MPPA Meeting Minutes – 6/09/21

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This MPPA Meeting (in its 24th year) was a “Dock Side Chat” held Wednesday, June 9, 2021, at 6 PM with renowned economists, Professor Stephen Parente (Medical Industry Leadership Institute—MILI, at the UMN Carlson School) and Professor Charles E. Phelps (Univ of Rochester , NY) using the UMN webinar site. The webinar moderator was the gifted Bryanna Mayer, PhD.

Focus: Medical Econ 101—the origin of medical marketplace dystopia of unrelenting cost-price inflation and other distortions For those not already acquainted with MN Physician-Patient Alliance (MPPA), attached to the email distributing these minutes, is a briefing regarding its nature and its evolution into a discussion group.

Present: Alexander Leick, Hannelore Brucker MD, Jenny St. Louis, Lee Beecher MD, Lyle Swenson MD, Matt Flanders, Michael Webber, Michelle Sotak, Noel Collis MD, Rick Morris MD, Robert Geist MD, Robert Koshnick MD, Sally Duran, Scott Hanson, Stephen Huey PhD , Rep/ Susan Akland (19A); Vincent Hunt MD, Wayne Zuehlke CPA (ret), Rep. Jen Schultz (7A), Sue McClernon PhD, Marie Olseth MD, Tim Herman (ret), Peter Nelson JD. A total of 23 of whom 15 were MPPA Fellows. A vigorous post-meeting email discussion loop has developed—it is not appended to these minutes; I’ll try to correlate for all MPPA Fellows later.

A recording of the meeting is available: here—click DOCKSIDE CHAT, JUNE 2021. It is 32 minutes long, delightfully informal, and full of information. The entire program was skillfully arranged by Jessica Haupt, Managing Director, Medical Valuation Lab at the UMN Carlson School of Management—we owe her many thanks for this entertaining “mosquito free” summer dockside chat. The meeting can now be enjoyed by all 80+ MPPA Fellows.

Once again please note that my own opinions in these minutes are always enclosed in [brackets—rwg]. I do not use the phrase “healthcare”, a very broad category often
“medicalized”; the national debate about healthcare is really a debate about Medical care. Also keep in mind that the speakers had little time to fully explore the rationales for their opinions and ideas. For that see their excellent book, The Economics of US Health Care Policy. https://www.amazon.com/Economics-Health-Care-Policy-World/dp/0415784328/ref=sr_1_4?dchild=1&keywords=Charles+phelps&qid=1624706178&s=books&sr=1-4

Steve Parente began by noting that his top 3 issues were: 1) eliminate tax-free health insurance premiums; 2) price transparency, published for consumer directed health plans; and 3) reconstructing high deductible health insurance plans (HDHP) to cover preventive and chronic illnesses.

He noted that the distortions of the medical marketplace are due to the Employer-Based Insurance (EBI) tax-free subsidy; it ought to eliminated. It is highly regressive and typically coverage of preventive services and chronic conditions is not adequate. Chales Phelps added that the EBI tax-subsidy created excess demand; it has squeezed alternative insurance products out of the market. ObamaCare was an attempt to create a competitive insurance market. In an “alternative universe” without the tax-subsidized insurance [highlighted in their book—rwg], money would be back in the hands of the workers to buy an alternative less costly insurance plans or increase take home pay. That does not mean that employers would not have health insurance plans or that other entities such as Unions, would not also sponsor plans. In addition, the economy’s tax-base would be increased, but [in their book] would be offset by equivalent reduction in tax rates.

Both agreed that price transparency was important for proper market function. In this regard, patient information such as My Chart, is a “huge step forward” that could become akin to the financial services market, where one hires an expert for advice. In a universe without tax subsidized insurance, the need for HDHPs is certain; such plans can provide free chronic diabetes, asthma, and COPD as treatments for such illnesses are effective and inexpensive. Parente had noted earlier that in the first year, 40% of employers had adopted such plans—a fast uptake not seen before.

The absurdity of charges to real prices was noted. Phelps had recently had pre-op billed charges of $35 K, discounted to about $3.5 K, and a final personal bill of $350! The absurdity “is an artifact of the tax law” so that the hospitals can write-off charitable services at extraordinary high prices. He thought the solution could be to limit the deductions to Medicare rates! [The write-offs are now based on arbitrary (secret and high) hospital charge-master prices—there is an easy read book of revelations regarding the absurd charge-master system written by Johns Hopkins surgeon, Marty Makary— https://www.amazon.com/s?k=marty+makary&i=stripbooks&crid=1A79RLWQ1IX3Z&sprefix=makary%2Cstripbooks%2C183&ref=nb_sb_ss_ts-doa-p_1_6 rwg]

Phelps noted that there is no reason that access to data and care across systems could not be done. He found it done much better in Rochester NY than when in San Francsico. [In the last 2 months of my son’s various medical complications the electronic coordination of records was smooth. The “hospital system’s” internal referrals methods are a different problem—rwg]. Phelps said that putting the consumer in the drivers seat is the goal.

Phelps worried that to have an informed consumer “you have to have a physician, who does not have a personal financial interest in the treatment…a third-party advisor without a financial interest, such as in the financial sector, would be ideal. [He did not address the previous lack of financial advisor fiduciary duty, which was only recently mandated through federal regulations. Nor was there a chance to compare this 3rd party with a doctor’s or lawyer’s professed covenant of exclusive loyalty to the patient or client interests. In my opinion, the problem in the current medical system dominated by commercial insurance corporations is that the federal CMMS and the corporations seek to transfer their insurance risk to bedside clinicians rewarded or punished contingent on the volume of referral orders for care? Where doctors play the dual role of care giver and corporate insurance underwriter, a serious financial conflict of interest with the patient is created through pay for financial performance from restricting referrals for care. Payments contingent on the volume of orders for care (aka, “value pay and value contracting”) are not for service rendered the patient, but are hidden profits for the corporation, i.e., profiteering; an issue of corruption for discussion another day in Professionalism 101—rwg]

Medicare and Medicaid were discussed. Phelps thought Medicare Advantage (MA) was “an incredibly good idea”. He said that the MA voucher meant that an individual could take it for care anywhere. [Not discussed was that the voucher money does not go to the patient, but goes to a managed care insurance corporation, which controls use of the money; in my experience, a problem too often encountered by the ill—rwg.] He thinks that Medicare covers too many dumb services, since cost was not considered when benefit lists were created, therefore, MA needs to be fixed. [He did not elaborate on what mandated MA services ought to be cut—rwg]. He thought “MA for all” better than “Medicare for all”. [Keep in mind that there was little time for him to elaborate at length on his preference—rwg]. Phelps thought UHI was possible, if a universal voucher system were enacted; he drew on Milton Friedman’s thought that vouchers for public entitlement programs would work. [They do. Vouchers are used for food and housing now, but medical care is different; we insure medicine because one may need $30,000 of medical care tomorrow morning, but not $30 K of Wheaties or hotel room—rwg].

Continuing on Medicare, Parente added that HDHP insurance could start at any age; it was an artifact of timing that Medicare Medical Savings Accounts were begun in 1997 and HSAs later in 2003—they can be harmonized for continuity at or after age 65. HDHPs could be incorporated as another means to implement MA—the choice would be for a more affordable HSA-HDHP or a standard highly restrictive HMO corporate plan. [More about this below in discussing where the voucher goes—rwg] Parente thought that, if all expenditures for medical care were done using vouchers that this would a) give a choice of either a HDHP or a standard HMO-PPO plan, and b) that the total cost would be a wash. He thought the ability to get this done could run into real problems in both political parties. [The details here would be interesting—it sounds much like Greg Scandlen’s 2005 plan of HSAs for all Medicare clients; it is no longer available on line, so let me know if you would like a copy. A question, would anybody ever use a voucher [if the amount is sized only for a HDHP] to buy an expensive and restrictive HMO plan that “covers everything” or more likely to buy HDHP insurance against financial catastrophe, which is far cheaper and without corporate policing? The experiment was carried out in the private sector when competition from HSA-HDHPs beginning in 2004 dropped HMO price inflation from 15.5% to a declining 5.5% by 2007 (see Fig. 1). For that reason, some dubbed ObamaCare the HMO Resuscitation Act—rwg].

Phelps thought that they agreed BernieCare was good, but “MA for all” the best. He incidentally noted that medigap plans were a useless expense. He also stated that vouchers for food stamps is exactly the same as for MA.

[Please pardon this long aside commentary regarding vouchers. The problem is that all vouchers are not the same. The food voucher does not go to a paternalistic grocer. The MA voucher goes to a paternalistic corporation. Parenthetically, MN HF 1948 for Medicaid Reform would create a HDHP. Enrollees would have cash/voucher (on a debit card) for OP procedures—all large and IP expenses would be covered by the state as the insurance carrier; cash transactions make 3rd party carriers unnecessary and thus are eliminated. (The government is the Medicaid ultimate insurer whether or not it farms out the machinery operations to 3rd party profit-driven police.) Could the same concept be extended to Medicare? HF 1984 is consumer-controlled plan for a public sector free of the usual 3rd party policing complexity and financial conflict of interest; the government is the HDHP—rwg].

Bryanna Mayer asked what policies each speaker thought would add the most value to medicine.

Parente thought there are “so many”. Price transparency is an issue of primary importance. In 2020, federal regulations mandated hospital price transparency—this has been mostly ignored and if challenged, the minimal fine could easily be endured. [CMS price transparency mandates of, say hundreds of individual items, has proved unusable for the consumer looking at a complex procedure involving many different services. There is bill pending in the MN House that would encourage a single provider price for a bundled complex elective procedure—rwg.] In 2022 Parente noted that federal regulation will mandate that insurance corporations publish and update monthly all negotiated prices with providers. He thought this would open up provider prices. [I was not clear, if this was for bundles of services or not—rwg]; he said that providers have no such mandate for transparency. Parente thought that medical care pricing subjected to an app analysis could work, as does Travelocity!

Phelps thought investment in education was an issue of primary importance; the result would be “intelligent consumers”. He noted that good population health outcomes track closely with a well-educated population. Poor education (especially, if poor in math and science and segregated racially) is a “public health hazard”. The education-health gradient is true when diets are considered, or exercise, tobacco and alcohol use, breast feeding, and other beneficial life styles. [Not discussed were the findings of others that cultural status (Marmot, M. https://jamanetwork.com/journals/jama/article-abstract/202520) and wealth itself have a strong correlation in mortality statistics. In essence, investment in quality education ought to be society’s goal. Phelps is right; it would create both wealth and health—rwg.]

One question involved what providers must report. Parente noted that the 2022 mandate reporting is only for insurance company negotiated prices with providers. Not provider mandate reports. Coordination of insurers and providers would be anti-trust violations. Phelps noted the coordinated prices of nearby California gas stations raised the “coordination” concern for medical pricing.

Many questions and answers were dealt with after the recording stopped. The subjects parsed included: the complexity of pricing OP vs hospital IP care; uniformity of transparency standards don’t need to come from government; the different attributes of HSAs and concierge medical service delivery; the usefulness of MA competition vs regular Medicare; high deductible health plans as a fix most medical system problems; wisdom of individual mandates and methods; the valid reasons for small regular insurance payments to avoid unexpected financial catastrophe from illness; where medical services are thought “free” demand can be infinite [rationing by price or politics!—rwg]; much medical care is shoppable; and HSAs in the long run “will work”.

We can all be grateful for excellence of this delightful information-laden chat with Professor’s Steve Parente and Charles Phelps. It was ably moderated by Bryana Mayer and coordinated by the indefatigable Jessica Haupt.

 Next meeting: We all missed the opportunity to chat in person. Our next MPPA meeting will be in person. It is tentatively set for October 2021.

This June 9 meeting was Econ 101; the next will be about Professionalism 101. The possible last in this trilogy of primordial issues in medicine might be Quality 101, as in “Quality, Cost, Access: pick any two” (Bodenheimer T. N Engl J Med. 1997;337:651-655, 720-723).

 I’ll be in touch.

 Respectfully submitted,

Robert W. Geist MD, secretary pro tem
651-485-5933 [m] rgeistmd@comcast.net

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Minnesota Physician-Patient Alliance

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