How to REALLY Lower Healthcare Costs


The Great Healthcare Debate of 2017 has been underway for a few months with the usual drivel about the impossibility of lowering healthcare costs and thereby lowering insurance premiums. Experts in healthcare—generally those who created this mess to being with—tell us they were lying when they claimed they could, through the ACA (aka Obamacare) “bend the cost curve down.” Now that there is new proposed legislation that actually has a shot at lowering healthcare costs, we are hearing about millions of people dying in the streets if Congress passes any of the proposed legislation.

Take Medicaid for example. We are told that the cuts to Medicaid are heartless, mean, and will end the lives of millions of people on Medicaid. The reality? Well, the new health program has zero cuts to Medicaid for the first three years. This from Investor’s Business Daily:

  • First, the Senate bill doesn’t change Medicaid at all for three years. That means spending on the program will continue to grow, just as it is slated to now—at an annual 5% clip—until 2021.
  • What does that mean in dollar terms? Under the Senate’s “shredding” reform, Medicaid’s budget in 2021 will be $85 billion bigger than it is this year, and $209 billion (or 79%) bigger than it was in 2013.
  • What about after that? Under the Senate plan, there’d be a three-year transition to a new way of financing Medicaid.

Seems to me that if there are people dying in the streets, it isn’t because Medicaid is spending like a drunken sailor.

That’s Medicaid. So what we hear through the media and political organizers is pretty much just a shibboleth to keep compassionate people compassionate.

The politicians, media, and other flotsam and jetsam that haunt the halls of Congress are befuddled by the real opportunity that healthcare reform is actually, well, reform. Understand that all the hoopla about reform is couched in the language of a science fiction novel. In other words, you are asked to have a very, very large suspension of disbelief along the lines of: “Planet Xenon? It’s only a couple of light-years away, we’ll be there in an hour.”

But, you know what? Health reform is really only just around the corner. If necessity is truly the mother of invention, then health reform will create a whole lot of necessities that need invention. And invention in healthcare is the purview of the providers and the payers, not the government. Take, for example, the morphing of Accountable Care Organizations into viable providers and managers of patient care. ACOs have been around for a few years and have been developing a system that works to improve patient outcomes, reduce costs, and is scalable to a large population. What ACOs have done is really a proof of concept, with over 500 ACOs in operation (many small), the kinks have been worked out, and the data produced shows that ACOs really do work.   How? By focusing on patients with chronic health issues and designing a delivery team comprising primary care physicians, pharmacists, physical therapists, and a few others to take over management of a patient’s health needs. This approach was first designed to avoid costly emergency room visits, as well as hospitalization, and use pharmacists to ensure that any pharmaceuticals are consistent with the diagnosis and not in conflict with other drugs the patient is taking. Seems simple, but the cost reduction is sizeable and the incentive payments from CMS are significant enough to make ACOs financially viable. Case in point, since 1913, Blue Cross of Nebraska, has invested $37 million in an ACO called “Think” that has over 7,000 patients under management. Think is now in the process of expanding nationally. The success of ACOs to lower costs is attracting more health-delivery organizations to create their own ACOs. Lower the cost at the patient level and reductions will accrue for all in the form of lower premiums: Better care, less money.

Getting rid of the Affordable Care Act and its onerous regulations and requirements will bring insurance companies back into the market, bring new ways to manage healthcare, and bring innovation to healthcare. I, for one, am looking forward to the innovation that we will be seeing in the near future.


Leave a Reply: