How To Discourage a Doctor | THCB

I came across this series of articles and comments whilst researching for today's post.



The hospital is not a friend of the doctor. These stories will illuminate what many physicians face. Perhaps it is not a uniform policy, and perhaps the tide has turned with the battle being won by hospital conglomerates.  The days of the local community hospitals is about over, due to mergers and acquisitons forced by economic necessity and solvency.  For most of the hospitals who did not merge are now gone.

These are the daily battles that your physician(s) endured to care for patients. Shameful !  While there are many hospital executives that do not subscribe to these tactics a few bad apples spoil the barrel.

The details of the article are much too long to long to repeat here, these are some of the high points.

"Not accustomed to visiting hospital executive suites, I took my seat in the waiting room somewhat warily. That was when I spotted the document on an adjacent chair. Its title immediately caught my eye: “How to Discourage a Doctor.” No one else was about, so I reached over, picked it up, and began to leaf through its pages. It became apparent immediately that it was one of the most remarkable things I had ever read, clearly not meant for my eyes. 

My recollection of its contents is naturally somewhat imperfect, but I can reproduce the gist of what it said. “The stresses on today’s hospital executive are enormous. They include a rapidly shifting regulatory environment, downward pressures on reimbursement rates, and seismic shifts in payment mechanisms. Many leaders naturally feel as though they are building a hospital in the midst of an earthquake. With prospects for revenue enhancement highly uncertain, the best strategy for ensuring a favorable bottom line is to reduce costs. And for the foreseeable future, the most important driver of costs in virtually every hospital will be its medical staff.

“Though physician compensation accounts for only about 8% of healthcare spending, decisions that physicians strongly influence or make directly – such as what medication to prescribe, whether to perform surgery, and when to admit and discharge a patient from the hospital – have been estimated to account for as much as 80% of the nation’s healthcare budget. To maintain a favorable balance sheet, hospital executives need to gain control of their physicians. Most hospitals have already taken an important step in this direction by employing a growing proportion of their medical staff.

“Though physician compensation accounts for only about 8% of healthcare spending, decisions that physicians strongly influence or make directly – such as what medication to prescribe, whether to perform surgery, and when to admit and discharge a patient from the hospital – have been estimated to account for as much as 80% of the nation’s healthcare budget. To maintain a favorable balance sheet, hospital executives need to gain control of their physicians. Most hospitals have already taken an important step in this direction by employing a growing proportion of their medical staff.  “Merely controlling the purse strings is not enough. To truly seize the reins of medicine, it is necessary to do more, to get into the heads and hearts of physicians. And the way to do this is to show physicians that they are not nearly so important as they think they are. Physicians have long seen the patient-physician relationship as the very center of the healthcare solar system. As we go forward, they must be made to feel that this relationship is not the sun around which everything else orbits, but rather one of the dimmer peripheral planets, a Neptune or perhaps Uranus.

“How can this goal be achieved? A complete list of proven tactics and strategies is available to our clients, but some of the more notable include the following:

“Make healthcare incomprehensible to physicians. It is no easy task to baffle the most intelligent people in the organization, but it can be done. For example, make physicians increasingly dependent on complex systems outside their domain of expertise, such as information technology and coding and billing software. Ensure that such systems are very costly, so that solo practitioners and small groups, who naturally cannot afford them, must turn to the hospital. And augment their sense of incompetence by making such systems user-unfriendly and unreliable. Where possible, change vendors frequently.

“Promote a sense of insecurity among the medical staff. A comfortable physician is a confident physician, and a confident physician usually proves difficult to control. To undermine confidence, let it be known that physicians’ jobs are in jeopardy and their compensation is likely to decline. Fire one or more physicians, ensuring that the entire medical staff knows about it. Hire replacements with a minimum of fanfare. Place a significant percentage of compensation “at risk,” so that physicians begin
to feel beholden to hospital administration for what they manage to eke out.

“Transform physicians from decision makers to decision implementers. Convince them that their professional judgment regarding particular patients no longer constitutes a reliable compass.

“Subject physicians to escalating productivity expectations. Borrow terminology and methods from the manufacturing industry to make them think of themselves as production-line workers, then convince them that they are not working sufficiently hard and fast. Show them industry standards and benchmarks in comparison to which their output is subpar. On the off chance that their productivity compares favorably, cite numerous reasons that such benchmarks are biased and move the bar
progressively higher, from the 75th

“Increase physicians’ responsibility while decreasing their authority. “Above all, introduce barriers between physicians and their patients. The more directly physicians and patients feel connected to one another, the greater the threat to the hospital’s control.

How To Discourage a Doctor | THCB

A patient’s budding cortex — in a dish? | National Institutes of Health (NIH)

Frankenstein----in a petri dish

A patient’s budding cortex — in a dish? 

The modern version...Franken-dish does not have a bolt through it's head.

Budding brain-like “human cortical spheroids” growing in a petri dish. Sergiu Pasca, M.D., Stanford University

A patient tormented by suicidal thoughts gives his psychiatrist a few strands of his hair. She derives stem cells from them to grow budding brain tissue harboring the secrets of his unique illness in a petri dish. She uses the information to genetically engineer a personalized treatment to correct his brain circuit functioning. Just Sci-fi? Yes, but...

An evolving “disease-in-a-dish” technology, funded by the National Institutes of Health (NIH), is bringing closer the day when such a seemingly futuristic personalized medicine scenario might not seem so far-fetched. Scientists have perfected mini cultured 3-D structures that grow and function much like the outer mantle – the key working tissue, or cortex — of the brain of the person from whom they were derived. Strikingly, these “organoids” buzz with neuronal network activity. Cells talk with each other in circuits, much as they do in our brains.

Neurons and supporting cells in the spheroids form layers and organize themselves according to the architecture of the developing human brain and network with each other.Sergiu Pasca, M.D., Stanford University

Sergiu Pasca, M.D.(link is external), of Stanford University, Palo Alto, CA, and colleagues, debut what they call “human cortical spheroids,” May 25, 2015 online in the journal Nature Methods.

For further details:

A patient’s budding cortex — in a dish? | National Institutes of Health (NIH)

Personalized Medicine, The Dog whose Bark was much worse than it's bite.

Eric Topol M.D., soon followed by Barak Obama coined the term 'personalized medicine' (PMx).  It’s been about 16 years since Genentech launched Herceptin, a drug for breast cancer patients with a specific genetic mutation. At the time, Herceptin seemed to usher in a revolution for how drugs would be developed and patients would be cured.

In that new version of care, drugs could be tailored to a patient’s specific biochemical profile, dramatically improving efficacy rates and reducing the system-wide costs and complications associated with one-size-fits-all medications. For pharmaceutical manufacturers, this approach had the potential to improve sales and profits through a radically new business model: differentiated products for segmented populations (see “A Strategist’s Guide to Personalized Medicine,” by Avi Kulkarni and Nelia Padilla McGreevy, s+b, Winter 2012).


But despite the occasional success story, PMx is largely seen today as the dog that did not bark. With a few exceptions, such as Herceptin, there are few PMx success stories. This is true for several reasons. 

Health insurers remain unconvinced of PMx’s merits. One would expect these companies to push hard for personalized medicine, considering that they are the main beneficiaries of more efficient healthcare. Yet most payors seem to believe that the economic benefits of PMx are relatively small. The few PMx-based therapeutics now on the market are much more expensive than conventional therapies—and the prices don’t always translate to proportionately better outcomes, such as higher survival rates. For example, Bristol-Myers Squibb released a new metastatic melanoma therapy called Yervoy in the U.S. in 2011. Yervoy costs US$120,000, but in Phase III trials, it added only about 3.7 months of survival time.

In addition, many pharma companies have been hesitant to make the necessary investments in personalized medicine. The steep costs required, including best-in-class PMx development and commercialization capabilities, seem out of proportion to the small markets for each drug. Cancer drugs are the exception, but pharmaceutical companies have focused less on the genetic causes of other diseases. That makes PMx a costlier and riskier proposition.

Finally, the reason success stories are so rare is a notable reluctance among physicians to adopt PMx. Medicine is a cautious discipline, understandably, and in some cases PMx requires practitioners to dispense diagnoses and treatments based on complex molecular changes. For example, in the 10 years since Genomic Health launched its pivotal Oncotype DX test, which can determine the recurrence risk of breast cancer and assess the likely benefit of certain types of chemotherapies, it has faced steep resistance from the medical community. Even though Oncotype DX has been proven as medically relevant technology, and been widely reimbursed by payors, analysts estimate that it is used on only half of all eligible patients.

Despite the promise of fewer and less serious complications than toxic chemotherapy using PMx to treat malignancy, they have other and even more serious side effects causing heart, and liver disorders.

There is much more to be done until this methodology enters the main stream.

A Diagnosis for Personalized Medicine

Consumer oriented Genomics and Ancestry.com

Ancestry.com takes DNA ownership rights from customers and their relatives

A word to the wise: Read the complete terms of service.

Read the fine print before you send in your sample to Ancestry.com .  The bottom line is you consent to give ownership of your genetic information to Ancestry.com . Ancestry.com can use your genotype for anything it wants.  They can use methods to copy it, transcribe it, modify it and use it for whatever purposes they want and gain profit from it.

There are three significant provisions in the AncestryDNA Privacy Policy and Terms of Service to consider on behalf of yourself and your genetic relatives: (1) the perpetual, royalty-free, world-wide license to use your DNA; (2) the warning that DNA information may be used against “you or a genetic relative”; (3) your waiver of legal rights.

So, you still own your DNA, however Ancestry.com also owns it. It is not a partnership.  Normally when a company owns something that they don't own they pay a royalty payment each time it is used. Essentially you are paying them to use your DNA.  What do you get in return ?  Their marketing literature explains it.

The AncestryDNA service promises to, “uncover your ethnic mix, discover distant relatives, and find new details about your unique family history with a simple DNA test.”

For the price of $69 dollars and a small saliva sample, AncestryDNA customers get an analysis of their genetic ethnicity and a list of potential relatives identified by genetic matching. Ancestry.com, on the other hand, gets free ownership of your genetic information forever. Technically, Ancestry.com will own your DNA even after you’re dead.

Specifically, by submitting DNA to AncestryDNA, you agree to “grant AncestryDNA and the Ancestry Group Companies a perpetual, royalty-free, world-wide, transferable license to use your DNA, and any DNA you submit for any person from whom you obtained legal authorization as described in this Agreement, and to use, host, sublicense and distribute the resulting analysis to the extent and in the form or context we deem appropriate on or through any media or medium and with any technology or devices now known or hereafter developed or discovered.”

Basically, Ancestry.com gets to use or distribute your DNA for any research or commercial purpose it decides and doesn’t have to pay you, or your heirs, a dime. Furthermore, Ancestry.com takes this royalty-free license in perpetuity (for all time) and can distribute the results of your DNA tests anywhere in the world and with any technology that exists, or will ever be invented. With this single contractual provision, customers are granting Ancestry.com the broadest possible rights to own and exploit their genetic information.

The AncestryDNA terms also requires customers to confirm that, “You understand that by providing any DNA to us, you acquire no rights in any research or commercial products that may be developed by AncestryDNA that may relate to or otherwise embody your DNA.” Essentially, you still own your DNA, but so does Ancestry.com. And, you can commercialize your own DNA for money, but Ancestry.com is also allowed to monetize your DNA for millions of dollars and doesn’t have to compensate you.

Although AncestryDNA customers provide voluntary consent to have their DNA used in commercial research projects, customers are free to withdraw consent, with a few exceptions. First, “data cannot be withdrawn from research already in progress or completed, or from published results and findings.” In those cases, Ancestry.com has access to data about you indefinitely.

Secondly, if a customer withdraws their consent, Ancestry.com will take 30 days to cease using their data for research. Finally, withdrawing consent, “will not result in destruction of your DNA Sample or deletion of your Data from AncestryDNA products and services, unless you direct us otherwise.” Customers must jump through additional hoops if they want their DNA sample destroyed or their data deleted from AncestryDNA products and services. The Ancestry.com policy does not specify what “additional steps” are required. U.S. customers must contact Ancestry.com customer service at 1–800–958–9124 to find out. (Customers outside the United States must call separate customer service numbers.)

Their marketing literature posted on their web site is rather seductive about the wonderful genomic science that will allow you to discover where your relatives come from or even connections with other members of your family.  It however, other than the legal disclosures when you  sign up says nothing about their legal claim to your genetic data. BEWARE !

https://thinkprogress.org/ancestry-com-takes-dna-ownership-rights-from-customers-and-their-relatives-dbafeed02b9e

UnitedHealth Doctored Medicare Records, Overbilled U.S. By $1 Billion, Feds Claim | California Healthline

The complexities of billing Medicare in Medicare Advantage Programs is leading to fraudulent claims.

Advantage plans are paid by Medicare according to a risk sharing formula and payments can vary from year to year.

By Fred Schulte

In a 79-page lawsuit filed in Los Angeles, the Justice Department alleged that the insurer made patients appear sicker than they were in order to collect higher Medicare payments than it deserved. The government said it had “conservatively estimated” that the company “knowingly and improperly avoided repaying Medicare” for more than a billion dollars over the course of the decade-long sche

UnitedHealth Doctored Medicare Records, Overbilled U.S. By $1 Billion, Feds Claim | California Healthline

Medicare pays the health plans using a complex formula called a risk score, which is supposed to pay higher rates for sicker patients than for people in good health. But waste and overspending tied to inflated risk scores has repeatedly been cited by government auditors, including the Government Accountability Office. A series of articles published in 2014 by the Center for Public Integrity concluded that improper payments linked to jacked-up risk scores have cost taxpayers tens of billions of dollars.

Tuesday’s court filing argues that UnitedHealth repeatedly ignored findings from its own auditors that risk scores were often inflated — and warnings by officials from the Centers for Medicare & Medicaid Services (CMS) — that it was responsible for ensuring the billings it submitted were accurate.

All but two of 37 Medicare Advantage plans examined in a 2007 audit were overpaid — often by thousands of dollars per patient. Overall, just 60 percent of the medical conditions health plans were paid to cover could be verified. The 2007 audits are the only ones that have been made public.

Audits in these cases are difficult to trace. One factor may be due to inaccurate coding and/or incomplete medical records from providers notes in either a chart or in an EHR.   This may be due to time pressures  and inadequate time allotment for providers to complete their CPT and ICD coding.

While the feds are focused on the insurance companies, part of the blame may rest on providers themselves...insulated now by another level of bureaucracy.  In an effort to reduce CMS cost, CMS has shifted the burden to Advantage plans.  The blame game comes into operation in this case.

The current complexity of billing is such that it encourages omissions and faulty record keeping. CMS audits numbers, codes for CPT and ICD, in a digital manner, not an analog manner.

Stay tuned and add Health Train Express to your feeds by subscribing to a feed or by email.

This story was produced by Kaiser Health News, an editorially independent program of the Kaiser Family Foundation.

Primary Care Doctor Speaks Out: “The Problem Isn’t Obamacare…It’s The Insurance Companies” | Bluedot Daily

CATHLEEN LONDONSPECIAL TO THE PRESS HERALD

Read what this primary care physician (G.P.) Family doctor has to say about insurance companies, including Medicare.

Cathleen London is a primary care physician in Milbridge, a rural town in Maine. She claims the problem isn’t Obamacare itself, but rather, the entire health insurance system and insurance companies are to blame.

Writing for the Portland Press Herald, London explains she is a a primary care physician who is on the front lines every single day, as  her town is very remote, which means it takes 30 to 40 minutes to get to the emergency room, which is why her office operates as an urgent care facility as well as a family medical practice.

It’s takes an ambulance about 20 minutes to get to her clinic and specialist care about 2 hours away, so Dr. London is trained to handle about 90 percent of medical problems.

DR. LONDON EXPLAINS THE FOLLOWING, WHICH WILL SHOW YOU EXACTLY WHAT’S WRING WITH HEALTH CARE:

One evening I was almost home after a full day’s work. Around 7:30, I got a call on the emergency line regarding an 82-year-old man who had fallen and split his head open. His wife wanted to know if I could see him, even though he was not a patient of mine.

Instead of sending them to the ER, I went back to the office. I spent 90 minutes evaluating him, suturing his wound and making sure that nothing more sinister had occurred than a loss of footing by a man who has mild dementia. When I was sure that the man would be safe, I let them go.

I billed a total of $789 for the visit, repair, after-hours and emergency care costs. Stating that the after-hours and emergency services had been billed incorrectly, Martin’s Point Health Care threw out the claims and reimbursed me $105, which does not even cover the suture and other materials I used.

I called them about their decision, said that it was not right and let them know they’d lose me if they reimbursed this as a routine patient visit. They replied, “Go ahead and send your termination letter” – which I did.

The same day, Anthem Blue Cross kept me on the phone for 45 minutes regarding a breast MRI recommended by radiologists on a woman whose mother and sister had died of breast cancer. She’d had five months of breast discharge that wasn’t traceable to anything benign (and it turns out the MRI is highly suspicious for cancer).

Anthem did not want to approve the MRI unless it was to localize a lesion for biopsy, even though the mammogram had been inconclusive! This should have been a slam-dunk fast track to approval; instead, dealing with Anthem wasted a good part of my day.

Then Aetna told me there is no way to negotiate fees in Maine. I was somewhat flabbergasted. I do more here than I did in either Brookline, Massachusetts, or New York. The rates should be higher given the level of care I am providing. I have chosen not to participate with them. This only hurts patients; however, I cannot keep losing money on visits.

I do lose money on MaineCare – their reimbursement is below what it costs me to see a patient. For now, that is a decision that I am living with.

I had thought those losses would be offset by private insurance companies, but their cost shifting to patients is obscene. I pay half of my employees’ health insurance, though I’m not required to by law – I just think it is the right thing to do.

My personal policy costs close to $900 a month for me and my sons (all healthy), and each of us has a $6,000 deductible. This means I am paying rack rate for a policy that provides only bare-bones coverage.

Something is wrong with the system. In one day, I encountered everything wrong with insurance. I am not trying to scam the system. I am literally trying to survive. I am trying to give care in an underserved area.

This is not the fault of Obamacare, which stopped the most egregious problems with insurance companies. Remember lifetime caps? Remember denials for pre-existing conditions? Remember the retroactive cancellation of insurance policies? Returning to that is not an option.

Indeed it is not an option, Dr. London.  If Republicans get their way eventually by repealing Obamacare, it may be where we end up again. If Republicans really get their way, it’ll be even worse than it was before.

Primary Care Doctor Speaks Out: “The Problem Isn’t Obamacare…It’s The Insurance Companies” | Bluedot Daily

California To Pay About $1.3 Billion For Medicaid Expansion In First Year Of State Contributions | California Healthline

The senate is debating a new American Health Care Act (AHCA) as time ticks on.  Meanwhile many provisions  of the ACA continue to unfold.

For example the State of California is preparing to pay $ 1.3 billion to underwrite Medicaid (Medi-Cal), a new expenditure that will further strain an already burdened health care budget.

By  Emily Bazar

This year marks the first time states that expanded Medicaid under the Affordable Care Act will have to pitch in to help fund their expansion of the program. Their share of the overall price tag compared with federal contributions is small — 5 percent of the cost to cover newly eligible enrollees — but that still equates to real money in the Golden State.

That’s because the expansion of Medi-Cal, California’s version of the federal Medicaid program for low-income residents, has added nearly 4 million additional enrollees, according to the state Department of Health Care Services (DHCS). Most other states don’t have that many enrollees in their entire Medicaid programs.

“It was expected, but it’s still money that has to come from somewhere,” said Stan Rosenstein, a health care consultant in Sacramento who ended his 31-year career at Medi-Cal in 2008 as the state Medicaid director. “It puts budget strain on the state.”

In California, the potential loss of federal dollars caused by a rollback of the Medi-Cal expansion would be massive. The state Legislative Analyst’s Office estimated in February that the Golden State is slated to receive more than $17 billion from the federal government for the expansion in 2017-18.   Gov. Jerry Brown unveiled his revised $183 billion state budget last week.

If the House GOP plan were adopted, Medi-Cal expansion enrollees would likely fall off the rolls in large numbers after 2020 because of natural churn in and out of the program and a new provision that would require enrollees to renew their coverage every six months, twice as often as under current law.

As expansion enrollees drop, so would the more generous federal funding. Facing reduced federal support, the state may not be able to continue to allow people to enroll under the expanded eligibility criteria, said Deborah Kelch, executive director of Insure the Uninsured Project.

As lofty as the ACA is it did not take into account 3, 4, or 5 years down the road what financial cycles can do to state and/or federal budgets.  

The Affordable Care Act continues to sink. Economic realities will impact state and federal monies eventually forcing reductions in enrollees and reimbursements to hospitals and providers.

Of course the Feds can always print more currency.

“This story was produced by Kaiser Health News, which publishes California Healthline, an editorially independent service of the California Health Care Foundation.”

California To Pay About $1.3 Billion For Medicaid Expansion In First Year Of State Contributions | California Healthline

LA County looks at planning for possible Obamacare repeal | 89.3 KPCC

Health Train Express examines the conundrum of revising the Affordable Care Act. There are outcries about how the  Affordable Care Act is not working. Yet millions of Americans now have health insurance coverage. No, it is not perfect. Deductibles are higher, and in some cases premiums are still not affordable for many patients.  Perhaps the reason is that one law cannot anticipate individual health care needs. Additional taxation of medical devices, and other necessities of medical care has brought an outcry from those affected.  Uniformly patients are satisfied with elimination of the 'prior existing' language of former  policies.

Hopefully this article can serve as a starting point, by following the embedded url links.

As congress attempts to pass a workable alternative to ObamaCare, the House has passed the American Health Care Act, and now the Senate is writing its own version of a plan. The Affordable Care Act is still the law of the land.  It has not been repealed and will remain in effect unless Congress repeals it, or President Trump by executive order repeals or it.  Either event would be   politically unlikely without a suitable replacement.

Obamacare transition plans are causing Los Angeles County and others with high rates of previously uninsured to plan for interruptions in health coverage.  LA County is seeking consultant's to plan a transition plan to fill the void.

Some local jurisdications are searching for alternative plans.

Under consideration by the Los Angeles County Board of Supervisors on Tuesday: 

The county wants to be ready as the U.S. Senate considers its steps on a bill to repeal and replace the Affordable Care Act. The House passed the American Health Care Act, which would make significant changes to the nation's health care, early this month. The L.A. County Chief Executive Office recommends the board reinstate retired health policy adviser Fred Leaf as a temporary hire. If the board approves the motion, Leaf would help develop the county’s position and plan to move forward in the event Congress repeals the Affordable Care Act.  "We need to have a coordinated strategy moving forward to be able to handle whatever it is that happens," said Dr. Christine Ghaly, chief operations officer for the Department of Health Services.

Republican efforts to replace the Affordable Care Act (ACA) are not over, despite the failure of the American Health Care Act (AHCA) legislation. The major challenge facing the AHCA was the loss of insurance coverage for an estimated 24 million people.¹ Any subsequent reform, especially those less costly than the ACA, will have the same challenge of keeping currently insured individuals and households from discontinuing their insurance. In this Viewpoint, we draw on behavioral economics to propose 4 general principles for health insurance reform to help ensure that the currently insured will not lose their coverage.

Health care policy making is technically complex, of course. But it is also complex in that the president and Republicans seeking to replace the Affordable Care Act (ACA) face very difficult political and philosophical choices. It was evident from the internal backlash to the recent Republican House committeebills that there is a deep divide among Republicans on these choices.

Consider 3 such tough issues: deciding what coverage means, making hard choices about subsidies, and determining how to cover people with chronic illnesses.

What Does “Coverage” Mean?

A key metric in the ACA replace debate has been the number of people who are “insured” or “covered.” The true purpose of insurance is to protect people from ruinous costs, such as from a terrible accident or a chronic condition. However, most people in the United States think health insurance should also cover routine costs.

Therefore, an ACA exchange plan that costs hundreds of dollars in monthly premiums and has a deductible of perhaps several thousand dollars, may technically be good insurance, but many people think it is not meaningful “coverage” because it leaves them exposed to possibly hefty routine costs. Indeed, polling has shown people in the United States generally view the ACA favorably or unfavorably depending on whether their own premium and out-of-pocket costs have been rising—even if they are not actually in an ACA plan.

Trump responded to this public perception by pledging better coverage with cheaper premiums and lower deductibles for everyone. So Republicans are now struggling to find ways of accomplishing that promise.

One popular Republican proposal is to reduce insurance costs by paring back the “essential health benefits” that ACA exchange plans must provide—so people don’t have to pay for benefits they supposedly do not want. However, the ACA’s required benefits mostly cover what Americans consider basic insurance, such as hospital stays and prescription drugs, so there is little room for paring back. Meanwhile, eliminating more controversial benefits, such as birth control, would have little impact on insurance costs.

Another popular idea is permitting families to buy inexpensive insurance from anywhere in the country. That sounds like an easy cost-cutting measure, but it’s not. Insurance today is typically tied to local networks of physicians and hospitals; thus, an out-of-state plan might be cheaper but essentially inaccessible. Most likely, with reduced regulation, we would see cheap cash indemnity plans aimed at healthy individuals. However, if large numbers of healthy people in a state did buy such out-of-state plans, that would undermine the state’s insurance pool and push up the average cost for remaining enrollees.

Designing Subsidies

Both the supporters and the critics of the ACA accept that some level of subsidy is needed for many families to afford coverage. Here again, Republicans seeking to replace the ACA face some hard choices in how they would construct such subsidies.

Bringing down the general cost of coverage would require a large infusion of new money or retaining some ACA taxes. Without that, many people will have a hollow choice between unaffordable plans. However, the House bills triggered angry resistance from fiscal conservatives opposed to keeping even some ACA taxes.

Even putting that problem aside still leaves hard design choices. Many Republicans favor a broad tax deduction for health coverage. But a deduction is of no value to the nearly half of US individuals who pay no federal income tax, and the greatest benefit goes to higher-income households who least need a subsidy. For that reason, the House Republican leadership opted for an income-related tax credit that is “refundable”—meaning available to households that pay no income tax. Yet even if the proposed refundable income-related credit were reconfigured to be made adequate, many conservatives balk at the idea of refundability, arguing that it would be a new cash entitlement.

An existential problem for Republicans remains, however. If they refuse to subsidize millions of modest- and lower-income individuals to buy private insurance, the only way to honor the President’s pledge would be to provide public coverage.

How Should We Cover Sicker Individuals?

A commitment to adequate and affordable coverage for all also means deciding how to address people who develop chronic illness, especially when young, and then try to buy insurance. In a less-regulated market, these individuals are literally uninsurable at a price that even comparatively well-off people can afford—but somehow, their treatment must be paid for.

There are only 2 broad options to deal with this group. One way, adopted in the ACA, is to spread their high costs across the entire insured population by requiring plans to cover all risks and limiting the range of premiums and deductibles insurers can charge. The problem with this approach is that premiums for younger, healthier individuals then become “artificially” high, making their purchase of coverage less economically attractive unless they receive generous subsidies. If these healthy people leave the insurance pool, such as by forgoing insurance, that raises the average cost of insuring those remaining in the pool.

The unpopular individual mandate penalty is meant to discourage this pattern (the House legislation explicitly repeals the mandate—but then adds back a penalty on people who wait to buy coverage until they are sick). Opting out is a particular problem in the ACA exchanges because healthier people can still obtain coverage in the less-regulated nonexchange individual market, making the exchange insurance pool more costly (a partial solution to this would be to merge the individual market with the exchange market, as has been done in Vermont and the District of Columbia).

The other way to cover people with high health care costs, embraced by the House legislation, is to fund states and hospitals to provide these individuals with extra services or place them in a separate subsidized insurance risk pool so their premiums are affordable. Subsidizing high-cost individuals in this separate way allows regular premiums to be lower for healthier individuals—making a mandate for coverage less necessary. Conservative analysts argue that carefully designed risk pools are an effective alternative to controlling premiums to cover expensive individuals, and can cover people “invisibly” and at reasonable cost. Some liberal analysts counter that the government cost would be too high for most Republicans to accept. But the bottom line is that a high-risk pool approach can only work if it is adequately funded.

These are just 3 of the many difficult issues Republicans have to deal with in designing an alternative to the ACA that adheres to Trump’s commitment to provide better and less expensive coverage. As my colleagues and I have pointed out, there are certainly ways to craft an alternative to the ACA that might appeal to many—though not all—Republicans. But that task is indeed complex, and requires a constructive consensus among Republicans that is currently lacking and may be unattainable.

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Article Information

Corresponding Author: Stuart M. Butler, PhD (smbutler@brookings.edu).

Published Online: March 15, 2017, at http//:newsatjama.jama.com/category/the-jama-forum/.

Disclaimer: Each entry in The JAMA Forum expresses the opinions of the author but does not necessarily reflect the views or opinions of JAMA, the editorial staff, or the American Medical Association.

Additional Information: Information about The JAMA Forum, including disclosures of potential conflicts of interest, is available at http://newsatjama.jama.com/about/.

Note: The print version excludes source references. Please go online to jama.com.

 : LA County looks at planning for possible Obamacare repeal | 89.3 KPCC