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There is no shortage of proposed solutions to reduce health care costs and expand coverage in the U.S. However, central to many policy options is the concept of increased market competition and/or increased regulation of health care insurance markets. In other U.S. markets, competition is a tool used to achieve standard levels of quality and efficiency, spur innovation, and drive down costs thereby improving affordability. Further, in U.S. health care, market competition can take many forms but does not guarantee the quality of care. This session explored how cost-saving proposals to spur market competition or enhance regulation address: (1) fiscal implications; (2) coverage; (3) accessibility to patients (including out-of-pocket costs and equity), and (4) provider reimbursement. Panelists also explored how the COVID-19 pandemic may increase urgency or complicate discussions around these policies.
- Fred Bentley, MPP, MPH, Managing Director, Avalere
- John Holahan, Ph.D., Institute Fellow, Urban Institute
- Avik Roy, President, The Foundation for Research on Equal Opportunity
- Emily Stewart, Executive Director, Community Catalyst
- Kate Sullivan Hare, Vice President of Policy and Communications, Alliance for Health Policy (moderator)
This event is made possible with support from Arnold Ventures.
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Fred Bentley, MPP, MPH
Avalere Health, Managing Director
John Holahan, Ph.D.
Urban Institute, Institute Fellow
Foundation for Research on Equal Opportunity, President
Community Catalyst, Executive Director
Experts and Analysts
James Capretta, MPP
American Enterprise Institute (AEI), Resident Fellow and Milton Friedman Chair
Lanhee J. Chen, Ph.D., J.D.
Hoover Institution, David and Diane Steffy Research Fellow
Mark Peterson, Ph.D.
The University of California, Los Angeles, Professor of Public Policy, Political Science, and Law, Luskin School for Public Affairs
Lauren Crawford Shaver
Forbes Tate Partners, Partner
Cori Uccello, MAAA, FSA, MPP
American Academy of Actuaries, Senior Health Fellow
Jennifer Boulanger, MPP
Centers for Medicare & Medicaid Services, Office of Legislation, Deputy Director
Government Accountability Office, Director of Health Care
Jeff Grant, MPA
Centers for Medicare & Medicaid Services, Acting Deputy Administrator & Director and Deputy Director,
Center for Consumer Information and Insurance Oversight
Centers for Medicare & Medicaid Services, Office of Legislation, Director
Avalere Health, Head of Advisory Services
Allison Hamblin, MSPH
Center for Health Care Strategies, President and CEO
Claudia A. Salzberg, Ph.D.
American Hospital Federation, Vice President, Quality
Lori Shoaf, J.D.
Blue Cross Blue Shield Association, Executive Director, Political and External Affairs
Council for Affordable Health Coverage, President
Hello, everyone. Thank you for joining today’s webinar, Options for Lowering Costs for the Privately Insured.
I am Kate Sullivan Hare, Vice President for Policy and Communications at the Alliance for Health Policy.
For those who are not familiar with the Alliance, Welcome.
We are a non partisan resource for the policy community, dedicated to advancing knowledge and understanding of health policy issues the Alliance for Health Policy.
If I could have the next slide.
The Alliance for Health Policy, gratefully acknowledges Arnold Ventures for supporting today’s webinar.
The alliance is pleased to have Hunter Kellett, Director of Payment Reform at Arnold Ventures for some opening remarks.
Thank you very much, Kate. And thank you to the entire Alliance team for their work to put together this event.
I also want to thank the speakers who are here to talk about a very important issue.
Autonomy costs for the over 160 million people with commercial health insurance.
Polling from Pew last week, 56% of Americans said the affordability of healthcare is a very big problem in this country.
Health care affordability ranked higher than immigration.
Higher than infrastructure, higher than any other policy that was listed.
I don’t know, ventures for a philanthropy dedicated to tackling some of the nation’s toughest problems with evidenced based solutions, whether it be criminal justice reform or healthcare.
We support critical research to better identify the problem and drivers of high health care costs, then use this research to inform policy for both state and federal policymakers.
When it comes to health care affordability, one area of focus for us are the prices that commercial insurers pay providers, on average are two times what Medicare with the same inpatient hospital service.
Today’s talk broadly about commercial market, not only those who receive health insurance through the marketplace, but also those who are much more likely to receive health insurance from their employer.
We hope you walk away from today’s session with a good sense of the policy options in this space, including how to think about markets, where there’s a lack of competition, and, in particular, how to address the underlying problem of prices.
Lastly, as new options emerge from the debate on affordability, we hope you’ll have a better sense of how options will affect different actors, including insurer’s, hospitals and clinicians.
But also employers pay a large share of the premium costs.
Individuals and families are consumers who pay their premiums, deductibles, co-pays, and co-insurance.
And lastly, the taxpayer subsidizes the commercial market through the tax code.
I hope you find the session informative to your work. Thank you very much.
Great. Thank you so much, Hunter. Now we’ll go over some quick housekeeping items and then introduce our moderator and panelists.
I want to remind everyone that she can join today’s conversation on Twitter, using the hashtag AllHealthLive, and join our community at all health policy, as well as on Facebook and LinkedIn.
We want you all to be active participants, so please, get your questions ready.
If I could have the next slide.
Um, you should see a dashboard on the right side of your web browser that has a speech bubble icon for the question mark.
You can use that speech, that icon, to submit questions that you have for the panelists at anytime.
We will collect these and address them during the broadcast.
You can also chat any technical issues that you may be experiencing, and someone will attempt to help.
I could have the next slide.
Please be sure to check our website, our health policy dot org, where you can find background materials, including a resource list, and an expert list.
A recording of today’s webinar, including today’s slide deck, will be made available on our website soon.
And today, I’m so pleased to be joined by an esteemed group of experts.
If I could have the next slide, First, we have doctor John Holohan, who is an Institute Fellow at the Health Policy Center of the Urban Institute, where he previously served as center director for over 30 years.
John examines the health coverage costs and economic impact of policies like the Affordable Care Act, including the cost of Medicaid expansion as well as macroeconomic effects of the law.
And his expertise has been leveraged, testified before congressional committees.
Thank you for being here, John.
Next, I’m pleased to introduce Mr. Avik
Roy president at the Foundation for Research on Equal Opportunity, a non partisan non-profit think tank that conducts original research on expanding oportunidades to those who at least have it.
He also serves on the advisory board of the National Institute for Healthcare Management.
He is a Senior Advisor to the Bipartisan Policy Center.
And he co-chaired the Fixing Veterans Health Care Policy Task Force.
Welcome, and it’s great to have you back.
Next, I’m pleased to introduce mister Fred Bentley, managing director of the Center for Health Care Transformation at Avalere Health as an expert in fields ranging from payer strategy to hospital physician alignment and post acute care.
Fred has worked with providers, including integrated delivery networks, academic medical centers, post acute providers, and long-term care organizations, as well as national and regional health plans.
It’s a pleasure to have you with us today, Fred.
And finally, we have Miss Emily Stewart, Executive Director of Community Catalyst. In this role, Emily oversees the overall direction of Community Catalyst work to empower the consumer voice and health and healthcare decision making.
Most recently, Emily served as the Vice President Public Policy for Planned Parenthood, Federation of America, and Planned Parenthood Action Fund.
So, pleased, you could join us, Emily.
We’re going to launch today’s discussion. We’re beginning to hear from John. And I’m going to ask all of our speakers if we could turn off our camera, so that we can focus on our speaker, John?
Yes, OK. So, can you hear me?
Yes, John, Yes, we can hear you OK, good.
All right, we’re ready to start.
Yes, done, please go ahead OK, or somebody, could, You put on the first slide?
OK, so, I just wanted to start with a word about the competition versus regulation debate and just say that there’s clear evidence that competition can work in the right circumstances.
In the example I give is the marketplaces where subsidies are tied to second, lowest cost plan. If you are a more expensive plan. You have to pay the full cost.
This has provided strong incentives to be premium down.
So in our analysis, we found that markets with five or more insurers and low hospital concentration have premium.
There are about 35% lower the markets with one insurer.
The problem is that a large number of insurer and hospital markets are very concentrated, for example, 40% of operating region and the ACA in the non group market have 1 or 2 insurers, and about half of a hospital market in these regions are also concentrated by FTC standard standards.
So concentration means payment rates and providers are higher as a result.
The next slide provide, um, some of the evidence on this, showing the ratio of private insurance prices, relative to Medicare price, from various studies.
The first one in the top left is work that we did.
And the average ratio is a private price, 2.4 tons.
Medicare, or in other words, percent of Medicare, for hospital care, another study. Bam.
Same inpatient ratios are a little bit lower around two, Outpatient care is higher, physician services completely are quite a bit lower.
Um, the next slide, this is what, with the payment, provider, grahams, and that.
A public option or copyright to offset the effects of the concentration, public option is the government run program that provides insurance, that bears the risk it can contract out for administrative services.
It can be implemented in the non group market alone or in both the non group and employer market.
Generally subprime Right below commercial rate Medicare levels and Medicare blood pumping Public auction We generally agree to benchmark premium.
Coverage and government subsidy cost wise to the employer market will also affect employer and household spending.
It could reduce the participation of private insurers who partnered with a public option, But it could also give private insurers considerably more leverage Can negotiate rates.
Next slide, please, so a variant on this is capping rate.
And this would limit grades trade by on tours, Medicare and Medicare, what pumping level.
Pretty much like the way Medicare Advantage works in the Medicare program, it can be implemented on non group employer market. It can be combined with the public option. Again, like Medicare Advantage.
Individuals would benefit from lower premiums while keeping their private insurance.
More insurers can enter and exit in market them public option.
We completed Sportive Arnold Ventures a number of studies, recently.
These are probably the key finding.
Um, there’s a potentially significant effect on premiums in the non group market, is 28%, depending on where you start payment rate.
But the effects are small, in the aggregate or nationally, because the non group market is so small.
You really change the game quite a bit of public cloud vendors in an employer market, which is about 10 times larger than Niagara Margaret.
Second, the lower provider payment rates are, the lower premiums will be more savings for households, employers, and government.
But here’s the issue: It’ll be a greater reduction in provider revenues. Possibly, more disruption.
Captivates result in more than public option alone because the payment rate reductions or apply more broadly.
We also look at what a few exempts rural areas are involved in that you could do that with having much without much effect on national results.
And lastly, the policies can be limited to highly concentrated insurance and hospital market, and achieve substantial effects on federal spending and national health spending.
And this happens because so many markets are concentrated, and this is where premiums are higher. So even if it’s just one concentrated market you’re going to have. The next slide.
This sort of summarizes.
Some of the results from one of the recent papers shows the overall effect on national health funding.
If the policy applies in the non group market, effects are pretty small.
These are largely saving in government subsidy cost because you’re bringing premiums down, somehow you’re bringing down more public option one, because provider payment rates are lower.
The next or extend public option or cap rates to the employer market.
And, you can see that the effects are substantially greater.
ranging from three to 7% of national health spending.
If the public option applies, Um, the employer as well as the non group market differences payment or by the payment rates, then capillary because they apply so broadly, that, all right, you get really significant reduction in national health spending.
But, the 16% only happen through provider payment rates, relatively low, somewhat above Medicare, but not, not at Medicare levels.
So, the bottom line, and I think you’re going to begin to offset the effects of concentration using either one of these approaches.
The downside is favoring, translate the lower provider webinar’s.
How much can be done without disruption, and some adverse consequences, is really kind of hard to know.
Those policies are, um, read broadly and includes the employer market, some kind of a phase in the policy, and the lower payment rate is going to be required, so I’ll stop with that.
All right, everyone. We have a tech issue. We’re trying to get Kate unmuted.
Great, thank you so much, and SSI, if I my audio troubles? Thank you for that helpful context, John. And now I’m going to turn it over to Avik Roy. Avik, if you could join me, joining us on camera.
Hit get you started with your presentation.
Great, thank you.
Everybody, good to be with you again.
I’m gonna focus the bulk of my remarks on sort of the background of the problem, if we could click on my first kind of cover slide.
The background of the problem being that monopoly power is a big, big problem in the affordability of healthcare, And if we want a solution to monopoly power, we need 1 or 2 ways.
You can have the monopoly of the government or the monopsony of the government dictate prices, which is one approach, or you can incentivize competition wherever possible.
And I’m a person who leans towards the latter solution. again. Whenever possible, it may not be possible in every single situation, but we should certainly be aware of where the government has incentivized consolidation and what to do about it. So, I’m going to lay out some of the data in these in these remarks, and then we can talk about solutions maybe more in the Q and A.
So, just to give a little bit of background on the Foundation for Research on Equal Opportunity, or Free up, For those of you who aren’t familiar with it, our whole approach to public policy is we try to find ideas that are both progressive, and free market oriented nature. We work on free market solutions that increase economic equality by meaningfully improving the lives of Americans whose incomes or wealth are below the US media. Next slide, or click.
Click twice, and you’ll see that the next several bullets there were a standard 501 C 3 think tank, And we work with both Democrats and Republicans Click.
Then next slide, please.
So, this is, uh, and click on the next one.
This is a slide about the National Health Expenditures and Private Insurance Claims, so many of you are familiar with the official CMS data on National Health Expenditures, what I’m trying to highlight in the in the right donut chart is that private insurance premiums and what private insurance premiums pay for is different from what national health expenditures overall pays for. And that’s really important, because the conversation about the public option, Medicare for all, et cetera, is about what to do about the people who have private insurance, which is to say the non elderly population. And when it comes to the non elderly population, you notice a couple of big differences, right? one prescription drugs is a bigger portion of the pie in terms of private insured, the private insured population, and their spending, and physician services, as well, along with hospital care, which is obviously important across all demographics and payer groups. Next slide?
A big problem is that the hospital care in particular, and this is a, you know, it’s lesser.
It’s true, to a lesser degree, with physician care, and prescription drugs, but hospital care overall is a huge, huge problem.
What you’re seeing on this chart is for the median household, so the median household makes about $60,000 in America, what percentage of their income is going to the IRS every year.
It’s declined, somewhat thanks to the Tax Cut and Jobs Act of 2017, and it’s leveled out in this sort of 13.5% range.
What you’re going to see next is the share of National income that goes to the hospital industry.
We’re now at a point, and I had to triple check this spreadsheet to make sure I wasn’t miscalculating this.
We’re now at a point where the average household is sending more of their household income to the hospital industry, than they are, to the Treasury Department.
That is how bad the problem has become, in terms of the affordability of hospital care. And that’s before you even get to drugs, doctors, and everything else. We spend a because it’s just the hospital industry. So this gives you a sense of the severity of the problem. Now, cutting taxes for the average family is not was no longer a material to their living standards relative to the rising cost of health care, particularly for the privately insured. Next slide.
And a big problem here, and click through the next two clicks here, to see all the curves.
What you’re going to see here is that adjusted for inflation, what Medicaid and Medicare, pay hospitals, has stayed relatively constant, but what private insurers are charged by hospitals has skyrocketed.
And this chart is actually nine year old data. It’s gotten even worse, over the last nine years, we’re now at a point Based on various research that’s been done by a number of people who are familiar to the audience. That the average, the average hospital privately insured patient, is basically being charged three X, what A Medicare has to be. A patient is being charged for the same service, the same unit of care, that is not sustainable, right.
And so you hear this argument that, well, uh, you know, hospitals are cost shifting the cost of the care to the private privately insured patients. That’s not true.
What’s happening is, wherever private hospitals can charge more, they are which is to the privately insured. where they can’t, because of administered prices. Prices of basically tracking inflation.
So, here is a is a is one way to capture how much monopoly power consolidation has driven this problem. And I could show you a lot of slides. I have a whole talk on on hospital consolidation. How, how damaging the massive trend towards these massive hospital systems have become regional monopolies is, I’m going to capture it with this. one particular study from Jamie Robinson at UC Berkeley. He looked at basically dividing the country into two. Buckets: one, half of the country is in a relatively more consolidated, competitive market for hospitals and one half of the country that’s like more, more consolidated, an average of the blue bars.
Here are the more competitive markets relative to the average, you see the average prices of various services and the average underlying cost of those services.
And then click.
Here, you see, in consolidated markets, what hospitals are charging, you see, the underlying cost of delivering those services is basically the same. In fact, in the competitive markets, there’s a little bit more efficiency on the cost side.
But the prices in the consolidated make markets is hard as higher, and this is like an open secret in the industry, Everybody knows that the whole point of merging Hospital systems or individualized spitals, is to charge higher prices, That’s the only reason to do it.
And yet, our regulatory system has been incredibly permissive for allowing these mergers to continue. Next slide.
Now, I’m gonna switch gears to drugs.
The same phenomenon in a different way applies to drugs, so a lot of people complain about prescription drug prices, as you all know.
But what’s interesting is, for the part of our pharmaceutical market, that is about small molecule medications, that is to say, drugs that are like conventional pills, and relatively simple drugs to manufacture, that represent 99.6% of all prescriptions.
In the United States, the vast majority, we actually do a really good job of steering people to low cost generic alternatives.
We actually lead the world in terms of unbranded generic being substituted for branded products where appropriate, 79% as of 2018 compared to 29% for the European Union on average.
But here’s the problem. Next slide.
The problem is that the spending on prescription drugs isn’t entirely on that 99.6% of drugs that are small molecules. So small molecule spending, and these are nominal dollars, meaning this is not adjusted for inflation.
On a nominal, non inflation adjusted basis, we’ve seen a decline, actually, in small molecule spending on drugs’ net of rebates, and without including inflation, since 20 15, which means on an inflation adjusted basis. Even more, A steeper decline, right?
So, but why aren’t we seeing headlines about the fact that prescription drug spending is down? Click.
It’s because for the 0.4% of prescriptions that are for biologic medications, the new fangled drugs lot largely manufactured by the biotech industry, we’re seeing a massive growth in spending.
We’re now at a point where in 20 21, we’re going to see more spending net of rebates on biologic drugs.
Then we see on small molecules, even though biologic drugs represent 0.4% of all prescription volume in the United States. think about that.
Half of all spending netta rebates is on 0.4% of the prescription volume in the United States. Why is that?
It’s because biologic drugs are not governed, by the same laws, as small molecule, small molecules, and the generic competition for small molecules is governed by hatch, the Hatch-Waxman Act of 1984, which is a incredibly sophisticated and successful law reform that allowed enabled a lot of generic competition.
By contrast, biologic competition is governed by the Biologics Price Competition and Innovation Act of 2009, which is Title seven of the Affordable Care Act or obama-care.
That law was heavily influenced by the pharmaceutical and biotech lobbies, which which we’re very smart and worked with very sophisticated, learned a lot from hatch waxman, and did a lot of things that gum up the works, such that competition really hasn’t successfully emerged for a biologic drugs.
So these are two areas, just to sum up what we’ve got to do a much better job at improving competition, hospital consolidation and competition and biologic drugs, And we’ve written a lot on both topics. I’ll point you to two pieces of legislation that attempt to address this in some of the ways that we free up proposed.
one is the Hospital Competition Act, which is sponsored by Jim Banks of Indiana, a Congressman who’s now the new Chair of the Republican Study Committee.
and the Fair Care Act of 2020, which is Sponsor the Senate by Senator Mike Braun of Indiana, and in the house by Bruce Westermann of Arkansas, that I will stop and and return for the Q and A Thank you.
Great. Thank you so much, and thank you so much for that. That was really terrific, and I’d now like to turn this over to Fred.
Thanks very much.
And thank you everybody for, for this session and for participating, really looking forward to the Q&A but just in terms of setting a little more context and maybe a slightly different perspective.
So I work at Avalere Health.
For those of you not familiar with Avalere, we’re a DC based research consulting and analytics company.
We work with every part of the health care industry, helping them understand what’s going on at CMS, what’s going on on the Hill and what that means for their business strategy.
And I, as my bio, as Kate noted, in my bio, I focus on hospitals, health systems, physician groups, And I’m gonna give you the provider perspective.
And more specifically, what I want to touch on rather than delving into the details of different policy options is really give you a sense for based on my work with with organizations that really do kind of span that provider spectrum or continuum. You know, what is driving real change? You know, and I think it’s, it’s, here, again, something we can come back to in the conversation.
But, um, know, it, the risk of sounding glib. It’s really not that hard to clamp down on costs, right? There are varying ways to do that, some subtle, some not so subtle.
But what I want to focus on is really what is driving systemic change in how hospitals, physician groups, others are delivering care and more specifically delivering higher value care that is, yes, more affordable, absolutely important, but it’s also accessible and is high quality and and it’s the triple, quadruple quintupled aim, whatever we want to call it, you know, that’s what I wanna look at. And think about what’s, what’s working, what’s not, what is really driving meaningful change on the provider side.
So, if you’ll move to the next slide, just, I want to touch on a couple of recent changes that I think both are on the competitive in, as well, is that kind of more heavily regulated, regulated sort of government focused approaches.
And give you my sense, again, from that the perspective of providers, from hospitals, health systems, physician groups, kind of what’s, what’s the take here, what’s actually going to move the needle in terms of affordability, as well as other things that we value around access and quality.
Very quickly here, you know, one of the areas that has gotten a lot of attention and it’s kind of a holdover from from the the the waning days of the Trump administration is the, the push for greater price transparency, specifically amongst hospitals.
The quick take here.
So, so, for those of you not familiar, this is a new requirement that hospitals are supposed to be reporting on the negotiated rates, so the rates they negotiate with commercial insurers, on up to 300 different procedures. And it’s supposed to be available to consumers and to dorky researchers like me at the touch of a stroke of a few buttons.
A couple of quick just observations on this No, it absolutely. You know, transparency is shedding a light on what we note here is arguably unwarranted variation in prices.
And that is a big issue, no doubt about it. And you’ve just look at some of the interesting data that the Kaiser Family Foundation just reported on a couple of weeks ago when they looked at this.
Looking at prices for MRIs.
So, you couple the fact that, yes, there’s now a spotlight on on this, with a couple of two, you know, a couple of realities.
In fact, one is that the requirement as of right now, really doesn’t have teeth to it, So the data along the bottom, I realize it’s hard to read, You can see it when we share the materials, if you don’t have them already.
Very few, a very small percentage of hospitals are actually making the rates available.
They just decided they’re going to take the penalty and not share those rates, so very hard to actually get that data out there.
However, even if it it gets out there, I think.
point As well as John’s point around the underlying market concentration issues, market, power, dynamics.
Transparency is not going to change that. You know, there’ll be a recalibration of pricing and payers and providers will work together and and hash this out.
There’s this voucher of a chance of rates going up is going down, right?
Once every, you know, these rates are out on the table and folks who feel like they got short shrift in rates, will be going to payers and saying, I demand more.
And again, at the end of the day, those hospitals and health systems, provider groups that have market power have monopoly are going to leverage that cloud. And they’re going to continue to extract higher prices. So this is necessary, but by far from being sufficient to really improve affordability.
Next slide, you know, a big area that I’ve been focused on for the better part of a decade and where a lot of the discussion has been is this idea around moving towards value based care.
And that kind of cliched proverbial shift from volume to value that we’ve all been hearing about the quick take there.
And it’s painful for me to do this.
But but for the sake of brevity, you know, there have been some meaningful gains. I do think this is causing that are creating that fundamental change in how care is being delivered. It’s too little too late, arguably, and for the purposes of today’s session, we’re really focused on affordability for the privately insured.
And so the big takeaway here is, yes, we’re seeing ACOs cropping up, we’re seeing bundled payment arrangements.
We’re seeing more risk based arrangements and capitation is made a pretty significant return. It’s no longer a curse word.
And yet, the savings that have been achieved there, I think very few of them have really flowed through to the individual, to the consumer, to the employer.
So, it’s a long, steady change.
And, and, you know, I think that’s the reality with value based care is this is gonna know, this is a decades long change. And yet, no, privately insured folks, folks over, because, as he pointed out, we’re really struggling with high costs. They don’t have time for this steady incremental change.
So, that brings us to this next slide and a couple of other realities I want to touch on before I wrap up here.
You know, as we’re talking about Public Options and kept provider payment rates, some of the policy options that are being talked about now that Biden is is, is empowered, His team has come in, and it’s there’s been renewed focus there.
A couple of realities. I just want to reinforce I think John and …
did a nice job, but just it, give my take on it.
The reality here is that, you know, when you look at, as we show here, this is just a snapshot of how you typical hospitals sort of revenue source, or what we call payer mix.
And you can see Medicare and Medicaid are the big payers here commercial commercially insured. Patients are also critically important.
The key thing I want to emphasize, though, it’s in that little box on the top right, is that I’m that commercially insured payer mix, only a very small subset of that rep or the non group individually.
Insured are folks with individual plans, including individuals in the exchange or marketplace, you know, the obama-care plans.
And so any change there in terms of tapping rates or grinding down on reimbursements or reimbursement rates, it’s going to have a pretty incrementalist.
If, I would say, trivial, impact on systemic change at the provider level now, again, maybe that’s OK, and And maybe the reality is like we want to cap rates and it’s also the reality that the rates being paid to hospitals and health systems and physician groups through the existing exchange plans are anything But, you know, basically matching Medicare rates, they’re not significantly higher and so that’s the reality hospitals are already dealing with So going to cap rates going to You know, this public option model they’d have concerns about it. Yes, it would put a dent in their, their margins but nothing big.
The big deal, and where you really start to get their attention, as John indicated, is, when you start talking about making changes to the employer, the new self insured employer coverage, the large group, employer plans, those that are still buying, you know, traditional health insurance.
If those cap rates did move to that market or some sort of public option, as some states are starting to too, move towards are starting to kind of dabble in.
That is a big deal that is a game changer.
And that really does fundamentally shift hospital health system physician group economics in a meaningful way.
So, again, if we just focused on changes in the non group, individual market, you know, providers are going to say, OK, you know, we’re not big, fans of that, but, you know what? We’re already, you know, in a rate setting environment and Medicare and Medicaid. And, for all intents and purposes, on the exchange plans. So, not a big deal. Very different story.
If we talk about the employer space, are moving to the employer market.
Let’s go ahead and skip the next slide. Just for the sake of time. There’s just a couple of examples there of states that are moving forward and public option and cap rate models. But I do want to circle back to the the proverbial cost shifting or sort of cross subsidization issue that … touched on.
And that is, no, I don’t know, we can, we can have a discussion around whether it’s a myth or not. I mean, the reality is, that it is happening. So, I don’t think it’s a myth from that standpoint.
But, I think there, there is a valid question around, as we show here, the payment to cost ratios is some data from the American Hospital Association, which just underscores that as Medicare and Medicaid rates have really held steady, and that, you know, ties in with with the data that …
was showing, When you control for inflation at the rates in the, on the commercial side, have steadily increased.
Absolutely, if we move to a model where we’re rate setting and it applies to employer based, or some employer based plans, if we take dramatic steps there, there will be cost shifting pressures.
And again, we can debate whether that’s, are actually, I suppose it’s not a debate. You know, that’s an arguably direct, not a good thing, but it will happen.
And in hospitals, in particular, we’ll look for the employers for the markets, where they can extract higher rates.
And, again, reinforcing what’s been said in those markets, where there’s not a lot of competition, where there’s high concentration, where they’ve got the market power, they’re going to extract those rates.
And so, I think that’s just a reality that, you know, we squeeze went into the balloon and the other pieces part is going to pop up.
Another thing that I do want to touch on, because it’s almost kinda counter-intuitive.
But if we move to the final slide that I’ve got here, um, the reality is, like, if weird, grinding down.
If we’re going to really cap rates, and we’re going to make that cut, that across not only the non group market, but to the, to broader employer coverage, whether it’s through public option, or, you know, some true kind of kept provider payment model.
I would argue that you’re actually creating even more of an incentive for both vertical and horizontal integration in the hospital health system industry, the integration between hospitals, and the acquisition as we show here, which, which has continued to increase of hospitals acquiring physician groups, and that, you know that the rationale is pretty straightforward.
It’s, if you are making economics more challenging, particularly for physician groups and smaller physician groups that don’t have the financial wherewithal to to deal with CAHPS on their rates, they’re gonna go to the health systems. And that is what is exactly what we’ve seen when Medicare starts to really clamped down on rates. In states where Medicaid rates have really dropped. Providers have said, if I want to keep my doors open, you know, I need to jump in with a bigger hospital or health system.
And so that’s another trend that we are unintended consequences that we have to deal with here, and it’s a reality, if we’re going to move forward with summit, some of these models. So, look forward to your questions and the discussion, but I’ll turn it back over for additional commentary.
Thank you so much for that.
It’s really terrific, very helpful, understanding the impact them of various proposals. And now, I’d like to turn it over to Emily.
All right. Just confirming, you can hear me.
Yes, we can. All right, thank you so much. Great to be here.
And you can move to the next slide. I believe. OK, so, Community Catalyst for a National Health Advocacy organization.
We’ve been around for 20 years, and our calling card is working with local, state, and national organizations to make sure that people’s perspective and experiences read it in these discussions and that people have control over the decisions that impact their health. We firmly believe that we will not have a health system that is accountable to people without people’s voices perspectives at the table and influencing the decisions like these. And also truly believe that if we don’t have an accountable health care system, we have in our country, which is why I’m so delighted to be in this conversation today, to talk about this important issue. And you can move it to the next slide.
So, I wanted to, know, take a step back, real, real, real quickly, here, probably stayed a little bit of the obvious, in terms of where Community Catalyst is coming from. And, and, I think, as you all know, I’m here to talk about how proposals designed to lower cost will impact people and families. But before I did that, I did want to kind of reflect on, you know, the bigger picture point about what works in terms of policy making, which is the importance of keeping a laser focus on continuously engaging people in the cycle of policymaking. It’s obviously a pretty simple and straightforward concept, and certainly, we’ve all been in conversations and read papers about things like patient centered care, and human centered design, and the like.
But it’s actually pretty common in the policy development process, that too many assumptions are made about what really matters to people. What they are really experiencing, and what their priorities are, oftentimes are often relying on datasets that are too often incomplete, particularly with respect to the experiences of people of color, people with low incomes, people with disabilities, women, LGBTQ, plus people. So, I wanted to raise this in the context of this discussion, because obviously, there are many, lots of there are lots of different types of health care costs for people, and just really wanted to name quite explicitly that it’s really important in any policy development process, that there’s a lot of attention focused on which of those health care costs need to be reduced the most for people. Particularly for people who are most hurt by the system today. And you can take it to the next slide.
And, in the vein of stating obvious things else, to say that, remind folks in terms of taking a step back around people’s experience, that healthcare is obviously not affordable in this country. And there’s a couple of headlines here on the slide, just relaying various studies that continuously come out about the ways in which people in this country are struggling to afford health care. And there’s a few points on this, and I wanted to emphasize, the first is that this is getting worse for people. Which is no doubt why it consistently tops the list, every election cycle, in terms of issues that are most concerning to American voters.
In fact, the according to the Kaiser Family Foundation Study, when you ask people about what’s the most important feature in their health plan, With respect to employer coverage, people say, are now twice as likely to cite cost, over coverage protections are considerations. And that is the exact opposite. Today, as it was 15 years ago, that same Kaiser Family Foundation study put it at 50% of people in this country who are wrestling with some kind of health care cost, one third of ensuring adults. And it’s very difficult, or somewhat difficult for them to afford to pay their deductible. And I do think it’s worth noting that that’s that figure is 60%. In terms of overall health care costs for people who are uninsured, 60% of uninsured people are skipping medical cost due to cost. So, I actually put, at the bottom of this slide, a picture of a bill I just received. Because I wanted to also note that, I think there’s a lot of people who may be, say they don’t worry about it, and say that they don’t worry about it, because it hasn’t hit them yet, and you could probably have, counted me as one of those people a couple of weeks ago.
But I had a pretty simple outpatient procedure. The other month, that was supposed to be covered, with, you know, with the exception of a, small co-pay by my health insurer. And I just recently got a 1349 dollars and 49% bill from my, from my hospital. And you know, just, you know, worth noting that it has been very difficult for me as somebody who works in, you know, health, advocacy to kind of figure out where that’s coming from.
How am I supposed to pay for it reconciling between the hospital and the plan? Importantly, according to a Kaiser study, a third of people with employer sponsored coverage, if they couldn’t afford a bill over 500, again, I do want to reinforce that the data around cost is insufficient when it comes to understanding experiences based on race and other demographic factors. So, it’s really essential, again, that we’re thinking about equity in the context of this conversation, and you can take it to the next slide.
OK, so, what has helped coverage expansions, of course, the availability of the marketplace plans, on the private insurance side, in the Medicaid Expansion, on the public Insurance side, has contributed significantly, for people who are uninsured, cutting, the insurance rate, and half. That has disproportionately helped people of color, Black Americans, and Latinos in this country, gaining important access to coverage, still there, a major gaps with 30 million people were meeting uninsured, about half of, those are people of color. I also just wanted to, of course, point out that coverage expansions in the past, at least with the Affordable Care Act, have created a platform to address cost, issues and making health care coverage, more affordable for people in the Affordable Care Act.
You know, this was essentially, I think, ultimately the most successful in Lat, long lasting aspect of the Affordable Care Act was the financial assistance of the ACA. So, about 86% of people on the marketplace are getting access to tax credits under the Affordable Care Act. And 50% of people are getting cost, sharing reduction, support. So this has been a major benefit to millions of people. It’s important to note that the American Rescue Plan Act has actually enhance that financial assistance, but only for two years, but super exciting that now, individuals with incomes below 150% of the federal poverty, for instance, will play zero on their income for their premiums. So that is great news, and it’s important that those protections get extended and made permanent.
Also, the American Rescue Plan Act didn’t make those tax credits now available to people with incomes above 400% of FPL, which was when I think one of the things. I think what we came to understand is one of the big gaps of the Affordable Care Act also limits on out of pocket spending. So for 2021, this is also under the Affordable Care Act, there is a maximum 8550 for an individual, and 17,000 for families for out of pocket spending. As you can imagine, when you think about that, in the context of income inequality, as it’s not so great for people who are making lower incomes. I did wanted to give a shout out in particular, on the limits of out of pocket spending to the preventive benefits under the Affordable Care Act, which made cost sharing, which required no cost sharing for certain preventive benefits under the Affordable Care Act, which I think it went from an access standpoint, is one of the provisions that translated the most in terms of eliminating costs. And now demonstrating that people have better access to care.
In particular, I think actually one of the most important, an explicit protections in terms of the preventive benefit, was the birth control benefit. And an example of how skeptical Americans are that any of this is really going to be resolved. I have three sisters and when the news broke that the Obama administration was requiring health insurance plans to cover birth control at no co-pay, I heard independently from each one of them, both expressing happiness that this was a benefit for some people and expressing deep skepticism that they would actually experience it. But that benefit did go far and wide, reaching 60 million people and we have some really good data in the system about the difference that it made in that first year. The IMS release data showing that there was a 10% increase in the number of birth control prescriptions that were being doled out by pharmacies.
And there’s been a tremendous amount of research showing that utilization of longer acting methods increased because that was a method that was most cost prohibitive for for many people. Importantly, Wraparound support has has helped in terms of making sure that people have support, like the Navigator program under the ACA, to understand what their benefits are, what their protections are, and, in particular, their programs.
Cap programs, that have been in existence and continue to be in existence, that do help people resolve things, like, surprise, billing, that kind of wrap around support really is essential to making sure that number one people are, can get enrolled in coverage. They understand what the financial implications of coverage are. They’re getting access to financial assistance, and when they are, you know, getting a surprise bill, or otherwise facing costs that they shouldn’t be from a health plan, it’s really essential that they have that kind of support net investment in that kinda wrap around support. Navigators, consumer assistance programs ships.
Under the Medicare program, we need more investment in that overall I would just say that the ACA is probably most instructive on one thing which is added. The question is, you know, whether or not competition among ACA marketplace plans affected affordability, The answer is no. It didn’t. Thinking, the hope, at the time, was that you would create all this competition, you know, premiums would be reduced enough that people who are younger and healthier would be flooding into the market and that really didn’t happen. If you don’t have access to financial assistance. The fundamental truth is and reflective of that, you know, 15% of people who are in the marketplace the plans are still too expensive for people to be attracted to buying coverage, and you can take it to the next slide.
What’s missing? You know, it’s really important that no matter what we do, we are putting equity at the center of the conversation and thinking in particular about the people who are hurt most by the health system today. Go most excluded from quality, care, and experience within the health system today, and really resolving the cost question through their eyes. So that is people of color, or people with low incomes, People with disabilities, older adults, and then also people who might fit both of those categories, like dually eligible folks, from a system wide approach perspective, I think, building on some of my previous presenters, just, I just want to highlight that, you know, it’s really important to look at this through the view of who is delivering care today, what are they getting paid, who are they service servicing and who is paying them?
You know, so, for instance, if you have hospital systems and health plans that, I mean, hospital systems and provider networks that are predominantly serving low-income communities, or who have a revenue stream, that is predominantly public payer versus private payer, or who don’t have sufficient assets, is, really is important, that we’re thinking carefully about the downstream impact of any policy proposal. I think this is particularly important in the context of setting provider rates for public plans. This is, not, you know, quite aligned in terms of in terms of this issue.
But I do think that, you know, the payments that came out of the stimulus packages towards hospital systems are instructive, whereby a lot of hospitals that really didn’t need the support and support and actually weren’t really seeing a ton of people with Kogod 19 Got a tremendous amount of payments from the federal government in terms of bolstering their revenue. Whereas many hospitals that were serving predominantly Medicaid covered people serving low-income communities. And who were overwhelmed with Kobo, 19. Patients were not getting the support that they needed. So really thinking carefully about what the downstream impact is going to be in terms of any proposal is really essential. I did want to make one note here on the consolidation issue, since that, that came, came up, and which is, you know, I think the data is consistently showing that consolidation is increasing cost, not achieving the quality. That is promise. I also want to point out that, you know, there’s a, there’s, for certain patient populations, it is also reducing their access to care.
So, for instance, in some consolidation efforts, reproductive health care is being restricted, or health care for LGBTQ plus people is being restricted as a result of that consolidation. And so from a consumer standpoint, the regulatory apparatus that has been in place historically, I think, was insufficient, historically, and is especially insufficient in the context of the rising consolidation. We’re seeing, both with respect to hospital systems. And as was pointed out with physician outpatient networks, but also in terms of retail settings, which I think we also need to take a careful and close look at, in terms of impact on cost and quality of care. And finally, I just want to say the policy evolution is important.
The Affordable Care Act is probably a good example of a situation where a big law was passed, And then everybody was ready to just watch it, change the world, And obviously, it didn’t. And I certainly didn’t, with respect to cost. Many, many people were helped, It was very, very important, and continues to be an important and helpful law, but obviously, there was a tremendous amount more to be done.
And with that, I will turn it back over.
Thank you so much, Emily. And I’m going to ask you to stay on camera and ask all of our panelists to join us back on camera, so that we can turn this over to our audience, who has not been shy feeding us questions already. So, as we look forward to a really good discussion here, we still have John Holohan on the phone joining us as well. But the first question I’d like to ask is, when actually directed to Fred. Fred you spoke about have mechanisms like market competition rate, setting, and transparency impact providers, could you speak to some of the challenges the realities that payers are facing within this policy discussion?
Sure, happy to.
So, specifically, you know, for some of the specific policy mechanisms and options we’ve been talking about, I’ll, you know, I’ll touch on those first.
The, uh, it’s interesting with the to the Public Option is.
You know, I think when, when it was first tried it out during the lead up to the implementation or adoption and implementation of the Affordable Care Act was a non-starter.
From a political standpoint, amongst health plans.
And, again, I am sure everybody dialed in is well aware, but the sense was, you know, how can we, as insurers, compete with a Medicare like plan, and that can cap rates, can offer broader access?
Know, and I that is absolutely still the reality, even fast forwarding here, 10 plus years.
You know, there are still some of those fundamental concerns around, OK, have a public option comes into an exchanger is brought into an exchange marketplace, it’s going to be really hard for insurers, to, to match that, again, in terms of affordability, in terms of some of the access guarantees.
But, you know, there’s been a lot of thinking by folks on this call and others, and, and I think there’s also the recognition that whether it’s at the State level or in discussions with the Biden administration, No. There are different permutations of the model, and there are.
So so there’s a world in which, you know, there is a public option available on the, you know, for the non group market.
That plans could maybe not compete with, but offer a differentiated product, that maybe it’s higher price, but has some benefits that you wouldn’t get in sort of a barebones public option model.
That’s still, you know, I think that’s kind of a minority view.
I think the sense is that it still would be really hard to compete with that and that, you know, a kind of a standard public option model would be reason or give a lot of our clients, at least a health plan clients.
pause in terms of staying in or getting into new Exchange markets.
And, remember, you know, we’ve seen this evolution of exchanges first coming online, which I’m sure some insurers getting on, losing their shirts on it, getting out We’ve steadily seen plans coming back in, you know, older and wiser. And I think the public option would definitely, you know, counteract that and probably cause insurers to exit the market in terms of the cap rates.
No, I think that’s a really interesting piece because on the one hand, you know, our health plan clients see that as?
Well that’s great, you know.
We’ve had a hard enough time, especially on the employer side, capping rates and we kind of as for the reasons we talked about when we’re in markets where hospitals are calling the shots.
You know, we have to pay them essentially what they asked for, or some, you know, small discount off of that, And it’d be nice to have the government come in and maybe not for all lines of business, but for some of our big ones And I’d be able to say, no. This is the rate, This is it, within, you know, certain confines.
The flip side to that though is there are two concerns.
one is, OK, Well We cap rates, but then we as a health plan have to build that and manage that network.
What are we going to do if we’re the ones that are now having to you know, go out and basically tell our our our members here’s your hunting license, right?
Kind of just like the classic argument around Medicaid, the cost sharing requirements there, and then the low reimbursement and the ability that maintain networks, adequate networks. So that’s one challenge.
I think there’s also just the reality of, know, this is kind of the is it opening Pandora’s box or the camel’s nose under the tent of OK?
If they come in and we’re gonna let them now tell us the rates and kept the rates, What’s going to stop them from coming in and more aggressively regulating other parts of our business? So I think that’s a source of skepticism around, at least the kept provider payment concept.
Great. Thank you very much. That is definitely a lot of considerations and tradeoffs as as we evaluate these options. Might be a question for Avik, but I think anybody would like to hear from others as well. It could be argued that healthcare payers and providers should resist the emergence of a competitive healthcare marketplace and make competing on values central to their strategy.
What are the challenges, and the opportunity is a payer and provider buy in to the concept of increased market competition?
And I think you’re on mute to unmute.
Uh, if we could get a tech person to help out.
OK, now I get now I know I’m unmuted, yeah. I think I was I was muted sent more centrally. So a couple of things to say. You know, first of all.
value conversation in general is one that while it there are there are meritorious ideas and a lot of good people working on value based insurance design value based outcomes and provider settings, et cetera.
one thing that’s really important to understand about the vast value conversation is that value is not the same thing as price.
People can define value differently. They can define relative value differently.
You know, you could pay three X for a good outcome, and one X for a bad outcome.
I mean, excuse me, three X, 3 X 1 3 X for a good outcome.
one extra bad outcome would have one X is already, a very high and affordable price, then, you know, the net result is more health care spending not less. Right. So, it’s what, what you describe as if the point of value based care is, to say, we’re gonna give, we’re gonna pay you more for a good outcome, or we’re gonna pay less for a bad outcome.
Those are relative descriptions of, of the price you’re paying, and what matters is the absolute price that you’re paying.
So, unless we get the absolute price and absolute spending of healthcare under control, of the impact of value based care on affordability is uncertain, and in fact, they’re effectively independent variables, so that’s one thing I’d want to highlight.
The second point, in terms of the incentives, as he as he is implicit in your question, Kate, is that a lot of the providers are not participating in value based arrangements.
And this has been a huge problem, And a big part of why is, because if you’re a hospital, what incentive do you have to get paid less? Because of the way payers are trying to do value based care, is we’re gonna pay you more relative to the standard rate for a good outcome and less, relative to the standard rate for a bad outcome, in that, that less part is not particularly attractive to to providers.
So what we’ve seen, for example, in Medicare demonstration projects, is, is what, with what, what, what walks call one-sided risk, where you get the upside. If you’re the hospital.
If you get a good outcome, but but there’s no penalty for a bad outcome, getting hospitals to adopt two sided risk has been a lot harder because that would mean less money for the hospital. So, you’ll hear a lot of people say, Hey, it’s great.
We’re seeing a lot of adoption of our value based contracts, but when you look under the hood of what’s in that value based contract, it’s basically meant to pay hospitals more for a good outcome, but not less for a bad outcome.
And so it’s really important to kind of dig into that and get get more, we need to push harder if we want to do value based care on that two sided contract, where where there’s a risk reward for all parties.
Um, I do want to address a little bit this point about, how, if we had some sort of external, a ceiling to prices, that that would basically blow up the private health insurance industry.
People who participate in Medicare Advantage would be very surprised to learn that ceilings on reimbursement rates blow up the private health insurance industry.
In fact, in Medicare Advantage, we do have ceilings in the form of Medicare fee for service reimbursement rates, which effectively are a kind of cap on what Medicare Advantage plans pay. They don’t make it. They can pay more if they want to, But they’re not forced to.
Because basically, the hospitals have to accept that Medicare standard fee for service rate as an alternative to the negotiated rate, if the if the payer, and the provider don’t come to an agreement, and that has turned out to be a really successful model.
In that in the MA case, dozens of plans are competing with each other all the time. Robustly. There’s robust competition among private plans.
It’s a very attractive market for payers.
And yet, there is a governor on monopoly behavior by hospitals, because they basically can’t really consolidate and just uncharged three X, the Medicare rate, because payers don’t have to accept that rate.
So that, that turns out to be a pretty attractive solution.
We might call it Medicare Advantage for all as a reform platform, that could be adapted for both the employer market and the individual market that’s now regulated by the Affordable Care Act.
Did anyone else want to jump in on that question, before I move on to the next?
I mean, I would like to just add on the on the point about value based care that the, how we define value is, it’s sort of, you know, has been including in many value based payment arrangements has been, you know, based on what the system has decided is most important. and not necessarily what people have decided is important.
And a lot of, I think, value based care arrangements that even get tagged value based, Know, Arrangements are ultimately just, you know, bonus payments for fee for service, you know, payment. And, you know, it doesn’t really have any true benefit to people, or in any way, kinda start moving the dial in terms of how people experience care.
So, I think, when you think about competition in the context of value, again, it’s really important to understand better what people are actually looking for, from health plans, what they’re actually looking for in terms of their experience, whether it’s a hospital system, or a provider setting. Because oftentimes, what gets decided, you know, with CMS, or any given health plan about what value is and what’s going to be prioritized, is very much through this lens of, how do we get costs down. How do we move the dial on a range of important quality metrics? And completely misses the point in terms of what’s important to people.
I’d like to ask a question since it was, we were just discussing, as someone mentioned, the employer market a few minutes ago, there’s a question from the audience a public option. And the employer market could destabilize the employer group. Some groups might not then the participation requirements if their employees are opting out into the public option, and the plan would unwind. Isn’t this a slippery slope to single payer?
I don’t know who would like to take that question, perhaps Emily or John.
I might step in, you know, while other people are formerly and answers. I mean, it’s, it’s not necessarily a slip, a slippery slope to single payer.
I mean, you know, if you have a public option, if it, if it sets rates, it, say, let’s say there was a public option on the commercial market that said, we’re going to pay 150% of Medicare rates or even 100% of Medicare rates, and that’s going to be the public option.
The private plans are going to then say, You know, what, hospitals, we’ve gotta, we gotta get paid, are we gonna, you know, pay at similar rates to the public option plan, or will go out of business.
So, which is kind of what happens in Medicare Advantage today.
Right, so, Medicare Advantage is gaining share relative to fee for service. The CBO projects, by the end of this decade, a majority of seniors will be on Medicare Advantage plans, not on traditional single payer Medicare plans.
So, if that is a proxy for what we might expect in a, in the employer market, under similar conditions, you know, we should have more confidence in the ability of private plans to compete.
Now, obviously, a lot of it would depend on exactly how the private option public option was structured if Congress created rules and unfairly advantage, the public option, relative to the, to the private employers. The employer based plans, excuse me, but, but to say, as an absolute fact, that if there’s a public option, the private insurance market will collapse. There’s not a lot of evidence of that.
Can you hear me?
Yes, John. Thank you.
Oh, OK. Yeah.
I agree with a lot of an awful lot of what are with respect to Medicare Advantage.
Um, I don’t think all employers, word, to the public option.
Even if it was less expensive, there are certain advantage to them to tailoring benefit cost sharing, net or whatever that might have real value to their employees.
I think it would be likely to be attractive to smaller, lower wage. Providing them with a much better option than they have today.
It’s not completely clear to me that it’s a better option than larger employers can get.
On their own, the other point, I’d like to make you, um, Public options are, in the non group market, a public option not going to wipe out other insurance plan, more competitive market.
There, they have really, you go to parent rate than pretty low levels already.
And in the work that we’ve done, we don’t see the public option, you know, having a major effect and competitive market.
It does have a big effect in where the markets get more concentrated, and that’s what you want.
OK, good. Thank you so much for that.
Yes. Go ahead. I’m sorry. Yeah, and I just wanted to jump in on the, you know, public option in the employer market and would destabilize.
And, yeah, I think it’s a, it’s a great analogy. Although, a little bit different. But the Medicare Advantage piece and, and recognition that, they are still very robust.
Competition there. ISO, you know, I would just echo John’s point that.
And we already see, you know, again, you know, it’s not completely analogous, but there was always this fear of when we have these exchange plans or are we going to see employers just dumping employees onto the exchanges?
And there was some of that. I don’t I don’t have the stats in front of me, but it was not this sort of tidal wave of folks out of the employer market.
And, in fact, you know, that the employer market is still very robust.
And I do think that, you know, for some big retailers, for lower income, lower lower wage workers, this may be a better option and mirror a better option for the employer.
But, you know, the work, all the work that we’ve done, particularly with, employ employers with large sort of white collar, workforce, this is a differentiator for them.
And they don’t, they would not say, oh, well, guess what, we want to hire you and you get to go on. You know, the public option.
No. That’s a non-starter.
So, I don’t think, yeah, you really have to kind of segment that employer market and really understand the dynamics across the different player types, employee sizes, as well.
OK, thank you.
I want to ask a question. This might be for John, although some others may have a perspective as well.
Could you go into strategies targeting private insurance costs in rural areas?
Um, I think that’s hard.
And it’s one of the reasons we did a paper that, what if you introduce some of these options, public option, or kept rates, but exempted rural areas?
Because it’s hard to attract providers.
A lot of hospitals are have pretty serious financial problems, and that may not be the place you want to go, They are pretty kind of markets, and they are higher cost.
There really is a risk of losing what, what you have there.
And so the one thing, the thing I would add, that makes it a little more complicated, is that we’re all hospitals.
Are mostly Medicare and Medicaid.
Um, constrain through a public option or cap rate.
What commercial plan are now paying?
I would the effect would be muted because a significant share of the hustle revenues are already coming with Medicare and Medicaid.
The effect is less than you would think in urban areas.
Does anyone else have a perspective on rural areas and consumers who live in rural areas and their ability to access affordable coverage?
Yeah, So in our proposal, at free up, we we exempted the rural hospitals for precisely that reason, There obviously is not going to be a lot of, you’re not going to have 10 hospitals competing to serve a rural population.
And so in, in the Hospital Competition Act and the Fair carrick, which are reflective of our of our proposal, we basically exempt rural hospitals from, from the threshold of where we try to incentivize competition.
And what the Hospital Competition Act proposes is among urban or suburban hospitals.
If the market concentration is very, very high, basically, two X are actually really four X, the the Federal Trade Commission’s normal threshold for getting involved in antitrust litigation.
At that point, hospitals would be expected to use the Medicare Advantage rates, accept Medicare Advantage rates from an employer, or divests some of their hospital systems to restore a competitive market, in which case, that threshold would no longer apply.
So, basically, what we try to do there that that detail is really important, is we try to give hospital systems an incentive to disaggregate and voluntarily design, more competitive markets, as opposed to simply saying, if it’s consolidated, we’re just going to regulate prices.
Instead, we say, if you’re a CEO and I’m a CEO, and we’re thinking about merging our two hospitals, We know ahead of time, with great clarity that if we merge, we’ll go above that threshold. And then we won’t be able to exploit exploit our merger or greater market power to charge higher prices instead.
We should stay separate, because if we do so, we would compete against each other in a, in a market, and have to complete quality and outcome and value that we’re providing patients.
Yeah, I’m sorry, I would just add, you know, again, to bringing in the Medicare Advantage angle on this, you know, weeks, right, that, you know, Medicare Advantage plans are absolutely capturing share.
When we do the math on this, and we look at, you know, Medicare Advantage penetration, it’s those rural markets that are really kind of the standouts there.
And where, when you look on a county by county basis, where there’s one plan, right, as comparing the urban and suburban markets, and counties, where there’s a lot of competition, and I think that’s just a reflection of the economics are tough. You’re dealing with a true monopoly.
The other piece of this that I would just touch on is that, you know, you don’t want to undermine access for rural markets that are already many of which are struggling.
And it’s also the case that the hospitals are almost invariably the biggest employers, right? So there’s a political component to this. It’s not just, they are the health care provider. They are the employer and maybe the last remaining kind of, you know, private employer in a lot of these markets So that’s, that’s touchy, you don’t, you don’t want to undermine that.
Definitely, we have definitely seen the impact of politics on health care all around, but very much in that, in that role. We realize that they are large employers and can dominate in that area.
Can I just add that, Yeah.
That’s an important point, which is that in many of the states that have not expanded Medicaid, there are, those states cover have a lot of rural areas in them.
And so, you are a part of, the struggle for a lot of rural hospitals, is that they’re not getting revenue, that they would otherwise get through the Medicaid expansion. I think the point that John made here, and made in his paper around rural hospitals is a really important one, that should also extend to other, medically underserved areas, that are, not, you, know, technically, rural areas. But places where you have systems and providers that are, likewise, financially struggling, Don’t have the same kind of assets. Don’t have the same kind of revenue diversification, and are predominantly serving low-income communities. So thinking carefully about those kinds of areas, as well, in the context of a private option, would be really important.
Greg, I’d like to ask a question about that came in, about technology assessment. How can value assessment and health technology assessment play a role in reducing costs, and not just for prescription drugs?
What are the other ways in which we can use assessment mechanisms to reduce costs, Who would like to take that question?
I would just say, you know, in theory, private insurers can do that right. You know, there is one of the, one of the, one of the kind of dynamics of our system is because there’s an employer based system where workers are not necessarily exposed directly to the cost of care.
The insurance company gets blamed if they say, No, we’re gonna not cover that treatment, or that particular device, because it’s not cost effective.
And the more you move to a market in which people are choosing their own health insurance, they’re able to make those choices themselves. That happens in MA to a degree that happens in the individual market to degree.
And that should happen more on the employer market. If we were able to migrate the employer market into one where gradually, over time, more and more workers have sovereignty over who the issuer of their health insurance plan is. There was a rule enacted during the Trump administration called the you know what we call the HRA Rule: Allowing Employers to Use Health Reimbursement Arrangements.
To give workers the money to buy non group coverage instead of employer sponsored coverage, I’d encourage more employers to use that model so that that way, individuals can decide whether they want to go with a more a planet that draws a tougher line on, on cost, costly treatments, Or whether they want something that, that covers everything, and they’re willing to pay the higher premium for it.
This might be a question for Fred, since you mentioned in your presentation, in light of the new transparency laws, for hospitals and insurers do you think employers may be interested in using this information to pressure their insured shares? Are typically used to negotiate better rates for their plans.
And in fact, it’s very on the nose or on target, you know, we’re doing work right now with employer groups, and a few different markets who, and as I said, we’re the nerds out there, like digging around, trying to find this hospital pricing.
Where the, I guess the initial consumers of it, right? And, in what we’re helping to develop our, you know, we’re using that data, as it’s becoming available with, we have claims data so, we can look at utilization and cost, and I promise, I won’t nerd out on this. But, then, also taking all the quality data that we have access to to really try and give a as broader view of value.
An ohmic, again, I think it’s a good point. Values is a very subjective discussion or topic. But, you know, that, I think that is the intent of or one of the beneficial offshoots of the price transparency efforts is not alarming consumers which we can argue about whether consumers can make sense of that data or not.
But certainly, employer self insured employers are going to use, and I think the one challenge is, and this is no slight at, at employers, but, even at the largest, employers, we work with, you know, thousand plus FTEs employees, they have 3 or 4 HR folks, who are really focused on this, and managing their network. And they’re kind of literacy and understanding around this data, and how to make decisions, is very limited. And so you’re right. They’re leaning on brokers. They’re leaning on … to help set these networks.
So, you know, I don’t want to pretend that this, all this additional data, is really going to transform it, But it, it adds very valuable insight and kind of rounds out the picture and starts to round out the picture on, know, which hospitals are actually delivering value for the prices that they’re getting paid.
I’d like to remind our audience that if you have a question to, please, this is definitely the time to submit it. We’ve had a pretty good discussion, and I want to make sure we have everyone’s questions here.
This next question, sort of, I think, almost all of you may be able to address, is it fair to assume that all stakeholders in the health care industry, and I was ask, I would add patients themselves, the regulators, the providers, insurers, employers, and definitely patients, perhaps acting as consumers, have roles and creating competition.
What are the key roles of these different entities, and how do we incentivize action?
Well, just to double down what I said before, I think that if you want, if you want a competitive system, if that’s what you want, not everyone does.
But if you want a competitive system, you’ve got to put more control over healthcare dollars in the hands of patients.
Right now, patients are totally removed from the equation, because even if you have employer based coverage, you know, ace, you know, that’s theoretically private sector coverage, but 80% of every dollar is being spent by the insurer or not the patient.
And the employer is choosing the insurance plan, not the patient, not the work or not the consumer.
So, you’ve got to move to a system in which people are choosing their own insurance plan. That’s the only way to incentivize insurers to compete with one another on cost, and, thereby, for providers and drug companies to compete with each other on costs. So unless the patient is doing that, the government’s gonna step and undo instead.
Those are basically the only two polls, and we’ve kinda got the worst of both worlds in the US.
I think this would be, you know, first of all, I don’t think you can. To …
point, I don’t think you can, ah, I guess a different angle on that point.
Separate this question out from just the reality. That, everything so expensive. So you’re talking about, you know, you know, given the struggles that people have today with affording out of pocket costs with relatively limited number of living amount of money for any given average American in terms of what they can, how they can leverage.
Their own dollars to promote competition.
You know, I would also just point out that, you know, the purchase of health insurance is so complicated, the system is so complex that people, generally speaking, really aren’t interested at this point in shopping, because it feels like they can’t figure anything out. So, I think first and foremost, it does reinforce the important role of consumer assistance and making sure that there are resources available to help people make decisions about what’s the right health care plan for them, and is in line with what they can afford.
It also speaks, I think, importantly, to the value and importance of figuring out a systems approach that does work better for people, and it’s fundamentally, on some level, easier to, for anyone to figure out. as I was sort of explaining at the top of the call, You know, I think even people who work in health care and who are privileged with time and money, find it very difficult to navigate when they get surprise bills, or to figure out what actually is covered versus not covered on their, their own plan. So, that, to me, is one of the biggest barriers to giving people space to promote competition.
Can I just add to that a little bit?
Yeah. I agree.
I mean, putting money in the hands of people that’s going on.
For a good long time, the deductibles have gone up pretty high levels of the points at which people complain that we have huge affordability problem because of high out of pocket costs, that was gonna work.
We wouldn’t have, the problem that we’re all here kinda talking about is the very high cost of healthcare in this country.
It doesn’t it.
We’re really dealing with monopolist in the drug industry, And Robert talked about, we all talk about monopoly power in the hospital industry, hospital buying up more physician practices. That’s where the problem can be very, very little about that.
Just respond to that point, you know, I mean, I’m not saying that we should just leave people exposed to high costs without any resources. What I’m saying is the subsidies in our system go to insurance company.
And government sponsored insurance. They don’t go to consumers.
What if we actually put more of those dollars, again, in the hands of patients, Then they would have the resources to pay for those out of pocket expenses. We basically steer people to have third party and fourth party in ninth party payment system because that’s where all the subsidies go. The subsidies don’t go to the consumer to pay for things. They go to the insurer to pay for them or for the government to pay for them.
No, they had that power.
Yeah, not monopoly power in, in the in healthcare is really the problem and I don’t how, whether it’s through subsidies or not, giving individuals more, say over what they use or where they go to procure or whatever, is really any evidence at all that much.
Well, I wanna thank all of you for your insights on this topic.
Something tells me, based on the number of questions we had come in here, and their perspectives here, This is not going to be the last discussion of this topic. So, we look forward to engaging with all of you and with our audience going forward.
I want to thank all of our panelists for joining us this afternoon.
and, to our audience, please take time to complete the brief evaluation survey that you will receive immediately after the broadcast ends as well, Which will also come via e-mail later today. We really value your input, and it does impact our programming.
A recording of this webinar and additional materials will be available on the Alliance’s website, Giles, Fred. And Emily. Thank you so much for joining us.
Have a great day.