So now what?

  While Speaker Ryan has acknowledged that ACA will remain “the law of the land for the foreseeable future,” a looming question remains – what next?

For all the challenges with the now shelved AHCA – and there were many – Obamacare has never been perfect and is far from becoming perfect.  There are substantial structural challenges that must be dealt with ASAP, but with the White House vowing to “move on” from healthcare we’re left to wonder… what about the pressing problems that weren’t addressed?

Data from Kaiser shows that on the exchanges every state with a 5% or less premium increase in 2017 was matched by 2x as many states with a 20% or more premium hike.  For each of the 4 states who actually saw a drop in premiums (ranging from -1 to -4%) there were 3x as many states with a 40% spike or more (ranging from +40 to +145%).

Remember that – thanks to the ACA’s subsidies – these premium hikes are largely transparent to consumers… at least in the short term.  With subsides doubling, tripling, and even quintupling in at least one state, taxpayers will be funding subsides that are rising proportionately faster than the premiums themselves.  And with competition generally decreasing (from a mean of 5.9 insurers per state on the exchanges in 2015 to 3.9 in 2017) market pressure to control premiums isn’t likely to strengthen any time soon.

These math problems dwarf the even larger one associated with Medicaid expansion.  Over 14 million new Americans were added to the Medicaid program since implementation of the ACA (around 3 million of whom were actually previously eligible but hadn’t signed up), making Medicaid the largest provider of health coverage in America at over 70,000,000 covered livesWhile it still costs less than Medicare ($545B compared to $646B), Medicaid (as a combined state/federal program) is increasingly suffocating state budgets by consuming nearly 20% of all state revenues.

Republican or Democrat, liberal or conservative, the math doesn’t lie – these are fundamental problems of arithmetic that must ultimately be addressed.  Since AHCA’s chance to address them seems to have passed (at least for now) and the opportunity for large-scale reform in healthcare (e.g. revamping both the private/employer insurance market and government entitlement programs altogether to differentially address primary care, preventative care, emergency/catastrophic care, long-term care and truly elective care), the most pressing question is what can policymakers do now to at least stabilize the system in the short-term and avoid budgetary chaos in the long-term?

Here are two simple ways to start:

De-regulate (one of my Christmas Wishes from 2016).  Either as part of “one-in-two-out”or through separate legislation/regulatory actions, both Congress and HHS can provide significant and expedient relief to healthcare’s marmoreal regulatory environment.  The time for pruning is long overdue when even the federal judiciary acknowledges that:

Medicare and Medicaid are among the most completely impenetrable texts within human experience. Indeed, one approaches them at the level of specificity herein demanded with dread, for not only are they dense reading of the most tortuous kind, but Congress also revisits the area frequently, generously cutting and pruning in the process and making any solid grasp of the matters addressed merely a passing phase. (Rehab. Ass’n of Va. v. Kozlowski, 42 F.3d 1444, 1450; 4th Cir. 1994)

A few ripe targets?  Beyond the “impenetrable texts”of Medicare and Medicaid how about the antiquated Stark Law, widely acknowledged to make the kinds of interactions between hospitals and physicians that Obama era health reforms were intended to drive “remarkably difficult.” Another option would be the dense thicket of state medical license restrictions that makes providing tele-services across state lines both incredibly difficult and incredibly expensive.  The sheer volume of choices (catalogued here by Modern Healthcare) is prodigious, and few have defenders as vocal as their detractors (famously including Pete Stark himself).

Incentivize innovation.  While significant enough de-regulatory efforts will in and of themselves spark innovation, we need explicit incentives to overcome the sheer inertia that’s barred real disruptors from accessing healthcare for generations.  We needed the Wright brothers, not the Vanderbilts, to imagine airplanes in an era of railroads.  We needed Steve Jobs to put a thousand songs in our pockets before we knew we wanted them there, and to create an iPad before we knew why we needed one.

We need innovators to have time, space, and resource to innovate – de-regulation will create the space, and while private investors will seize the opportunity to add resource the amount of incentives we can provide through revamped reimbursement mechanisms vastly dwarf venture funding.  Last year’s National Health Expenditures reached $3.4 trillion (over $10k per American), dominating all 2016 US venture capital investments by nearly 50 times.  Earmarking a mere 2.4% of what America spends on healthcare (or about 5% of what government alone spends) to fund disruptive innovation would beat out all U.S. venture funding across all industries… and still amount to less than half of the total increase in healthcare spending from 2015 to 2016.

We need real reform in healthcare and we need it faster than the political environment in Washington will support – until then, perhaps policymakers can at least move forward purposefully on these two fronts… even if the movement needs to begin subterraneously.

It’s time for government to govern.

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