Greg Dennis: Healthcare hope — Single payer & the ACA

What’s the true nature of our expensive healthcare system? Is it an overregulated mess that’s crying out for free-market forces to improve quality and lower costs, by expanding competition among providers?
Or is it an under-regulated mess that’s crying out for a single-payer system to improve quality and lower costs, by eliminating the expensive, greedy middlemen known as insurance companies?
Or (more likely), is it a mish-mash of these ideological visions alongside perverse incentives that add unnecessary cost, plus all the uncertainty and opportunity created by the Affordable Care Act (ACA, also known as Obamacare)?
Like everyone else reading this column, I’m a healthcare consumer. I’m also one of two principals in a consulting firm that provides marketing communications for healthcare organizations — some of them nonprofits but most of them medical device and diagnostics companies.
Which is to say that as a consumer I want affordable, efficient, high-quality healthcare. And as a businessperson, I am one of many who have a stake in preserving a healthcare system with some measure of profit motive.
Those two goals aren’t contradictory. But they do involve a necessary tension.
I listen carefully to voices on the left who counsel the obvious advantages of single-payer, which might eliminate health insurance companies and their profits. A well designed single-payer system may be able to reduce costs more than 20 percent by removing the insurers’ profits from the system (though that would have a substantially negative economic impact on those who now make a living by working for those companies).
Under the leadership of Gov. Peter Shumlin, Vermont is headed toward such a single-payer system, which might become a model for other states. The goal is to implement single payer by 2017 — assuming the many glitches with the new state-run healthcare exchange don’t drain off the needed political support.
I also hear the voices in the business community. I worry (a bit) about the effect of the medical device tax, and about the role of government in deciding what is appropriate care.
It’s true that the medical device industry as a whole stands to benefit from Obamacare because the ACA brings millions of new customers into the system. But it’s unclear how the small start-up companies that fuel lifesaving innovations in healthcare will be affected.
Should healthcare even have a profit motive? Some of my fellow liberals don’t seem to think so. But countries with socialized medicine allow for companies to make a profit. And most of the big advances in pharmaceutical and medical technology have come from U.S. companies who are financially incentivized (more than in any other country) to develop these innovations.
No one really knows how all that will play out. My semi-informed guess is that, despite dire warnings from the right, neither the device tax nor government efforts to trim some insurance reimbursement will overly hurt the industry. (There are some problems with the device tax, and there are other issues with the rising cost of health insurance. But these are two separate problems that are beyond the scope of this column.)
Nonetheless, I worry about payment levels under single payer. It’s been reported that Vermont’s planned single-payer system would pay for healthcare services at a rate far below what insurance companies now pay (105 percent of what Medicare pays under single payer, versus 152 percent paid by private insurers). Lower payments will inevitably drain financial incentives.
Some of those incentives are bad, such as the absurd amounts paid to some MD specialists and to some hospital systems that have regional pricing power. Other payment incentives are good ones because they promote medical innovations (such as molecular diagnostic testing and better infection-control devices) that reduce the costs of care.
What happens under a single-payer system when the government chooses winners and losers? We trust Medicare (consulting with the American Medical Association and others) to make those kinds of choices, and it works out pretty well. That bodes well for single payer in Vermont, but it will be an adventure to implement.
Speaking of adventures, let’s turn back to Obamacare. Many of us are furious about the botched implementation of the national and statewide health exchanges — not because we oppose the ACA, but because the faulty websites have given a bad name to a worthwhile experiment.
ACA opponents, funded by corporate and ideological interests who stand to lose from broader, better healthcare, are spending millions to undermine Obamacare. Obama himself didn’t help things when he failed to oversee the smooth introduction of the websites and when he lied about how the system would work. (“If you like your insurance coverage, you can keep it.”)
Despite the botched launch, the ACA ship is righting itself. The expansion of Medicaid is benefiting millions of low-income people in states where it wasn’t rejected by politicians. Some states have smoothly running health exchanges where millions of people have purchased better insurance. The federal exchange is running better now (though it could hardly have run worse). And Vermont’s health exchange, judging by my experience and what I’ve heard from others, is working OK.
As a self-employed person, for example, I was able this month to navigate Vermont Health Connect on my own and, in less than an hour, get better coverage and better terms than I had previously. (I should also note that Blue Cross and Blue Shield of Vermont has been very helpful in answering questions and appears to have been a helpful partner in making the new system work better.)
So where does this all leave us? I wish I could offer black-and-white answers. But healthcare — whether in the hospital or the insurance market — offers few of those. It’s a gray mish-mash.
But I’ll say this: Before Obamacare, the old system was badly broken. Despite the current rocky transition, we are well served by these ongoing efforts to improve the system and the care it provides.
Nonetheless, we shouldn’t settle for Obamacare as the final answer. And it’s up to us as business people and healthcare consumers to hold our business and governmental leaders accountable for how it all unfolds.
Gregory Dennis’s column appears here every other Thursday and is archived on his blog at www.gregdennis.wordpress.com. Email: [email protected]. Twitter: @greengregdennis.

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