Democratic Candidate’s Policies for Surgical Practices

One of the hottest topics for the Democratic party in the lead up to the primary votes is healthcare. Through the first 3 debates, healthcare was discussed for more than 90 minutes. This is more than double the amount of time dedicated to foreign policy, often the most exciting topic discussed.

It’s not hard to understand why. Medical debt is a very real problem for over 137 million Americans and the reason for 66.5% of personal bankruptcy filing. Overall Americans spent $3.3 trillion on healthcare or about $10,224 per person in 2017. The two largest spenders were the federal government and private individuals. The next closest country is Switzerland, spending approximately 2K less per person per year.

The USA is #1…in healthcare spend

The question on every voter’s mind is, what are we going to do to solve this? and each candidate presents a different solution to this problem. I’m not a political or economic expert, though I do listen to NPR’s Planet Money and The Indicator podcasts,  I’m not going to weigh in on which plan is best for the economy. However, as a surgical care coordination company, we recognize these candidates’ potential plans could have a significant impact on surgical practices. 

Meet The Candidates

I used FiveThirtyEight to determine the current top 4 candidates. Using polling data available, the top polling candidates as of the publication of this blog piece are former VP Joe Biden, Senator Bernie Sanders, Senator Elizabeth Warren, and former Southbend Mayor Pete Buttigieg.

None of them have laid out all the details since it is the legislative branches of government that will decide how this is funded. However, many of these candidates have filled out questionnaires and answered enough questions for us to understand how their policies will impact surgical practices.

So let’s dive right in.

Joe Biden:

Preferred plan: Public Option

Private insurance: Keep intact

Out of pocket expenses: Reduced

Government negotiating power: Yes

Impact on surgical reimbursements:

Many view former Vice President Joe Biden’s Public Option as the Affordable Care Act (Obamacare) 2.0. Since he views ACA as attached to his legacy, some speculate he is attempting to make fixes to the glaring issues in the current system. This includes increasing coverage for low-income families, lower deductibles to align them with the ACA “Gold plan” and make most families and individuals eligible for premium subsidies by removing the current cap limiting subsidies. 

Passing the healthcare torch

This public option is meant to attract more healthy individuals into the insurance plan to offset the costs of riskier patients. The theory goes that with an increase in the number of people using the public option, it will have greater negotiation power, which may result in lower reimbursement rates.

Adding a more powerful consumer, an expanded Public Option, into the market will have an impact on Medicare’s negotiating leverage. With the Public Option in the market, providers may not be as willing to take a lower rate for reimbursements if the Public Option is willing to pay more than Medicare. The previous expansion of Medicare saw a ripple effect across the market. Suddenly Medicare became more powerful, was able to negotiate better rates and push certain policies. This also had a role in the push for value-based care to save money on readmissions. Some are afraid that this may have a negative impact on consumers with practices looking for more creative ways to bill Medicare. Practices may further divide up procedures so that a simple knee surgery is now morphed into 5 procedures. Hospitals may also charge for things that weren’t billed for previously such as skin-to-skin contact for mothers post birth which has become a new line item on many hospital bills. This could end up being an out-of-pocket expense for the consumer.

Pete Buttigieg

Preferred plan: Public Option

Private insurance: Remain intact

Out of pocket expenses: Reduced

Government negotiating power: Yes

Impact on surgical reimbursements:

Former South Bend Mayor Pete Buttigieg and Joe Biden hold very similar views when it comes to healthcare. Mayor Pete, as he is fondly referred to, would also like to keep the private insurance option available while expanding the public option. This would have many of the same market impacts as Biden’s plan regarding reimbursement rates.

However, there is one point that Buttigieg differentiates himself from Biden. That is capping out-of-network provider charges at double what Medicare would pay for the same service. This is a big difference because he is going after the providers and not the low hanging fruit like insurance companies and drug manufacturers.

It’s all about giving the people a choice

How big is this issue? One study found that nationally, the average out-of-network charge for neck/spine disk surgery was $10,459, or nearly 640 percent higher than the $1,414 paid by Medicare. The same study highlighted knee surgeries, one of the most common procedures performed in the United States, on average cost more than 500 percent above the Medicare reimbursement rate if obtained out of network.

If Mayor Pete gets his way, it will have a profound impact on the bottom line of many surgical practices. While it is unlikely to deter practices from taking out of network cases, many will have to find ways to make up for lost revenue.

Bernie Sanders/Elizabeth Warren:

Preferred plan: Medicare for All

Private insurance: No

Out of pocket expenses: Severely reduced/eliminated

Government negotiating power: Yes

Impact on surgical reimbursements:

While policies like Biden’s and Buttigieg’s will impact many surgical practice’s revenue stream, none will do it more dramatically than Medicare For All. Since the only difference between Bernie Sander’s and Elizabeth Warren’s plan is the financing of their plans, we will cover both in this section.

Looking at the first graphic you understand the appeal

Medicare-for-All gives the government complete control over the negotiation of reimbursement rates and clinical costs. By removing most private insurance companies from the equation, practices will treat every patient at the same cost. One only needs to look at the current Medicare reimbursement rate to calculate the potential drop in revenue for surgical practices.

If this plan were to be implemented, it would force many practices to dramatically change their business model to ensure they remain profitable. Considering the snail-like speed in which the healthcare industry moves, practices don’t need to fret just yet. However, longterm, this will be a major uphill battle for many practices. Some are predicting mass closure of hospitals and practices across the country.

How to Prepare

While many in the healthcare industry are seeing the dark clouds of doom and gloom looming overhead, there are many hurdles that stand between these plans and implementation. Including primaries, general elections and then pushing it all through congress. This could take years to actually happen if it even happens at all. A good precedent is the passage of Obamacare which only took place 2 years after Obama’s election. Key provisions only kicked in 4 years after that.

I used this cartoon to ace my Political Science classes

For the more pessimistic practices, this is an ideal time to begin planning ahead. Calculate potential losses and create a business model that will allow surgical practices to remain profitable while still providing patients with the best care and services.