There's another unintended consequence that's likely much smaller - but not zero. Because VBC incentivizes providers to essentially become payers (a 'payvider'), smaller practices can avoid the scaling dilemma through adverse selection and there's really no reporting mechanism (other than internal) to capture that. Practices can actively select healthy patients (cherry pick) and (lemon drop) unhealthy ones. Insurance companies can't really do this because of the scale needed to maximize revenue/profits - but a small 'payvider' has no such barrier. FWIW - this flaw is also evident in Direct Primary Care (DPC) where the provider is free to select patients for their practice.
1st: there is a difference between emergency and non-emergency care.
For real emergency care, I agree about demand elasticity - and even there it is nuanced. E.g. People (and families) will request millions of dollars in unnecessary care at end of life. (Remember we are talking about policy for a population, not individual wants).
2nd There is a lot of demand elasticity for non-emergency care. I see that as a PCP who keeps appointments open for same day visits. Medicaid patients , who don’t pay anything (and the very wealthy) will constantly schedule appointments for extremely minor ailments that would resolve on their own. Also, they will take appointment slots and not show up for appointments.
3rd: Real emergency care like emergency surgery or cancer Rx can be part of catastrophic insurance. It will be cheaper and people who “arrive on a gurney” will still get the care they need.
4th: Even surgeries in a free market are cheaper. E.g. LASIK, cosmetic surgery and even sometimes regular surgeries such as appendectomy if you go to a center that does not take insurance.
And finally: You did not answer my question about what you mean by cooperation in healthcare.
This is exactly the polarity in the healthcare policy debate we face - and I would argue that the debate is a political POV, not an economic or clinical one because it falls on the core framing that healthcare is either a basic human right (D's), or that healthcare is a privilege to be earned (R's).
More broadly, the problem with "catastrophic-only" coverage is that there's no evidence it can work at the scale of a country. None - so it's theoretical.
... and it's a flawed theory because clinically, most expensive medical conditions don't begin as catastrophes. Diabetes, hypertension, asthma, depression, heart disease, and many cancers often start with relatively inexpensive primary care, screening, and monitoring. If people must pay entirely out of pocket for those services, many don't. The result is more strokes; more heart attacks; more diabetic complications; more cancer dx at later stages; more ED utilization.
Those later interventions are vastly more expensive than the routine care that might have prevented them - so what we end up with is a large population of underinsured people who technically have "coverage," but avoid care due to out-of-pocket costs. Just making those OOP costs LESS expensive doesn't make them "affordable." The clinical argument here is that preventative care should be very low (even no) cost - and the evidence of this working from other countries with true universal coverage is compelling. Not just one - but many.
Again - healthcare isn't a normal consumer market for all the reasons I identified. Simply repeating the assumption that it is (or can be forced into one like elective Lasik or cosmetic surgery) doesn't make it so. Cooperation starts with the right economic and clinical framing - not a political framing. And as a country - we clearly don't have that after ~80 years of debating both sides ad nauseum.
I fall in the center of the political spectrum, and lean more democratic (if that matters).
1st: Making something a basic human right does not guarantee access. It becomes virtue signaling.
2nd: As soon as you make something a human right and a "public good," you will decrease inputs into the system. E.g., Years of treating primary care at the bottom of the pyramid have led to a dramatic decrease in the number of PCPs. Making it a public good is a sure-fire way to ensure that the shortage worsens. Furthermore, central planning will never be able to determine which specialists are needed, how many, and where. This is the classic failure we see with large monopolistic health systems trying to allocate specialists in different areas -- the end result is that it takes months to get an appointment.
3rd: As soon as you make something a public good, you get monopolies and regulatory capture, which makes everything more expensive and worse. Value-based care is trying to do something similar, and it has been a disaster.
4th: Yes, many people don't realize they need an Rx for chronic problems. But we have the same problem today. Furthermore, the underinsured generally pay much more when they have insurance, compared to e.g. DPC clinics. Furthermore, people have the right to decide if they want care or not. We cannot force people to take medications!
5th: We often conflate free markets for people with means vs. access for the poor. There can still be a separate mechanism to help people who cannot afford care for chronic conditions, just like SNAP for food. Food is necessary for survival, but we have 2 different systems - market mechanics and SNAP benefits. We don't give SNAP to the entire population!
All countries that have universal healthcare ration care. E.g. UK makes national decisions for which chemotherapies will be available to people (this happens on a smaller scale with insurance coverage decisions, but in the US, you can appeal or switch insurance)
The evidence of universal coverage (through many countries) refutes most of these arguments - economically and clinically. Simple example - amenable mortality per 100,000: US = 312; Canada = 184; Germany = 195; France = 162.
FWIW - there is no perfect system. All healthcare is rationed - the only question is how - at what cost clinically, fiscally and morally (equitably). Our system (which tells docs through a tiered payment model that patients have different dollar values) is morally indefensible.
One big advantage of universal coverage is that it’s a delivery mechanism for monopsony (one buyer) pricing - which is directionally opposite the way we’re heading. Our current system of tiered coverage is unique - and only serves one purpose - as the delivery mechanism for tiered (and uncapped) pricing. My identical surgery could cost 3X my neighbors simply because we’re in different coverage tiers.
PCP shortages? We can fix that. Take the profit out of MedEd and make it free - in exchange for 2 years of primary care service. In France, docs graduate with zero debt so it can be done - if we really want solutions - and not keep funding the status quo with the “tranquilizing drug of gradualism.”
1st Most countries with universal healthcare don't share the same geography, demographics, advertising regulations, or consumption patterns as the US. So it is not an apples-to-apples comparison. This is a very common mistake - we compare ourselves to neighboring countries in one aspect, but ignore all the other differences.
2nd: Average mortality rates are higher in the US because of early deaths, e.g., gun violence, accidents, etc. Once people reach their 60s, the US has one of the highest life expectancies in the world. This directly contradicts your assertion that medical care is lacking in US compared to other countries.
3rd: Agree that there is no perfect system. It is preferable to have a market-based system where people are free to choose, with a safety net for the vulnerable. The answer is not to have a single system for everyone (nuance: I do like the idea of a single system for catastrophic care e.g. Medicare Catastrophic Coverage for everyone).
4th: Every 3rd party payment will (eventually) tell the doc what to do - govt or insurance, as they are paying the bill and want to manage costs. Under Medicare-for-all, the govt (and companies that influence govt) will decide what care people receive. In a market-based system, the patient decides in collaboration with the doctor what they want.
5th: We already have giant monopsonies and duopsonies in many regions. This is why costs are so high -- lack of competition. In a single-payer system, over time, due to regulatory capture, the price for surgery will still increase, but people will have no choice. This is the tradeoff - and why many Canadians come to the US to get their surgery.
6th: How do we take profit out of medical education? Do we make it free and taxpayer-supported? How about making college free for everyone? What happens if the really smart professors then leave for private universities? Btw, this already happens as tax-subsidized universities struggle to retain talent! The problem with communism is that it is hard to predict downstream repercussions, which always leave people worse off.
7th: We should definitely borrow ideas from other countries, but we have to acknowledge that there are differences and cannot just "copy and paste" what works elsewhere.
Stop right there. There is no "universal healthcare." It doesn't exist. It's a way to mask what does exist - and what works well. Universal coverage - and no, they are not one and the same.
How different countries choose to finance that model is highly variable - but they are ALL under-girded by universal coverage. Why? Because the population of a country is the largest denominator possible - and THAT creates monopsony (one-buyer) pricing power. Beyond that - the fact that no two countries are alike (including the US) is irrelevant.
And stop with the "market-based" BS. There is no "market" in healthcare (for all the reasons I cited before). The only reason for our unique system of tiered coverage is to support tiered pricing - as the way to maximize profits.
Universal coverage won't work you say? It already does - in Maryland - which uses an All-Payer model for standardizing rates (which is another advantage to universal coverage). It's the delivery mechanism for single-pricing healthcare.
Single-payer healthcare works - but - we don't need it. It's just a financing model for universal coverage and there are countless way to finance universal coverage - including multi-payer. What we ABSOLUTELY need is single-pricing. The fact that my identical surgery could cost 3X my neighbors simply because we're in different coverage tiers has no clinical or moral logic. http://hc4.us/oneprice
Small practices have limited ability to cherry pick. Insurance contracts mandate that you have to accept all patients. If a small practice starts cherry picking, the insurance company can terminate the contract.
Cherry picking happens in large organizations at scale much more often where they create TAX IDs (TINj and divide the clinicians depending on their patient panel. Then different TINs are enrolled in different VBC contracts to gamify benchmarks.
So paradoxically, it is the large healthcare orgs that have scale cherry pick practices and by extension, patients.
Very true - but I was thinking more of the direct-contracting/DPC world. Still relatively small - but becoming increasingly popular with the anti-insurance crowd.
In that world - providers are free to cherry pick/lemon drop as much as they want/can - and they're also free to market unregulated "gap insurance" which is often just indemnity coverage. I've already seen examples of that.
There is a lot of nuance to DPC and cherry picking.
First, patients often self-select DPCs that prioritize relationship over transaction.
Clinicians can also decide which patients to see and how many.
The nuance here is that what is not talked about enough is people who are abusive to clinicians, or demand we provide a service that we are not comfortable with (e.g. xanax or pain killers). That is a form of cherry picking.
Paradoxically, this is a bigger problem with a monopoly. Clinicians constantly suffer abuse or are compelled to do things they are not comfortable with (moral injury). Furthermore, if a large system cherry-picks (or fires a patient), people often have no recourse.
The way to fix this problem is not to force clinicians to take care of everyone, but to increase competition. The more independent practices that compete, the more likely people will find someone to take care of them.
“This talk is a heresy – and I’m going to start with the punchline. The punchline is that competition is not the answer – it is the problem. We are in trouble. Healthcare is not meeting the social need. We are not accomplishing the triple aim – and we will not do that as long as we bet on competition as the remedy. Competition is not the answer. Cooperation is the answer.”
There's another unintended consequence that's likely much smaller - but not zero. Because VBC incentivizes providers to essentially become payers (a 'payvider'), smaller practices can avoid the scaling dilemma through adverse selection and there's really no reporting mechanism (other than internal) to capture that. Practices can actively select healthy patients (cherry pick) and (lemon drop) unhealthy ones. Insurance companies can't really do this because of the scale needed to maximize revenue/profits - but a small 'payvider' has no such barrier. FWIW - this flaw is also evident in Direct Primary Care (DPC) where the provider is free to select patients for their practice.
1st: there is a difference between emergency and non-emergency care.
For real emergency care, I agree about demand elasticity - and even there it is nuanced. E.g. People (and families) will request millions of dollars in unnecessary care at end of life. (Remember we are talking about policy for a population, not individual wants).
2nd There is a lot of demand elasticity for non-emergency care. I see that as a PCP who keeps appointments open for same day visits. Medicaid patients , who don’t pay anything (and the very wealthy) will constantly schedule appointments for extremely minor ailments that would resolve on their own. Also, they will take appointment slots and not show up for appointments.
3rd: Real emergency care like emergency surgery or cancer Rx can be part of catastrophic insurance. It will be cheaper and people who “arrive on a gurney” will still get the care they need.
4th: Even surgeries in a free market are cheaper. E.g. LASIK, cosmetic surgery and even sometimes regular surgeries such as appendectomy if you go to a center that does not take insurance.
And finally: You did not answer my question about what you mean by cooperation in healthcare.
This is exactly the polarity in the healthcare policy debate we face - and I would argue that the debate is a political POV, not an economic or clinical one because it falls on the core framing that healthcare is either a basic human right (D's), or that healthcare is a privilege to be earned (R's).
More broadly, the problem with "catastrophic-only" coverage is that there's no evidence it can work at the scale of a country. None - so it's theoretical.
... and it's a flawed theory because clinically, most expensive medical conditions don't begin as catastrophes. Diabetes, hypertension, asthma, depression, heart disease, and many cancers often start with relatively inexpensive primary care, screening, and monitoring. If people must pay entirely out of pocket for those services, many don't. The result is more strokes; more heart attacks; more diabetic complications; more cancer dx at later stages; more ED utilization.
Those later interventions are vastly more expensive than the routine care that might have prevented them - so what we end up with is a large population of underinsured people who technically have "coverage," but avoid care due to out-of-pocket costs. Just making those OOP costs LESS expensive doesn't make them "affordable." The clinical argument here is that preventative care should be very low (even no) cost - and the evidence of this working from other countries with true universal coverage is compelling. Not just one - but many.
Again - healthcare isn't a normal consumer market for all the reasons I identified. Simply repeating the assumption that it is (or can be forced into one like elective Lasik or cosmetic surgery) doesn't make it so. Cooperation starts with the right economic and clinical framing - not a political framing. And as a country - we clearly don't have that after ~80 years of debating both sides ad nauseum.
I fall in the center of the political spectrum, and lean more democratic (if that matters).
1st: Making something a basic human right does not guarantee access. It becomes virtue signaling.
2nd: As soon as you make something a human right and a "public good," you will decrease inputs into the system. E.g., Years of treating primary care at the bottom of the pyramid have led to a dramatic decrease in the number of PCPs. Making it a public good is a sure-fire way to ensure that the shortage worsens. Furthermore, central planning will never be able to determine which specialists are needed, how many, and where. This is the classic failure we see with large monopolistic health systems trying to allocate specialists in different areas -- the end result is that it takes months to get an appointment.
3rd: As soon as you make something a public good, you get monopolies and regulatory capture, which makes everything more expensive and worse. Value-based care is trying to do something similar, and it has been a disaster.
4th: Yes, many people don't realize they need an Rx for chronic problems. But we have the same problem today. Furthermore, the underinsured generally pay much more when they have insurance, compared to e.g. DPC clinics. Furthermore, people have the right to decide if they want care or not. We cannot force people to take medications!
5th: We often conflate free markets for people with means vs. access for the poor. There can still be a separate mechanism to help people who cannot afford care for chronic conditions, just like SNAP for food. Food is necessary for survival, but we have 2 different systems - market mechanics and SNAP benefits. We don't give SNAP to the entire population!
All countries that have universal healthcare ration care. E.g. UK makes national decisions for which chemotherapies will be available to people (this happens on a smaller scale with insurance coverage decisions, but in the US, you can appeal or switch insurance)
Healthcare is a political problem, not a clinical one. Please see my article: https://www.pcplens.com/p/when-policy-fails-medicine-pays
The evidence of universal coverage (through many countries) refutes most of these arguments - economically and clinically. Simple example - amenable mortality per 100,000: US = 312; Canada = 184; Germany = 195; France = 162.
FWIW - there is no perfect system. All healthcare is rationed - the only question is how - at what cost clinically, fiscally and morally (equitably). Our system (which tells docs through a tiered payment model that patients have different dollar values) is morally indefensible.
One big advantage of universal coverage is that it’s a delivery mechanism for monopsony (one buyer) pricing - which is directionally opposite the way we’re heading. Our current system of tiered coverage is unique - and only serves one purpose - as the delivery mechanism for tiered (and uncapped) pricing. My identical surgery could cost 3X my neighbors simply because we’re in different coverage tiers.
PCP shortages? We can fix that. Take the profit out of MedEd and make it free - in exchange for 2 years of primary care service. In France, docs graduate with zero debt so it can be done - if we really want solutions - and not keep funding the status quo with the “tranquilizing drug of gradualism.”
1st Most countries with universal healthcare don't share the same geography, demographics, advertising regulations, or consumption patterns as the US. So it is not an apples-to-apples comparison. This is a very common mistake - we compare ourselves to neighboring countries in one aspect, but ignore all the other differences.
2nd: Average mortality rates are higher in the US because of early deaths, e.g., gun violence, accidents, etc. Once people reach their 60s, the US has one of the highest life expectancies in the world. This directly contradicts your assertion that medical care is lacking in US compared to other countries.
3rd: Agree that there is no perfect system. It is preferable to have a market-based system where people are free to choose, with a safety net for the vulnerable. The answer is not to have a single system for everyone (nuance: I do like the idea of a single system for catastrophic care e.g. Medicare Catastrophic Coverage for everyone).
4th: Every 3rd party payment will (eventually) tell the doc what to do - govt or insurance, as they are paying the bill and want to manage costs. Under Medicare-for-all, the govt (and companies that influence govt) will decide what care people receive. In a market-based system, the patient decides in collaboration with the doctor what they want.
5th: We already have giant monopsonies and duopsonies in many regions. This is why costs are so high -- lack of competition. In a single-payer system, over time, due to regulatory capture, the price for surgery will still increase, but people will have no choice. This is the tradeoff - and why many Canadians come to the US to get their surgery.
6th: How do we take profit out of medical education? Do we make it free and taxpayer-supported? How about making college free for everyone? What happens if the really smart professors then leave for private universities? Btw, this already happens as tax-subsidized universities struggle to retain talent! The problem with communism is that it is hard to predict downstream repercussions, which always leave people worse off.
7th: We should definitely borrow ideas from other countries, but we have to acknowledge that there are differences and cannot just "copy and paste" what works elsewhere.
Stop right there. There is no "universal healthcare." It doesn't exist. It's a way to mask what does exist - and what works well. Universal coverage - and no, they are not one and the same.
How different countries choose to finance that model is highly variable - but they are ALL under-girded by universal coverage. Why? Because the population of a country is the largest denominator possible - and THAT creates monopsony (one-buyer) pricing power. Beyond that - the fact that no two countries are alike (including the US) is irrelevant.
And stop with the "market-based" BS. There is no "market" in healthcare (for all the reasons I cited before). The only reason for our unique system of tiered coverage is to support tiered pricing - as the way to maximize profits.
Universal coverage won't work you say? It already does - in Maryland - which uses an All-Payer model for standardizing rates (which is another advantage to universal coverage). It's the delivery mechanism for single-pricing healthcare.
Single-payer healthcare works - but - we don't need it. It's just a financing model for universal coverage and there are countless way to finance universal coverage - including multi-payer. What we ABSOLUTELY need is single-pricing. The fact that my identical surgery could cost 3X my neighbors simply because we're in different coverage tiers has no clinical or moral logic. http://hc4.us/oneprice
Small practices have limited ability to cherry pick. Insurance contracts mandate that you have to accept all patients. If a small practice starts cherry picking, the insurance company can terminate the contract.
Cherry picking happens in large organizations at scale much more often where they create TAX IDs (TINj and divide the clinicians depending on their patient panel. Then different TINs are enrolled in different VBC contracts to gamify benchmarks.
So paradoxically, it is the large healthcare orgs that have scale cherry pick practices and by extension, patients.
Very true - but I was thinking more of the direct-contracting/DPC world. Still relatively small - but becoming increasingly popular with the anti-insurance crowd.
In that world - providers are free to cherry pick/lemon drop as much as they want/can - and they're also free to market unregulated "gap insurance" which is often just indemnity coverage. I've already seen examples of that.
There is a lot of nuance to DPC and cherry picking.
First, patients often self-select DPCs that prioritize relationship over transaction.
Clinicians can also decide which patients to see and how many.
The nuance here is that what is not talked about enough is people who are abusive to clinicians, or demand we provide a service that we are not comfortable with (e.g. xanax or pain killers). That is a form of cherry picking.
Paradoxically, this is a bigger problem with a monopoly. Clinicians constantly suffer abuse or are compelled to do things they are not comfortable with (moral injury). Furthermore, if a large system cherry-picks (or fires a patient), people often have no recourse.
The way to fix this problem is not to force clinicians to take care of everyone, but to increase competition. The more independent practices that compete, the more likely people will find someone to take care of them.
I disagree.
“This talk is a heresy – and I’m going to start with the punchline. The punchline is that competition is not the answer – it is the problem. We are in trouble. Healthcare is not meeting the social need. We are not accomplishing the triple aim – and we will not do that as long as we bet on competition as the remedy. Competition is not the answer. Cooperation is the answer.”
Donald M. Berwick
Harvard University (BA, MD, MPP)
CMS Administrator - 07/07/2010 - 12/02/2011
IHI Keynote – December, 2017
Cooperation how?
It’s the opposite of competition b/c from the patient’s perspective - healthcare was never - and can never be a “free market.”
We never know when we'll need expensive healthcare
We never know how much expensive healthcare we’ll need
We often arrive to expensive healthcare on a gurney - unconscious
Genetics plays a huge rule in our need for expensive healthcare
There’s no ‘demand elasticity’ for life/living
Stakes are the highest (death/lifelong impairment)
Average cost of 1 surgery is $25-$40K
Some cancer treatments are 7-figures