Pulse Check on the Candidates: Nikki Haley

A Fulcrum Strategies Podcast Recap

Pulse Check on the Candidates is a periodic look at current candidates for President of the United States and their public statements on healthcare issues. This time around Matt and Ron provide us with their take on Nikki Haley’s comments about Medicare, Social Security, Medicare Advantage, and Certificate of Need (CON) laws.

Matthew played a clip from NBC’s The Today Show where Ms. Haley described some of her ideas to reform Medicare and Social Security. Namely adjusting when future recipients may qualify for benefits, but she was adamant about keeping promises that have been made to citizens currently receiving these benefits.

Matthew and Ron then look at her idea to expand Medicare Advantage and the source of why she thinks this could save money. Ron provided the background and referred to a study that looked at people with Medicare Advantage and with certain chronic conditions. The study compared the Medicare Advantage costs to those under a straight fee-for-service plan and noted a significant cost differential in favor of Medicare Advantage. Ron said the article then extrapolated out the apparent cost savings for these patients to an increased number of patients and concluded that this move would save even more money.

Ron agreed that it is likely that Medicare Advantage plans do save the government money, but it is only one part of the puzzle. The question Ron had is “How are they saving money?” For example, are they saving money because the insurance company is denying care? He pointed to a lawsuit against United Healthcare (UHC) that is ongoing right now on this topic. Is the insurance company submitting fraudulent data to the U.S. government? Ron reminded us that Cigna paid a 172 million dollar fine for doing just that, or it could be that health insurance companies are saving money through better utilization management.  In the end, as with a lot in healthcare, there is more to it than just doing one thing to solve the problem. The solution can create new unforeseen issues.

Matthew then asks Ron how would this expansion affect physicians and their businesses. Ron shared a recent conversation with a physician who explained that when you calculate in the denials they get from the Medicare Advantage plans and the added processing requirements, it affects revenue and it begins to look like Medicare Advantage plans are, as Ron says, becoming, “A payer that doctors don’t want to sell to.”

The FLATLINING team then looked at Ms. Haley’s CON proposal. Ron put on his economist hat, and provided a primer on CON, what they are, what they do, and how they affect the healthcare market. In short, these laws were put in place for a variety of reasons, but they provide some protections for rural hospitals to stay solvent but also provide protections to those who have a CON. Ron said some data shows that states that have CON laws have higher healthcare costs and as an economist, Ron said that is not surprising. Lowering costs by increasing competition is what Nikki was after Ron said, and he said she was correct. But, Ron warns us that a move like this can have a negative effect.

Ron explained that “perfect competition” works fine for things like Starbucks, but that is not how we think of healthcare. The big loser would be rural hospitals, Ron stated that these hospitals receive a lot of revenue through their outpatient surgery procedures. In a perfect market, rural hospitals would be left with the lower reimbursement procedures while the more profitable procedures would go to “specialty hospitals” like surgery centers. He explained that if you want perfect competition and lower prices that come with it, then understand that there are going to be some consequences to those decisions.

Matthew pointed out that N.C. approached this dilemma when they passed their law eliminating the CON by having it tethered to population maps, and Ron pointed out that the law also only focused on MRI and Ambulatory Surgery Centers, not in-patient beds, and provided for a three-year waiting period of implementation. This ensures that the competition would not hurt the hospitals, and the waiting period allows competitors time to assess their positions. Ron tipped his hat to N.C. Legislature and Governor Cooper for striking a good balance.

In closing, Ron was pleased and encouraged to see Nikki Haley bring up these topics in a substantive way on the campaign trail and hopes we will have more discussion on all these important topics that affect doctors and patients alike.