is taken to build a single website to serve the entire country. One size does not fit all. The solution is to combine Medicare and Medicaid processes in order to simplify administration but delegate the combined system to the 50 states. The states already administer Medicaid and have proven they can do it well and with innovation unique to their states. They could do the same for a combined Medicare and Medicaid system.
Solution 3: Require all health insurance companies to use standardized administrative procedures. Germany has 200 payers and Canada has 13, but the federal governments require standards. Health insurance standards should work like the Internet and credit cards. The Internet works the same way everywhere in the world. Credit cards can be used anywhere in the world. Citizens on Medicare do not need dozens of confusing prescription drug plans to choose from.
Solution 4: Require healthcare providers to publish price lists for all tests and procedures. The lack of transparency makes comparison shopping next to impossible. Millions of people are joining the healthcare roles at an affordable cost, but the large deductibles make all their healthcare costs out of pocket and unaffordable. They need to be able to comparison shop for healthcare services.
Problem 3: Double-digit growth in the cost of drugs is a burden for millions.
Solution 1: Allow Medicare, the largest healthcare payer in the world, to negotiate the price of drugs they pay for. Legislation in 2003, designed by lobbyists, prevents Medicare from negotiating. Other developed countries pay far less than we do for the same exact drugs. In effect we subsidize their cost of drugs. This simple change could immediately save at least ten billion dollars per year.
Solution 2: Disallow television advertising of expensive drugs most people do not need. No other developed country in the world allows direct-to-consumer drug advertising. Consumers know how to research symptoms, diagnoses, and treatments on the Internet. The billions of dollars spent on advertising reduce what can be spent on research for new drugs. The AMA, which represents more than 200,000 physicians wants the ads banned. They believe, as I do, TV advertising encourages use of high-cost drugs when lower cost generic drugs can often produce the same or better results.
Problem 4: Electronic Health Records (EHRs) are unpopular with patients and physicians. The data is needed to enable more population health programs and improved patient outcomes through better family doctor and specialist collaboration. However, the EHR software is hard to use and incompatible between various providers thereby defeating the purpose. EHRs cannot be easily exchanged between providers, sometimes even within the same building.
Solution: Require the 250 EHR software vendors to use compatible data formats. Mandate standards like the Internet and credit cards have. Only reimburse providers who use compatible EHRs, when they become available. The vendors can compete on price, function, ease of use, and support, but not on data formats. Such competition can lead to EHRs which are more user friendly and reduce cost.
Problem 5: Approximately 30 million people still have no health insurance. One study showed more than 40,000 people per year die because of their lack of insurance for treatments they need. The emergency departments cannot always meet this need. A review of speeches by Presidents Carter, G. W. Bush, Clinton, Obama, and Trump reveals they all, in different words, agreed healthcare should be available to all who need it.
Solution: The savings from the five common sense sets of solutions would provide more than enough funding to provide health insurance for all Americans and lower the total cost to an affordable level. Each American would pay according to their means. All Americans would pay something. The States would operate healthcare programs to meet the unique needs of all their citizens.
All figures in this footnote are from opensecrets.org and for 2020. More than two-thirds of Congress cashed a pharma campaign check. New analysis by STAT shows Pfizer’s political action committee alone contributed to 228 lawmakers. Amgen’s PAC donated to 218, meaning that each company helped to fund the campaigns of nearly half the lawmakers on Capitol Hill. The average received by 244 Democrats was $38,138 and for 235 Republicans was $30,828. The top 20 recipients received between $250,000 and $1,250,000. Legislation to allow Medicare to negotiate prices has passed the House numerous times, including in 2019 with yes votes from the three House members now opposing it, Representatives Kathleen Rice of New York, Scott Peters of California, and Kurt Schrader of Oregon. Why did they change their position? In 2020, Representative Peters received $229,973 from the pharma lobby and Representative Schrader received $144,252. Many people call the content of this footnote corruption. I call it legalized bribery.
Dr. John R. Patrick is author of six books including Health Attitude: Unraveling and Solving the Complexities of Healthcare. He is president of Attitude LLC and former Vice President of Internet Technology at IBM. In addition to holding a Doctorate in Healthcare Administration (DHA), Patrick has degrees in electrical engineering, management, and law. He is a member of the American College of Healthcare Executives and a Fellow of the Institute of Electrical and Electronics Engineers.