It’s completely understandable that Warren Buffett and Charlie Munger promote a single-payer alternative to the horrible under-performance of the status quo healthcare system. In fact, I’ve argued we’ve gone to war for less than what healthcare is doing to America. One of the many examples of the healthcare system’s disastrous under-performance is the latest research published in the venerable British Medical Journal cited preventable medical errors as the third leading cause of death in America.
Against that backdrop, if I thought the American version of single-payer was the best we could do, I’d join the calls for Medicare for All. However, I’ve seen and experienced models in the U.S. that wildly out-perform the status quo, which makes me optimistic we can do much better. It’s gone beyond isolated pockets of a few thousand patients to millions of people in healthcare organizations superior to standard Medicare. For example, you don’t have to leave the Washington, D.C. area to see it happen – in two years, a next-generation model has scaled to serve 3 million patients just in the DC/Virginia/Maryland area.
Single-Payer Advocacy: The Tyranny Of Low Expectations
Evidence suggests the two biggest problems in healthcare – pricing failure (i.e., no price:quality correlation) and overtreatment – haven’t been solved for Medicare. While some talk about fears of rationing care, it’s self-evident that the volume-driven reimbursement system rations choices – i.e., patients often aren’t told of alternatives to expensive and widespread overtreatment such as spinal and joint procedures. Medicare has done slightly better on pricing failure than private insurance, however that is because insurance companies are motivated to have overall healthcare costs increase more than excellent cost control by Medicare. In other words, that’s a bar so low a snake could jump over it. As the graphic from Oliver Wyman demonstrates, there is wild price variance within Medicare and it has nothing to do with outcomes.
Bipartisan MACRA legislation (passed 92-8 in the Senate) is being implemented by Medicare leadership as we speak. It’s laudable that MACRA seeks to remove fee-for-service incentives that are a key driver of overtreatment. However, I’m sober about the obstacles Medicare and his counterparts face. The healthcare industry “wins” by a country mile in the race to see who lobbies Congress the most. The military-industrial complex’s lobbying looks Lilliputian by comparison. The nature of politics is that most lobbying dollars don’t go to conservative or progressive causes – they go to “preservative” causes. After all, only industry incumbents determined to preserve the status quo have the ability to financially support their “preservative” candidates. Consequently, both the ACA and AHCA are largely about moving deck chairs around on the Titanic debating who pays for a wildly under-performing healthcare system.
This isn’t meant to cast aspersions on the real progress that individuals running Medicare have made. However, in many ways their hands are tied. The industry didn’t spend $650 million on lobbying last year ($187 million in Q1 2017) to see healthcare’s hyperinflation be tamed. It’s hard to imagine Medicare leaders being given the freedom to do what public and private sector employers are doing around the country to slay the healthcare cost beast. While there are pockets of excellence in Medicare such as the best Medicare Advantage plans (CareMore, Iora Health, ChenMed and other are great examples). On the other hand, healthcare insiders tell me that the upcoding that is part of the mega case that the Department of Justice has joined charging United Healthcare with fraud is commonplace in many Medicare Advantage programs.
Economic Depression and Redistribution “Tax” Can be Trumped by Health 3.0
It couldn’t be more clear that an economic depression for the middle class fueled the populist presidential campaigns. It has been a redistribution “tax” from the middle class to the private-sector healthcare industry that has crushed nest eggs. The challenge for public officials is that most of the workforce receives their health benefits via employers as a result of accidents of history that created an employer-based healthcare system. Despite some expectations that employers would drop insurance after Obamacare passed, that hasn’t happened. I’m still looking for someone who has made a strong case that it’s remotely possible that the employer-based healthcare system is going away in the next 10 years. Despite political will in places like Vermont, when single-payer advocates push for single-payer, they can’t find the money as they are doubling down on a very flawed economic model.
While some operate in hypotheticals, the Health 3.0 movement has fueled incredible things in Orlando, Kirkland, Tulsa, Pittsburgh and many other places. The non-profit institute that I co-founded, the Health Rosetta Institute, is focused on scaling the proven fixes to the healthcare cost crisis. We see these approaches working in virtually every setting of healthcare -- private and public employers, urban and rural, large and small companies -- and with challenging disease burdens they are addressing. Bruce Katz of the Brookings Institution has made a powerful case in his book on the Metropolitan Revolution that solutions to society’s biggest problems will happen at the city level and bubble up. For those seeking real improvements in healthcare, I believe the federal government can do things to foster or hamper that kind of grassroots revolution.
The following are some of the items that I think would make sound public policy whether one is operating at the federal, state or local level:
- Tap government buying power as a massive employer: The public sector is a large purchaser of healthcare services. As PwC and others have pointed out, we know a third to a half of all healthcare we purchase doesn’t add value. Imagine any business where that would be acceptable. We have seen in locales such as Kirkland, Washington, and Pittsburgh that the best way to slash healthcare costs is to improve health benefits. Adherents to the Health Rosetta in the public and private sector have proven that you can spend 20-50% less on health benefits for the same or better results. Just as the DoD and local governments have been early adopters of green technologies, the public sector can have more economically sustainable health benefits. We can take healthcare reform discussions out of the ivory tower and theoretical to large scale tests with the millions of public sector employees. In other words, the strongest path to make the case for single-payer is to prove it in the real world. A solid base of evidence would allow a state like Vermont to grow from public sector employees to Medicaid to Medicare for All if that was their goal. That would also allow a transitionary period for healthare providers so the transition wasn’t so abrubt.
- Greater transparency: The federal and state governments should push much harder on true price and quality/safety transparency. With healthcare consuming nearly one-fifth of the economy and devastating state budgets (which, in turn, devastates education, infrastructure and other budgets), it’s abhorrent that regulatory capture by the industry prevents this. Forward-looking leaders realize that there’s no greater economic stimulus opportunity in their hands than realizing the full value from healthcare. One citizen in Florida has done more to revitalize thousands of lives than most state governments have done. While there are different definitions of what “quality” means, Dr. Marty Makary’s Unaccountable book points to the most important quality indicator that is currently suppressed — hospitals safety scores/culture. Once healthcare purchasers knew things such as whether nurses or doctors would have their family member treated in their own hospital, they’d demand improved quality. As long as healthcare purchasers (public and private) allow that critical information to be suppressed, we’ll continue to seriously harm thousands of people a day needlessly. Once again, the government as a large purchaser of healthcare services could flex its muscle to shine a light on currently-hidden safety data.
- When you review the deep study Robert Wood Johnson Foundation conducted to determine what drives health outcomes, it’s clear that 80% of what drives health outcomes is driven by non-clinical factors. These so-called “social determinants of health” can be impacted by what local, state and federal government organizations do or don’t do. Unfortunately, we’ve had a catastrophic misalignment of resources that waits for the far-more-expensive medical “five-alarm fires” when “fire prevention” is much more cost effective.
Among the reasons I’m optimistic this grassroots Health 3.0 movement will continue to grow is that the solutions don’t follow traditional partisan-driven lines. These successes are coming from people across the political spectrum. Progressives are the ones implementing healthcare ideas that people call conservative. Conservatives are implementing ideas that would be called progressive. Each of us has had an awakening that we don’t need a left solution or a right solution. We need an American solution and this good news is spreading like wildfire. As Katz’s book points out, more localized decision-making tends to be more problem-solving-oriented than politically motivated.
To draw an analogy, look at how the movement to address climate change developed. The climate declaration signed by cities and counties began in Seattle, extended to New York and over 1000 cities and counties ultimately leading to the Paris Climate Accord and beyond. Cities, counties and states provide fertile ground for those who would like to drive real reform. As we state on the Health Rosetta Institute’s website, “Healthcare is already fixed. Join us to scale the fixes.” The genesis for the Health Rosetta was my 7-year quest to find all of the solutions that are actually working. The great news is that we’ve found a wide array of pioneers who’ve proven what works in rural and urban settings, in the private and public sector, in large and small organizations and in every corner of the country. They've shown how to tackle even the most vexing health challenges with extremely demanding populations. These are the sorts of successes I capture in my forthcoming book, CEO's Guide to Restoring the American Dream How to deliver world class healthcare to your employees at half the cost.
The book and institute take a transpartisan approach that recognizes there are common interests people have regardless of where they fall on the political spectrum. Having said that, with my friends who are pro or anti single payer, I make the following arguments:
- To my pro single payer friends: As described earlier, I believe the most realistic path to single payer is to prove how there’s a better model (replicating already-existing successes) that starts with public sector employees and then extends to state-based Medicaid programs. Success in those realms lay the strongest foundation for a single payer argument.
- To my anti single payer friends: The quasi free market has wildly under-performed from employer-based healthcare (the driver of 20 years of wage suppression) to Medicaid and Medicare programs where private sector models such as Medicare Advantage have created major incentives for fraud and in fee-for-service Medicare, there’s such widespread overtreatment that a renowned cardiologist established an institute to address that massive issue. Overtreatment is primarily driven by economic incentives the private sector has taken advantage of. If you want to make the case for the free market being the solutions, it’s time to address the woeful performance of the so-called free market that has run amok in healthcare.
For too long, healthcare has set too-low expectations for itself. With the brainpower and passion invested in healthcare, we should expect far more from our healthcare investment. Revolutionary doctors and forward-looking citizens aren’t waiting around for D.C. to solve the nation’s problems. Historically, the private sector has followed the lead of Medicare, but the tables are turning. The Health 3.0 movement is now leading the way for the highest-performing healthcare system.
Dave Chase is a tech entrepreneur and author turned healthcare industry investor. His book “The CEO’s Guide to Restoring the American Dream: How to deliver world-class health care to your employees at half the cost” will be released this year. He is also the co-founder of the non-profit Health Rosetta Institute. His recent TEDx talk was entitled “Healthcare Stole the American Dream - Here’s How We Take it Back”.