Medicare for All interim steps

Focus for now on should be on market dysfunction issues

WHETHER YOU ARE an avid supporter of the Bernie Sanders-style single-source financing concept (often referred to these days as Medicare For All), dead set against it, or somewhere in-between, you have to admit, there is significant market dysfunction in the provision of goods and services in our nation’s health care system, including here in Massachusetts.

The best way to think about the evidence for that dysfunction is to consider the commercial prices that are paid for health care goods or services, and the too often resultant mismatch between those prices and the value received.  A Sanders single-payer approach could, if implemented, vastly reduce a good amount of the waste that flows from these price-value mismatches in three important areas:

  1. Provider price variation in commercial payment to doctors and hospitals;
  2. Monopoly pricing by the pharmaceutical industry leading to exorbitant costs for branded drugs and, increasingly, even for some generic drugs; and
  3. The overpayment and flow of resources for care offered by procedure-oriented specialists, as compared to underpayment for primary care.

But no matter what happens in the national elections next year, there are a few things we can do in Massachusetts to begin to address some of these mismatches. In so doing, we will be helping to create a better foundation upon which some sort of expanded government offering of health insurance to Americans would work all that much better—no matter if that expansion comes sooner, later, or in incremental steps.

For those who are the most ardent single payer supporters, their attention ought to focus on some of these market dysfunction issues. In so doing, we can begin to chip away at some of the underlying issues and concerns that are rallying hospitals, specialists, and pharma against a single-payer concept.  If we can mitigate some of the dysfunctional commercial pricing that exists with providers, and squeeze out some of the windfall profits that pharma reaps (these days in both the branded and, to some degree, the generic drug space), providers and pharma will begin to learn a few things about how best to operate under a system that is more compatible with a single-payer system and its attendant need to bring sanity to the prices paid for health care goods and services.

Here are three areas where this approach makes sense.

Hospital price variation: Another legislative effort will likely be made in Massachusetts this term to help boost the payment rates to community hospitals.  But if you only boost the amount paid to the lower paid without taking some of the excess from the overpaid, it will only raise our premiums that much more. The Legislature clearly needs to assure that any additional monies that are directed to help the lower paid must ultimately come from the overpriced hospitals in our state.  The net result will be some amount of price compression in hospital services.

This sort of redistribution in hospital rates is a step toward what would happen under a single-payer system, where more uniform payment levels would be established somewhere between the current Medicare and commercial rates hospitals receive but much closer to Medicare than current payment levels.  We need to wean overpriced hospitals off their supra-normal commercial payments, which only encourage operating inefficiency.

Pharma pricing: The Legislature last month authorized MassHealth to start negotiating prices of very expensive drugs directly with manufacturers. On the commercial insurance side, there is another proposed bill in the legislature that could lead to increased transparency around the underlying costs to produce prescription drugs,  better education for prescribers to use evidence rather than marketing hype to guide their prescribing, and authorization for the state’s Health Policy Commission to set upper payment limits for unreasonably high-priced drugs based on objective evaluations. These strategies are all aimed at putting pressure on pharma to lower prices, which in recent years have been driving a good deal of the cost growth in Massachusetts health care spending.  If successful, the Massachusetts approach could be a model for a more value-based drug pricing system that a single payer approach could run with at the national level.

Steer more health care spending toward primary care: Researchers have estimated that in Massachusetts we dedicate about 6 percent of all medical care spending to primary care.  There is growing recognition that spending proportionately more money on primary care could not only improve quality and patient health status and satisfaction, but could also result in less growth in overall medical spending.

Rhode Island about 10 years ago mandated through regulation a doubling of its primary care spending from 5 percent to about 10% of medical spending.  Other states, such as Vermont and Oregon, are moving in the same direction. While there has not been any legislative activity tied to this issue in our state, a working group of primary care leaders from Boston area medical schools and practices are now meeting to formulate some specific state policy ideas. Perhaps state legislative funding of an initial demonstration project with agreed-on metrics could lead to future governmental action.

Meet the Author

Paul A. Hattis

Associate professor, Tufts University Medical School
Even if some sort of a single-payer system starts to take shape, there is still a burning need for evolution in primary care practice design and payment models in order for the overall system of care to achieve cost, quality, and public health goals. Given our state’s national leadership in pursuing Medicaid accountable care organizations, we are well positioned to launch an enhanced primary care payment model demonstration that comes with key features like enhanced access and behavioral health integration.     Carrying out such a demonstration successfully could then lead to establishing a payment system where money is redirected toward primary care with such attributes.  Such a system could become a core building block of any single-payer system.

In sum, who knows what next year will bring with national elections and what that will lead to from a national health care policy perspective.  But now is no time to sit on our hands.  Over the next year in Massachusetts, our Legislature can help make our system more affordable and a bit more functional from a patient and consumer perspective—no matter what happens nationally.  And as an added benefit, addressing these price value mismatch issues can clearly help create a better health system foundation upon which a single payer financing concept could be more easily and effectively implemented.

Paul Hattis is an associate professor at Tufts University Medical School.