Toward spending wisely on health care

OPINION:

After signing the March budget deal, President Trump told Congress “I will never sign another bill like this again” — a “Christmas tree” full of perks for special interests negotiated in secret and then thrust on the public, rank-and-file lawmakers and even the president as a fait accompli.

Problem is, a lot of damage has already been done. For one thing, if we are going to go even further in debt the spending must be wise and worth the price.

But Congress, in its recent spate of hasty spending bills, has enacted numerous policy changes, most of which are the type that lobbyists know to wait for some massive catchall bill to insert into, such that there’s little debate on the matter, owing to the sheer number of subjects up for consideration in one legislative vehicle.

One of those is creating massive instability in the pharmaceutical drug market because it dramatically changed how the Medicare Part D program works, basically as a bailout to health insurance companies that are struggling to keep Obamacare marketplaces afloat.

Under the previous version of the law, enacted under George W. Bush, drug companies, insurance companies and enrollees had a 50-25-25 split. The drug companies “paid for” 50 percent of Part D drugs with discounted prices, insurance companies 25 percent and enrollees 25 percent via deductibles.

At first glance, this split may seem arbitrary, but it was the product of intense debate and negotiations. Further, this structure has worked well in practice for more than a decade, resulting in unprecedented savings to taxpayers.

Of course you’ve heard of budget shortfalls. Have you ever encountered a cost shortfall? Part D came in more than 40 percent under budget in its first decade. By government standards, that’s like feeding 5,000 people with five loaves of bread and two fish.

The “secret” to Part D’s success is carefully balanced incentives that harness competition and profit motive to improve quality and cut costs, much like the free market does in thousands of other sectors every day.

This successful program took time to create value but could be ruined with one stroke of the pen. How many other attempts to reform health care policy have not lived up to their hype? Pretty much all of them. Here is one oasis of success in a desert of failure, and Congress has put its demise in motion.

I am all for closing the doughnut hole that was necessary to get the program off the ground, but it must be done wisely and give everyone some role in increasing quality and decreasing cost, even patients.

Congress changed the 50-25-25 split to a 70-5-25 split, swapping most of the insurance companies’ obligations on the drug companies. Not only is this a terrible way to create policy, since the change was preceded by exactly zero public debate, it destroys the balance of the previous incentive structure, decreasing the insurance companies’ “skin in the game” by 80 percent.

The future of health care is teams, insurers, doctors, hospitals, drug companies and pharmacies, and patients. Why put the only member of the team with the least influence over patient care at the highest risk for cost control?

Insurers are much better positioned to coordinate care and negotiate lower prices but now have little incentive to hold down drug costs. They are now perversely incentivized to encourage brand name drugs to patients to hit their doughnut hole sooner. Then they are off the hook.

Congress should use value-based insurance design to make all members of the team accountable.

In these models patients pay less for high-value medical care choices, like generic drugs and less for low-value ones, like MRIs as a first step for back pain. Drug companies will assume all the insurers drug cost through discounts with little to no ability to guide patients to the best decisions.

The travesty is compounded by the fact that Part D is one of the only price-based programs in the government’s sprawling health care empire. Until this change, it had been the best hope that reforming the entitlement programs that threaten to drown the nation in debt could be politically sustainable.

For all these reasons, Mr. Trump should lead Congress not just in preventing future such disasters, but in rolling back this one. This was a grave mistake. It can and should be reversed before the damage done is permanent.

• Dennis Deruelle is a physician and vice president and national medical director for value-based care at TeamHealth. He is author of “Your Healthcare Playbook: Winning the Game of Modern Medicine.”