I’ve blogged a couple of times about what I think Healthcare Reform 2.0 will look like. Due to the 2014 election, I don’t think there is a chance of a major bill being implemented until 2021 at the earliest, but the basic thrust of my thoughts are based on the following logic:
The PPACA/ACA negoatiations left a lot of money on the table from a variety of rentier interests because those players were able to be involved veto actors if they were threatened. However, there is still a lot of money on the table that can be used to finance coverage expansion and benefit enrichment…
The goal of healthcare reform 2.0 or an Obamacare improvement bill would be to rejigger the political coalitions to focus on cost control instead of coverage expansion, and the greatest tool would be to allow the biggest buyer of healthcare services in this country to act like the typical biggest buyer of anything in this country. That means the federal government would use its size and its ability to say no to get good to really good prices on common items.
there are a couple big pools of money to pay for them. The easiest pools are durable medical equipment and Medicare drugs. Currently Medicare only puts some DME contracts out for bid in some locations. Expanding DME bidding to cover more products and the entire country should generate $100 billion over a decade. Medicare gets a significant discount on Medicare Part D drugs in the donut hole, but otherwise Medicare has to buy drugs at average wholesale price plus six percent. Medicare can’t be like the VA legally and tell suppliers that Medicare is the biggest buyer in the world for drug X so a good deal is necessary. Both of these steps leverage sheer buying power to get good prices for the American people. Reforming Medicare Part D and allowing a Veterans Administration like formulary would free up a couple hundred billion dollars as well.
Sarah Kliff at Vox has a round-up that shows this is the basic idea animating the Democratic Party wonks for 2016. The idea is that the Democratic Party, should, on the matters of healthcare, be a party of reasonably free markets with an emphasis on using large scale purchasing power to improve the public good looks to be the major health policy philosophy of the upcoming Clinton campaign as outlined in this Familes USA white paper from January 2015:
Reducing health care costs and making care more affordable: stopping uncompetitive provider consolidations, reducing high prescription drug costs, and making information on health care cost and quality transparent
On the health insurance side, margins are already fairly low, and there is some fat left to cut, but not much. On the provider side of the equation, there is plenty of fat left to cut on the basis of international comparisons. The major areas where the Democratic Party can get a lot of money out of the US healthcare system is on high end provider payments, drug costs and hospital payments while also expanding the lower levels of basic but very valuable care. Right now the US health system has numerous guilds and other anti-competetive practices in place which protect small, concentrated and powerful groups’ incomes while screwing the broader society by ringing up much higher healthcare costs without delivering amazing value in return.
A Democratic Party that wants to bust hospital monopolies would be bringing competition to lower prices instead of subsizing hooker and blow consumption. A Democratic Party that is empowering Medicare and Medicaid to actually negoatiate and bid for drug prices with clear authority to say no for outrageous pricing would lower costs while also shifting some of the drug development subsidy off-shore to other rich countries that currently bargain hard for their drugs. A Democratic Party that decreases the power of the doctor guilds to restrict medical immigration and overly expensive and restricted credentialling would see lower primary care costs while also seeing a redistribution of income away from Republican leaning constituencies to Democratic leaning constituencies.
It would be a Democratic Party that is pro-competition, it would be a Democratic party that is pro-free market, and it would be a Democratic Party policy decision that would send most of the established high cost medical provider political organizations straight into the Republican Party as the Republicans would be the party of current businesses and incumbent providers who want to protect their rent. Pediatricians, internists, CRNPs, PAs and immigrants will benefit from these changes, but the specialists and consolidated hospital systems won’t.
Over the long run, the provider restrictions need to be broken, and they will be broken as the providers scream for protection of their privilege to have the finest blow and the most exciting hookers.