Commentary by Independent Institute's John Goodman brings decades of health policy expertise to bear on this election year.
Clipped for length.
https://www.independent.org/news/article.asp?id=14899
Is There A Trump Health Care Plan? | April 8, 2024Although he rarely talks about it, the most significant gift Donald Trump bequeathed to economic prosperity was deregulation. And the one sector that was deregulated more than any other was health care.
Since Joe Biden has been re-regulating the economy, it’s hard to think of a starker contrast between the two leading presidential candidates this year—and it affects all aspects of health care.
I am not alone in thinking that Trump might have won the 2020 election if he had campaigned on his health care accomplishments. Let’s see if this year’s election turns out to be different.
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Chronic Illness. There is mounting evidence that patients suffering from diabetes, heart disease, and other chronic illnesses can (with training and the right support) manage a lot of their own care as well as—or better than—traditional doctor therapy can. If they are going to manage their own care, they can do an even better job if they are also managing the money that pays for that care.
HSAs are a natural vehicle. However, current law’s requirement of an across-the-board deductible makes HSAs incompatible with smart insurance design for chronic care. For example, an wise employer might want to make insulin available for free to diabetic employees in order to encourage its use. The same employer might ask noncompliant employees who show up in emergency rooms to pay for that care out of their own account.
Under guidance issued by the Trump administration, employers and insurers can now provide first-dollar coverage for the purchase of maintenance drugs for 13 chronic conditions without running afoul of HSA regulations.
More needs to be done. HSAs ought to be completely divorced from the high-deductible requirement. Let the market, rather than government, make decisions about the optimum role of cost-sharing.
Another important development in the first Trump administration was the move to encourage “focused factories” in Medicare. In contrast to the rest of the health-care system, Medicare Advantage “special needs” plans can specialize in 15 chronic conditions. These plans can exclude applicants who don’t have the condition. They can also ask health questions and request medical records.
The Obamacare exchanges would be enormously improved if they allowed the same sort of specialization and the same type of risk adjustment that we now find only in the Medicare Advantage program.
Round-the-Clock Primary Care. Concierge doctors used to be available only to the rich. Today “direct primary care” (DPC) is much more affordable. Atlas MD, in Wichita, Kan., for example, provides all primary care along with 24/7 phone and email access. They offer discounts on lab tests and generic drugs for less than what Medicaid pays. The cost: $50 a month for a middle-aged adult and $10 a month for a child.
An unfulfilled goal of the first Trump administration was to allow employers to put money into individual accounts from which the employees could make monthly payments to DPC doctors of their own choosing.
This should be a high priority in a second Trump term.
A Future Agenda. Space does not permit a discussion of other reforms, including liberating Association Health Plans, requiring hospital price transparency and expanding options under Medicare Advantage.
But I hope I have made clear that Donald Trump does not need a new health policy agenda. He merely needs to complete the agenda of the first Trump administration.
The vision behind the Trump agenda can be found in Reforming America’s Healthcare System Through Choice and Competition. This 124-page Health and Human Services document from 2018 argues that the most serious problems in health care arise because of government failure, not market failure.
It’s time to dust off that document and re-read it.
John C. Goodman is Senior Fellow at the Independent Institute, President of the Goodman Institute for Public Policy Research, and author of the widely acclaimed, Independent books, A Better Choice: Healthcare Solutions for America, and the award-winning, Priceless: Curing the Healthcare Crisis. The Wall Street Journal and the National Journal, among other media, have called him the “Father of Health Savings Accounts.”
Dr. Goodman is frequently invited to testify before Congress on health care reform, and he is the author of more than fifty studies on health policy, retirement reform and tax issues plus ten books, including Living with Obamacare: A Consumer's Guide; Lives at Risk: Single Payer National Health Insurance Around the World (with Gerald Musgrave and Devon Herrick); Leaving Women Behind: Modern Families, Outdated Laws (with Kimberley A. Strassel and Celeste Colgan); and the trailblazing Patient Power: Solving America's Health Care Crisis, that sold more than 300,000 copies. His other books include The Handbook on State Health Care Reform, National Health Care in Great Britain: Lessons for the U.S.A., Economics of Public Policy: The Micro View (with Edwin Dolan), Fighting the War of Ideas in Latin America, and Privatization.
Dr. Goodman received his Ph.D. in economics from Columbia University, he has been President and Kellye Wright Fellow in Health Care at the National Center for Policy Analysis, and he has taught and completed research at Columbia University, Stanford University, Dartmouth College, Southern Methodist University and the University of Dallas. In 1988, he received the prestigious Duncan Black Award for the best scholarly article on public choice economics.
With the first presidential debate looming, another clip seems relevant.
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Insurance Tailored to Individual and Family Needs. Imagine combining the average premium with the average deductible for health insurance purchased by a family of four in the Obamacare exchanges. In 2020, that totaled more than $25,000. In other words, a family not getting a subsidy had to spend more than $25,000 before getting any benefit from their health insurance plan! And they had to do that every year!
Not surprisingly, the unsubsidized part of the market was in a free fall. Democrats in Congress responded by creating “enhanced subsidies”—even for people who are wealthy. The government is now virtually giving health insurance away for free to average-income families.
If you are sick, things are far less rosy, however. The annual out-of-pocket maximum exposure for a family this year is $18,900. That’s the amount you may have to pay in the form of deductibles and coinsurance—over and above any premium payment. Families with ongoing, chronic conditions have to pay as much as that amount—every year!
As an alternative, President Trump used an executive order expanding people’s opportunity to buy “short-term” insurance. These plans look very much like the insurance that was popular before there was Obamacare. They often sell for as little as half the price of Obamacare insurance; they typically have lower deductibles and broader provider networks; and they offer much better protection for anyone who experiences a costly medical problem.
Congressional Democrats, with the apparent backing of the large insurance companies, have generally been quite hostile to these plans. President Obama limited them to 3 months duration. President Biden recently limited them to three months with a one-month renewal. Under Trump, they were available for one year, with renewals for two more years. A second type of insurance could bridge the gap between three-year periods—allowing a relationship with an insurer indefinitely.
Under the Trump approach, the short-term market could easily evolve into the closest thing we have ever had to free market health insurance, and that includes a free market solution to the problem of pre-existing conditions.
Note that Trump did not abolish Obamacare, or even restrict it (despite a lot of Republican rhetoric). The Trump approach was to expand people’s options. The Biden/Obama approach eliminates options.
Personal and Portable Health Insurance. Before there was Obamacare, some employers gave their employees pre-tax dollars to purchase individually owned insurance. This was insurance the employees could take with them from job to job and in and out of the labor market.
President Obama completely shut down this practice with a threat to fine any employer caught doing it as much as $100 per employee per day. This was countermanded by a Trump rule that has allowed (and even encouraged) employers to fund employee-owned health insurance since January 2020.
It is striking to observe how many significant health policy changes have been affected by presidential action alone—without any act of Congress. Yet congressional action is needed to take full advantage of the opportunities.
Under the Trump executive order, employees can only use their employer’s funds to buy “Obamacare compliant” insurance, which mainly means insurance sold in the exchanges. Moreover, the employees cannot get the subsidies other buyers get in the exchanges. Since the exchange plans are otherwise very unattractive, the take-up rate for this opportunity has been well below initial expectations. What is needed is congressional action to allow the employees to buy any kind of insurance—including the short-term plans described above.
Virtual Medicine. When Donald Trump took office,it was illegal in most cases (by act of Congress) for doctors to bill Medicare for consultations by means of phone, email, Skype, Zoom, Facebook, etc. One of the few positive aspects of Covid was the liberation of telemedicine.
Given the Covid crisis, telemedicine would probably have been liberated even if Hillary Clinton had been president. But it would likely have taken another year to accomplish that change. The reason: there are 10,000 tasks Medicare pays doctors to do. Because Medicare insists on setting the price for every one of them, in every institutional setting, and in every locality, figuring out what can and cannot be done by telemedicine and what the right price should be is an enormous challenge.
The reason telehealth emerged so quickly under a Trump presidency is that his administration believed in deregulating telehealth barriers and had been preparing for it long before Covid struck.
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Project 2025 comes from a broad-based coalition of 100 policy organizations.
It is not enough for conservatives to win elections. If we are going to rescue the country from the grip of the radical Left, we need both a governing agenda and the right people in place, ready to carry this agenda out on Day One of the next conservative Administration.
This is the goal of the 2025 Presidential Transition Project. The project will build on four pillars that will, collectively, pave the way for an effective conservative Administration.
The financial markets seem to believe that Trump will get elected after President Biden's debate performance Thursday evening.
Friday's market action suggests that financiers believe that Trump may take significant actions against the Affordable Care Act. While healthcare stocks flatlined overall on Friday, healthcare companies which built business models around ObamaCare exchanges suffered losses.
Oscar Health [OSCR $ 15.84 (-10.54%)], HCA Healthcare [HCA $ 324.00 (-6.43%)] and Tenet Healthcare [THC $ 133.03 (-3.80%)] all took significant hits.
@10x25mm when time allows I think we'd all like to know more about how these businesses built around the ACA.
MedPage leads today with a StatNews overview of J.D. Vance's healthcare experiences and possible perspective.
It's crucially important to understand that health policy is not just about patients, professions, and industry. It is BIG MONEY at both state and federal levels. Due to massive regulatory expansion at both levels, how big can hardly be overemphasized.
https://www.statnews.com/2024/07/15/jd-vance-trump-vp-healthcare-abortion-investments/
What to know about Trump VP pick J.D. Vance’s health care views and investments
WASHINGTON — Sen. J.D. Vance, who was tapped to be former President Trump’s running mate on Monday, has a history of investing in health care companies — and of pursuing health care policies that are sometimes at odds with his party’s base.
Vance, as a Yale-educated venture capitalist, has invested in biotech startups developing new therapies, companies that aim to aid in drug discovery, health data companies, and health tech platforms, according to his federal financial disclosures.
Vance rose to prominence after his book “Hillbilly Elegy” about his impoverished childhood in Appalachia was published in 2016. He’s found friends in wealthy places since. He co-founded a venture capital firm, called Narya Capital, with funding from billionaire Peter Thiel and support from venture capital titan Marc Andreessen and former Google CEO Eric Schmidt. The firm has portfolio companies focused on health care.
Trump in the past has taken cues on health care from his vice president. Former vice president Mike Pence had significant influence over the administration’s health care officials. Trump’s second confirmed Health secretary, Alex Azar, was a former executive at Eli Lilly, a drugmaker headquartered in Indiana. Medicare and Medicaid chief Seema Verma had deep roots in Indiana as well, as did former Surgeon General Jerome Adams. Trump also used Pence to bolster his anti-abortion credentials with evangelical voters.While Pence was a more traditional conservative evangelical who brought decades of political experience to the ticket, Vance at 39 is younger and less experienced politically. He is a politician who rode the wave of populism that Trump started into office, and he offers less of a contrast to the former president than Pence did with his staunch conservatism.
Trump has now nudged the Republican party away from advocating for a national abortion ban, and toward a stance that abortion policy should be left to the states.
The party’s 2024 platform isn’t heavy on health care policy, besides a promise that Trump “will not cut one penny” from Medicare and Social Security. The platform shows Trump wants to intensify the party’s battle against gender-affirming care, and increase transparency and access to new and affordable options in health care.
Vance hails from the populist wing of the Republican party, and at times has been willing to buck his party on health care issues. In 2022, Vance voiced support to AARP for Democrats’ plans to negotiate drug prices in Medicare. However, he’s toed the party line on other issues, like a bill proposing to exclude children brought to the U.S. by parents without legal immigration status from federal health insurance programs — an issue Trump brought up during the first presidential debate.
At the same time, he has some ties to the drug industry. Vance has found a major supporter in former Celgene chairman Bob Hugin, who faced criticism for price hikes on a cancer drug during his failed Senate bid. Hugin donated $50,000 to a super PAC supporting Vance in 2022, according to the campaign finance tracking site OpenSecrets, and gave another $3,000 to his campaign in October 2023.
Vance’s evolving health care agenda
The Ohio senator has in recent weeks pulled his health care policy platforms more in line with Trump, at times drawing flak from conservatives.
For instance, Vance has previously said he objects to exceptions to abortion bans in case of rape and incest, running counter to Trump’s emphasis this year on the need for those conditions in any abortion restrictions. The Ohio senator told the state’s Spectrum News in 2021 that: “It’s not whether a woman should be forced to bring a child to term, it’s whether a child should be allowed to live, even though the circumstances of that child’s birth are somehow inconvenient or a problem to the society.”
Vance softened his position this month, telling NBC’s Meet the Press that he supports the Supreme Court’s recent decision preserving access to the abortion pill mifepristone.
“On the question of the abortion pill, what so many of us have said is look, the Supreme Court made a decision saying the American people should have access to that medication. Donald Trump has supported that opinion. I support that opinion,” Vance said on July 7.
The turnabout drew criticism from anti-abortion advocates, including some GOP state lawmakers.
“[J.D.] Vance claims to be a Christian. But now he suddenly wants abortion pills, by which two-thirds of abortions occur in our land, to be legal,” Ben Zeisloft, editor of conservative news site The Sentinel, wrote on X. “This is probably because Donald Trump now supports abortion pills as well and because J.D. Vance wants the vice presidential nod.”
Yet Vance has also been one of the Senate’s most visible proponents of another tenet of the Republican party platform, limiting transgender people’s rights.
The senator last year introduced a bill that would make providing gender-affirming care to minors a felony with a 10- to 25-year prison sentence. The bill would also bar taxpayer funding for gender-affirming care procedures — regardless of age — running parallel to a Republican party priority in the RNC platform.
Opioid epidemic
Vance’s mother struggled with drug addiction, which has underpinned Vance’s emphasis on addressing the opioid epidemic. He has said that prescription opioids landed his mother in the hospital before she started using heroin.
In 2016, Vance warned in an op-ed in The Atlantic that then-presidential candidate Trump had to address the opioid epidemic. His stance has been that substance use disorder is especially widespread due to hopelessness caused by economic, social, and cultural challenges. He has called “dignified work” the way out of addiction.
But his efforts to address the issue himself have been stunted. Following the 2016 presidential election, Vance founded a charity to help solve the opioid epidemic that he witnessed in his childhood, though it shuttered just a year later. An Associated Press investigation found that the addiction specialist the organization chose for a yearlong residency had ties to Purdue Pharma, which pushed the painkiller OxyContin for years.
In the Senate, Vance authored legislation that would allow parents to request information about controlled substances prescribed to adult children on their health insurance.
Health care for immigrants
Vance last year introduced legislation that would deny federal health care coverage to people in the Deferred Action for Childhood Arrival, or DACA program, long referred to as “Dreamers” by Democrats. The Biden administration finalized a policy this May that would broaden Medicare and Medicaid coverage for DACA recipients.
Trump has repeatedly brought up immigrants’ access to federal health programs, charging that illegal immigrants sap Medicare’s funding.
“[Biden]…is destroying Medicare, because all of these people are coming in, they’re putting them on Medicare,” he said in last month’s debate.
Advocates have said that Vance’s legislation would strip some 710,000 people of their health insurance.
Vance and public health
Vance received Trump’s praise for how he handled the fallout of the East Palestine, Ohio, train derailment and ensuing concerns about the chemical spill’s lingering impact on residents’ health.
“J.D. Vance has been incredible,” Trump told reporters during an Ohio event last February, as the senator stood to his side.
Vance joined with both Republicans and Democrats from the state to push federal health officials’ response to the disaster. Their letter included a call for the Department of Health and Human Services to deploy a little-known provision of the Affordable Care Act that allows Medicare coverage for people exposed to certain environmental hazards.
His advocacy for East Palestine has at times pushed Vance away from his party, particularly as he joined with Ohio Democrat Sherrod Brown on legislation to boost railway safety and oversight.
This May, the senator joined Ohio attorney general Dave Yost in criticizing a federal settlement with the residents that they said “risks undercompensating the residents of East Palestine.” That same month, Vance introduced a bill that would require HHS to conduct a follow-up study on the health impacts of residents’ chemical exposures.
In June, after transportation officials released their findings on the derailment, Vance ratcheted up his calls to reassess the agreement. The report called the “Biden Department of Justice’s premature settlement into serious question,” Vance said in a statement.
The Covid-19 response
The senator has blasted Covid-era vaccine and mask requirements, writing in a 2021 editorial that Covid-19 vaccine mandates are an “invasion of medical privacy.”
Last year, Vance introduced a bill that would prohibit mask mandates, calling them a failed policy of the pandemic.
Children “need us to not be Chicken Little about every single respiratory pandemic and problem that confronts this country,” he said in remarks on the Senate floor about the legislation.
Health care investing
Vance’s financial disclosures as a senator provide a window into his health care investments.
His largest investments are in AmplifyBio and Kriya Therapeutics, in the range of $50,000 to $100,000, according to his 2022 financial disclosures. Kriya is developing gene therapies to treat conditions including eye diseases, diabetes, and epilepsy. AmplifyBio specializes in helping drugmakers study, develop, and manufacture new medicines. Vance hasn’t filed his 2023 documentation yet.
His smaller holdings include investments of between $1,000 and $15,000 in a broad range of companies touching pharmaceutical development, provider training, medical devices, and data and software development.
In the pharmaceutical space, Vance’s investments include Chase Therapeutics, which is focused on developing treatments for brain disease including Parkinson’s disease and depression, NeuScience, which aims to treat terminal cancers, and Pop Biotechnologies, which is developing platform technology to treat cancer and infectious disease.
He also has apparently taken an interest in virtual care and health data. Vance invested in Abartys Health, a health care data management company in Puerto Rico; DeepConvo, a voice-based telehealth interface developer; MCH Ventures, a health software company, POPS! Diabetes Care, an online platform developer; Ready Responders, a virtual emergency health care platform; and Healthcare Interactive, which offers online dementia care training.
The Hill offers a somewhat biased summation of a possible RFK, Jr role in a Trump administration. There's also a New Yorker article: it may be better, but it's behind a paywall.
Of special interest to the growing tribe of vaccine-choice advocates (they prefer not to be called anti-vaxxers).
https://thehill.com/homenews/campaign/4887585-rfk-jr-trump-fda-nih-cdc/
RFK Jr. says he’s helping Trump pick leaders of FDA, NIH, CDC
Former independent presidential candidate and antivaccine advocate Robert F. Kennedy Jr. said that former President Trump wants him to choose leaders for key public health agencies if he wins the election in November.
Kennedy told conservative commentator Tucker Carlson that under a second Trump term, he would be responsible for eliminating “corrupt influences” from agencies, Mediaite first reported.
“President Trump has asked me specifically to do two things. One, to help unravel the capture of the agencies by corrupt influence. In other words, to drain the swamp. And, you know, I had to say something about President Trump,” Kennedy told Carlson.
Kennedy named the Centers for Disease Control and Prevention (CDC), the Food and Drug Administration (FDA) and the National Institutes of Health (NIH) as potential agencies during a Tuesday stop in Wisconsin on Carlson’s live tour.
Kennedy and Trump previously talked about conspiracy theories related to the toxicity of childhood vaccines in a video posted to social media earlier this year, The Hill reported.
In a separate interview with Carlson last month, Kennedy said that Trump asked him to serve on his transition team if the former president serves a second term.
Trump campaign spokesperson Karoline Leavitt called discussions about who will serve in a second Trump administration “premature.”
“President Trump announced a Trump Vance transition leadership group to initiate the process of preparing for what comes after the election. But formal discussions of who will serve in a second Trump Administration is premature. President Trump will choose the best people for his Cabinet to undo all the damage that Kamala Harris has done to our country,” she said.
Democrats and the public health community sounded the alarm earlier this month about the possibility of Kennedy becoming the Health and Human Services secretary in a second Trump term. At the time, The Hill reported that Trump had not said what, if any, Cabinet position he would offer Kennedy.
Dr. Sally Pipes experienced Canadian healthcare causing the unnecessary death of her parent.
Her recent Washington Examiner op-ed zeroes in on this thread's question.
https://www.washingtonexaminer.com/opinion/3161263/trump-has-plan-for-healthcare/
Trump has a plan for healthcare
September 20, 2024 12:24 pmVice President Kamala Harris is mocking former President Donald Trump for saying he has “concepts of a plan” to replace Obamacare.She’d do well to remove the plank from her own eye before slamming her opponent for a gaffe. During his presidency, Trump advanced several reforms that expanded access to affordable coverage.
Harris, by contrast, has been mum on whether she continues to support a government takeover of the health insurance system as she did during her first run for the presidency. Instead, she has said that she wants to strengthen the Affordable Care Act and extend President Joe Biden’s ruinously expensive scheme of enhanced premium subsidies permanently.
Pushing more patients onto the exchanges won’t make coverage more affordable.
Start with the price of insurance. According to the Paragon Health Institute, premiums in the individual market have risen 50% faster than employer plan premiums over the last 10 years. Average deductibles for mid-level silver plans have more than doubled between 2014 and 2024.
Because premiums are on the rise, customers are increasingly opting for less generous bronze plans that require lower monthly outlays. A decade ago, only 1 in 3 exchange enrollees had a bronze plan. More than half do now.
Lower premiums mean higher deductibles. According to KFF, bronze plans come with an average deductible of $7,258.
Now look at the employer market, where the average deductible is just $1,735. A whopping 84% of people with employer-sponsored insurance have deductibles under $3,000, based on Paragon’s research.
Despite high premiums and deductibles, Obamacare comes with scant benefits. Over the last decade, the share of exchange enrollees in plans with broad provider networks plunged from 36% to just 11%, according to Paragon’s research.
In other words, people may find themselves paying hundreds of dollars every month for insurance the doctor they’d like to see doesn’t accept.
Harris wants to keep subsidizing this failing insurance ecosystem. Her plan for healthcare would push more patients into poor-quality plans at taxpayer expense.
Trump has a different idea. His running mate, Sen. J.D. Vance (R-OH), says the former president would deregulate the insurance market to “not have a one-size-fits-all approach that puts a lot of people into the same insurance pools.”
During his first term, Trump allowed people to purchase short-term health plans that lasted for up to 364 days and could be renewed for up to three years. These plans cost less than exchange coverage because they don’t have to comply with Obamacare’s many regulations, including the requirement that plans cover 10 essential health benefits regardless of whether people want or need them. In many cases, short-term plans can offer better coverage than what’s available on the exchanges for less money, according to research from the Manhattan Institute.
The Biden-Harris administration reversed the Trump-era liberalization of the short-term insurance market by capping the plans’ duration at three months, with an option for a one-month renewal. Some states, including California, New York, and New Jersey, have totally banned them on the grounds that they’re “junk” insurance.
Both candidates have a plan for healthcare. Harris’s plan will make coverage less affordable — Trump’s could make it more so.
Sally C. Pipes is the president, CEO, and Thomas W. Smith fellow in healthcare policy at the Pacific Research Institute. Her latest book is False Premise, False Promise: The Disastrous Reality of Medicare for All (Encounter 2020).
He might have a point. Any federal health policy wonks care to comment?
Independent republished this Forbes opinion piece with plenty of hot links, omitted here to avoid some very ugly trailers.
https://www.independent.org/news/article.asp?id=15083
What the Left Is Getting Wrong About the GOP’s Health IdeasIn an interview the other day, J.D. Vance said that Donald Trump will “promote more choice in our health-care system and not have a one-size-fits-all approach that puts a lot of the same people into the same insurance pools.”
In no time at all, left-wing critics pounced.
Trump and Vance would “permit insurance companies to discriminate against people with preexisting conditions,” wrote Jonathan Chait. They would allow insurers to “charge less to the healthy and more (much more) to the sick,” added Josh Barro. “That’s exactly how health insurance worked before Obamacare,” said Paul Krugman.
Yet it is the critics who don’t understand how Obamacare is working and how it needs to be reformed. When insurers are forced to sell to everyone at the same price, they have strong incentives to attract the healthy (on whom they make a profit) and avoid the sick (on whom they incur losses). That is what is happening today.
Obamacare didn’t solve a problem; it merely changed the nature of the problem. In the old days, some chronic patients couldn’t get health insurance. As I show below, today they can get insurance, but they may not be able to get health care.
So, what’s the answer? It begins by recognizing that almost everyone in America today who buys private health insurance is getting a tax subsidy for their purchase. People who get insurance from an employer have that benefit excluded from their taxable income. People who buy in the (Obamacare) exchange are getting tax credits, which are transferred to the insurers along with the buyer’s payment.
Part of the premium we pay is coming out of our pockets, and the rest is picked up by government. Even if our part of the premium is community-rated (that is, the same price regardless of health status), there is no reason why the government’s share has to be restricted in that way.
In an ideal system, the government’s share would vary with health status. The total amount received by the insurer (personal + government payment) would equal the actuarially fair value of the insurance (the expected cost of care). Were this to happen, the healthy and the sick would be equally attractive to the insurers. There would be no incentive for insurers to discriminate based on health condition—either in cost-sharing, benefit design, or choice of provider networks.
If insurers were fully compensated to take on chronic patients, many would specialize and develop lower-cost, higher-quality systems of care. We could have what Harvard professor Regina Herzlinger calls “focused factories,” entities that excel in the treatment of various forms of chronic illness. Far from having everyone in the same risk pool, we could have separate pools for diabetics, heart patients, and those with other chronic conditions.
Some readers may wonder if this idea is practical. Could it actually work?
We are already doing it. What I just described is how the Medicare Advantage program was designed, and it is serving the needs of more than half of all Medicare enrollees. Although originally bipartisan idea, this approach to health care has become increasingly associated with Republicans.
Medicare Advantage is the only place in the health care system where health plans receive risk-adjusted premiums that reflect the health status of the enrollees. The enrollees pay the same premium, regardless of their health condition. But the government’s additional premium payment makes the total amount the health plan receives equal to the expected cost of the enrollee’s health care. Although not perfect, it is the most sophisticated risk-adjustment system in the world.
Medicare Advantage is also the only place in the health care system where a doctor who discovers a change in a patient’s health condition (say, the detection of cancer) can send that information to the insurer (in this case, Medicare) and receive a higher premium payment for the health plan, reflecting the higher expected cost of care. This means plans are rewarded, not penalized, when they find and treat medical problems.
Finally, Medicare Advantage is the only place in the health care system where insurance plans can specialize. There are special needs plans for diabetes, for patients with respiratory problems, heart problems, cancer care, etc.
Boston University professor Laurence Kotlikoff and I have argued that the Medicare Advantage model is exactly the right way to reform the Obamacare exchanges.
Right now, the individual market is great for the healthy and lousy for the sick. If you have average income and no health problems, the insurance is free (or almost free). But if you have a costly health problem, the out-out-pocket exposure this year is $9,450. For a family it is twice that amount. This is the highest penalty for being sick found anywhere in the health insurance system, and victims have to bear that cost every year.
Compared to employer-sponsored plans, the plans in the exchanges have very narrow networks that often exclude the best doctors and the best medical facilities. And if you go out of network, the plan pays nothing.
With rational risk adjustment, people would not have to be trapped in a one-size-fits-all system. They could go outside the exchange to purchase short-term plans, sharing plans, and other plans not subject to Obamacare regulations. In fact, we could have a fully free market for health insurance, comparable to the markets for other kinds of insurance.
And, although I have referred to government as the risk adjuster, the kind of system I am describing is what probably would have developed privately had the insurance market been allowed to evolve on its own.
What Trump and Vance are talking about doesn’t mean we have to return to the (pre-Obamacare) bad old days. It means we can look forward to a much better future.
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