As Health Care Implodes, Health Care Companies Boom
Many physicians believe upheaval is good for them, but that may be bad for us.
WHY YOU SHOULD CARE
Amid all the concern over rising health care costs, somebody is still getting paid.
Shortly after the Affordable Care Act was passed, Kathy Brown left her partnership at a traditional health care group. The bureaucratic weight of the new insurance exchanges had sapped her energy and kept her from doing what she loved — working one-on-one with patients. “I was in a box of increasing workload with decreasing pay,” Brown says. So she began her own completely insurance-free dermatology practice on the Oregon coast. The business has blossomed, to the point where she’s booked for months and is considering adding office space and maybe even a partner or two. The icing on the cake? If Obamacare is dismantled as expected, her unconventional practice is “positioned to do well,” Brown says, “especially in a more free-market environment.”
Brown isn’t the only physician expecting a payoff from the surprise election of Donald Trump and his announced pick for secretary of Health and Human Services, Tom Price. But while Brown believes patients will also benefit in the long run, other caregivers aren’t quite so sure. In a recent survey of almost 1,100 doctors by industry search firm Merritt Hawkins, 46 percent said Price would improve conditions for medical practitioners. But asked if the gravy train would extend to consumers, more respondents felt Price would decrease patient access to quality care. The split has manifested itself in other ways. After the American Medical Association gave a full-throated endorsement of Price — an orthopedic surgeon who would become only the third practicing physician to head the agency — more than 5,500 doctors signed a petition in protest, noting the association had “reneged on a fundamental pledge that we as physicians have taken: to protect and advance care for our patients.”
Health care companies, and the cottage industries that surround them, will cash in on the chaos.
There is no simple diagnosis for health care under Trump, but there is an emerging prognosis: Health care companies, and the cottage industries that surround them, will cash in on the chaos. After Trump won, Fortune reported that stocks rose for insurance firm Humana as well as UnitedHealth Group and Anthem, both of which previously complained about losing money under the ACA. Sure, hospital operators dipped early on, but the Nasdaq Biotechnology Index surged almost 9 percent, while pharmaceutical companies also got a boost from avoiding a Hillary Clinton–led smackdown on drug price hikes. While uncertainty is typically bad for business, it also opens the door for the think tanks and advisory groups that will be paid handsomely to make sure their benefactors find a lucrative path forward. “On a federal level, it will kick up the lobbying efforts in Washington,” says Jerry Taylor, a member of Burr & Forman’s Health Care practice with a focus on regulatory issues.
Some are bound to suffer in the shuffling, namely those who would lose their insurance — as many as 30 million people, according to the (left-leaning) Urban Institute, which used last year’s vetoed repeal bill to determine its estimates. “It’s always the people on the low end of the socioeconomic scale who get left behind on these major reform efforts,” Taylor says. Fewer customers could also hurt insurers, though anesthesiologist Marilyn Singleton, an independent California congressional candidate in 2012 and director of the Association of American Physicians and Surgeons, says it would be political “suicide if suddenly people were left dangling with no options.” She believes insurance companies will enjoy higher margins when they’re no longer held to Obamacare’s mandated plans: “When they’re able to offer other products and dress them up, believe me, they’ll find a way to make up the difference.”
Unlike many in the repeal camp, Price did have an expansive plan to replace Obamacare. His centers around more competition among insurers, a Bill Clinton–era approach to prior conditions, where those who have “continuous coverage” — 18 months of consecutive payments — are covered and garner greater access to tax-deductible health savings accounts. This helps “reduce excessive regulatory burdens that diminish time devoted to patient care and increase costs,” as the AMA gushed in its statement endorsing Price. However, the wealthier you are, the easier it is to take advantage of savings accounts. “There are a lot of folks barely making it, and for them, it’s just not feasible or practical to pay those out-of-pocket costs,” says Taylor.
One solution that could help both patients and providers would be to adopt a direct doctor-to-patient model advocated by folks like Brown. These doctors buy medicine at warehouse bulk rates, explains Josh Umbehr, who says his Oklahoma City practice is able to offer services at a fraction of the regular charge by skipping insurers: “Your big-box retailer is selling migraine medications for $100 when we get them for $5.” Insurers benefit too: Spending less on filing paperwork for basic checkups means more budget for catastrophic care coverage that most of the population never uses. Rethinking how America takes care of its sick is not just a financial imperative but also a moral one, Umbehr says, especially after many felt deductibles were too high under the ACA. “If we take our oath to do no harm seriously, then that has to also mean no financial harm,” Umbehr says.