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#327 - Choices, costs, and challenges in US healthcare: insurance intricacies, drug pricing, economic impacts, and potential reforms | Saum Sutaria, M.D.

Dec 2, 2024 2h 32m 38 insights
<p><a href="https://peterattiamd.com/saumsutaria/?utm_source=podcast-feed&amp;utm_medium=referral&amp;utm_campaign=241201-pod-saumsutaria&amp;utm_content=241201-pod-saumsutaria-podfeed"> View the Show Notes Page for This Episode</a></p> <p><a href="https://peterattiamd.com/subscribe/?utm_source=podcast-feed&amp;utm_medium=referral&amp;utm_campaign=241201-pod-saumsutaria&amp;utm_content=241201-pod-saumsutaria-podfeed"> Become a Member to Receive Exclusive Content</a></p> <p><a href="https://peterattiamd.com/newsletter/?utm_source=podcast-feed&amp;utm_medium=referral&amp;utm_campaign=241201-pod-saumsutaria&amp;utm_content=241201-pod-saumsutaria-podfeed"> Sign Up to Receive Peter's Weekly Newsletter</a></p> <p>Dr. Saum Sutaria is the Chairman and CEO of Tenet Healthcare and a former leader in McKinsey & Company's Healthcare and Private Equity Practices, where he spent almost two decades shaping the field. In this episode, Saum unpacks the complexities of the U.S. healthcare system, providing a detailed overview of its structure, financial flows, and historical evolution. They delve into topics such as private insurance, Medicare, Medicaid, employer-sponsored coverage, drug pricing, PBMs and the administrative burdens impacting the system. Saum's insights help connect healthcare spending to broader economic issues while exploring potential reforms and the role of technology in improving efficiency. Saum highlights how choice and innovation distinguish the U.S. healthcare system, explores the reasons behind exorbitant drug prices, and examines the potential solutions, challenges, and trade-offs involved in lowering costs while striving to improve access, quality, and affordability. The opinions expressed by Saum in this episode are his own and do not represent the views of his employer.</p> <p><strong>We discuss:</strong></p> <ul type="disc"> <li>The US healthcare system: financial scale, integration with economy, and unique challenges [5:00];</li> Overview of how the US healthcare system currently works and how we got here [9:45]; <li>The huge growth and price impact due to the transition from out-of-pocket payments in the 1950s to the modern, third-party payer model [18:30];</li> <li>The unique structure and challenges of the US healthcare system compared to other developed nations [22:00];</li> <li>Overview of Medicare and Medicaid: who they cover, purpose, and impact on healthcare spending [27:45];</li> <li>Why the US kept a employer-sponsored insurance system rather than pursue universal healthcare [32:00];</li> <li>The evolution of healthcare insurance: from catastrophic coverage to chronic disease management [36:00];</li> <li>The challenge of managing healthcare costs while expanding access and meeting increased demand for chronic illness care [44:15];</li> <li>Balancing cost, choice, and access: how the US healthcare system compares to Canada [48:45];</li> <li>The role of the US in pharmaceutical innovation, it's impact on drug pricing, and the potential effects of price controls on innovation and healthcare costs [56:15];</li> <li>How misaligned incentives have driven up drug prices in the US [1:05:00];</li> <li>The cost of innovation and choice, and the sustainability of the current healthcare cost expenditures in the US in the face of a shrinking workforce and aging population [1:11:30];</li> <li>Health outcomes: why life expectancy is lower in the US despite excelling at extending lifespan beyond 70 [1:18:45];</li> <li>Potential solutions and challenges to controlling drugs costs in the US while balancing choice and access and preserving innovation [1:26:15];</li> <li>Balancing GLP-1 drug innovation with affordability and healthcare spending sustainability [1:40:00];</li> <li>Reducing healthcare spending: complexities, trade offs, and implications of making needed cuts to healthcare expenditures [1:46:45];</li> <li>The role of government regulation, opportunities for cost savings, and more [1:56:15];</li> <li>Hospital billing: costs, charges, complexities, and paths to simplification [2:01:15];</li> <li>How prioritizing access and choice increased expenditures: reviewing the impact of healthcare exchanges and the Affordable Care Act [2:08:00];</li> <li>Feasibility of a universal Medicare program, and what a real path to sustainable healthcare looks like [2:15:45];</li> <li>The challenge of long-term care and the potential of innovation, like device-based therapies and AI, to improve health [2:23:15]; and</li> <li>More.</li> </ul> <p>Connect With Peter on <a href="https://twitter.com/PeterAttiaMD">Twitter</a>, <a href="https://www.instagram.com/peterattiamd/">Instagram</a>, <a href="https://www.facebook.com/peterattiamd/">Facebook</a> and <a href="https://www.youtube.com/channel/UC8kGsMa0LygSX9nkBcBH1Sg">YouTube</a></p>
Actionable Insights

1. Improve Nutrition, Physical Activity

Make fundamental changes to your nutritional environment and incorporate even a modest degree of physical activity into your daily routine, as these behavioral shifts can significantly improve health span and reduce long-term healthcare costs related to chronic illness.

2. Address Root Causes of Poor Health

Advocate for and support efforts to address societal issues like infant mortality, drug abuse, violence, and chronic illness directly, as these factors significantly drive poor health outcomes and are not primarily solved by insurance or healthcare system changes alone.

3. Avoid Being Uninsured

To protect yourself from exorbitant ‘sticker prices’ for medical services and supplies, ensure you have health insurance, as it acts as a ‘discount card’ providing access to negotiated group rates that uninsured individuals do not receive.

4. Reframe Healthcare Insurance View

Shift your perception of healthcare insurance from covering random, infrequent, and unpredictable events to viewing it as a ‘discount card’ for predictable, ongoing health needs, as this reflects its current function in the U.S. system.

5. Recognize Healthcare Cost Insensitivity

Understand that the socialization of healthcare costs through insurance has made American consumers less sensitive to the actual price points of services, drugs, and hospitalizations, which can lead to increased consumption.

6. Utilize ACA Exchanges

If your employer doesn’t offer insurance and you don’t qualify for Medicaid, explore options on the Affordable Care Act (ACA) exchanges, which are designed to provide more affordable group coverage by socializing risk.

7. Understand Insurance Plan Types

During open enrollment, familiarize yourself with different insurance plan types like PPO (Preferred Provider Organization) for open network choice and HMO (Health Maintenance Organization) for narrowed choice with potential cost savings, to make an informed decision.

8. Prioritize Choice or Cost

When selecting health insurance, understand that PPO plans offer more choice but often come at a higher cost, while HMOs restrict choice for theoretical cost savings; decide which priority aligns best with your needs.

9. Seek Outpatient Care

Whenever medically appropriate, opt for procedures and care in lower-cost outpatient settings (like ambulatory surgery centers) rather than hospitals, as this can significantly reduce per-unit costs and improve convenience.

10. Advocate Drug Price Negotiation

Support policies that allow government entities like Medicare to negotiate drug prices, as this could help curb rising pharmaceutical expenditures and align U.S. drug costs more closely with other developed nations.

11. Support Large-Scale Purchasing Power

Advocate for and support the use of large-scale purchasing power by major entities (like Medicare) to negotiate better prices for healthcare services and drugs, as this is a market-based approach that can drive efficiency and innovation.

12. Scrutinize PBM Practices

Be aware that Pharmacy Benefit Managers (PBMs) operate as intermediaries in drug pricing, and their rebate structures can create incentives that may lead to higher drug prices, warranting scrutiny of their practices and advocating for transparency.

13. Leverage AI for Admin Efficiency

Explore and advocate for the responsible implementation of AI and automation in healthcare administration to reduce costs and improve efficiency in areas like claims processing, while ensuring appropriate controls and oversight.

14. Implement AI with Careful Controls

When advocating for or implementing AI in healthcare, ensure robust controls are in place to prevent negative consequences such as over-coding or under-authorization of care, balancing efficiency gains with ethical considerations and patient needs.

15. Support Long-Term Government Health

Advocate for and support government-led initiatives aimed at improving national health objectives over a 10-year period, as such long-term investments are beyond the scope of individual or employer-funded programs but are crucial for societal health improvement.

16. Define National Health Objectives

Engage in discussions to establish clear national health objectives, as a defined goal is essential for guiding policy, funding, and interventions to effectively address the country’s health challenges.

17. Invest in Neuro-Engineering Solutions

Support and invest in engineering-based solutions and device therapies (e.g., neurostimulation) for neurocognitive decline and neurological diseases, as these innovations are crucial for managing an aging population’s care needs given the limitations of traditional drug discovery.

18. Support Home-Based Dementia Care

Advocate for and develop new models for custodial care that make it easier for families to provide care in the household, and support engineering solutions that enhance cognitive function to increase self-sufficiency for those with dementia, reducing reliance on expensive institutional care.

19. Grasp Healthcare’s Economic Impact

Recognize that discussions about the economy, inflation, and jobs are inherently discussions about healthcare, as it constitutes almost 20% of the U.S. economy, making it a critical factor in broader economic understanding.

20. Recognize Interconnectedness of Issues

Understand that seemingly unrelated societal issues, such as border policy, have direct implications for healthcare outcomes and costs, highlighting the interconnected nature of macroeconomic and social challenges with health.

21. Engage Long-Term Healthcare Planning

Recognize that fundamental issues in the U.S. healthcare system require long-term planning and discussion, as quick fixes are unlikely to succeed, and proactive engagement is needed to avoid future crises.

22. Seniors: Explore Medicare Advantage

For seniors seeking more product and benefit choices beyond traditional Medicare, investigate Medicare Advantage plans, which are designed to offer additional options and potentially better benefits.

23. Consider Integrated Care Models

Explore integrated care models like Kaiser Permanente, where you agree to stay within their network of providers and facilities, which aims to offer lower costs or better outcomes through care integration.

24. Explore Managed Care Options

If cost control is a priority, consider managed care programs (like HMOs) offered by insurance companies, as they have demonstrated an ability to manage costs, albeit sometimes with trade-offs in choice and flexibility.

25. Managed Care for Rare Conditions

If considering managed care, be aware that for esoteric or rare medical problems, physicians typically have the ability to refer patients to out-of-network specialists, ensuring access to appropriate expertise.

26. Understand Medical Billing Charges

Be aware that the ‘charge’ on a medical bill (e.g., $16 for gauze) is an artificial construct and does not reflect the actual cost or the negotiated price paid by insurers, which is typically much lower due to group discounts.

27. Be Aware GLP-1 Muscle Loss

If considering GLP-1 agonists, especially for elderly individuals, be mindful of the potential for muscle loss, which can have significant health consequences like increased risk of hip fractures and mortality.

28. Physicians: Seek Drug Cost Awareness

As a prescribing physician, acknowledge the lack of transparency regarding drug costs and consider advocating for or seeking information that would allow for more cost-conscious prescribing decisions.

29. Leverage EMR Foundation with AI

Recognize the electronic medical record (EMR) as a foundational system of record, and focus on leveraging it with AI to build systems of engagement, improve clinical care, and enhance evidence-based medicine, rather than expecting EMRs alone to transform quality, access, or choice.

30. Maintain Long-Term AI Optimism

While acknowledging short-term hype, maintain a long-term optimistic perspective on the potential of AI to significantly improve clinical care and not just administrative costs in healthcare.

31. Appreciate Effective Government Regulation

Acknowledge that while healthcare may be overregulated in some areas, government-mandated quality and safety standards (e.g., for sepsis care) have significantly improved the consistency and performance of the U.S. healthcare system.

32. Recognize Healthcare Cross-Subsidies

Understand that the U.S. healthcare system relies on cross-subsidies, where healthy individuals and employer-sponsored insurance (paying higher rates) effectively subsidize care for the ill and those covered by government programs like Medicare and Medicaid.

33. Understand Nationalized System Trade-offs

When comparing healthcare systems, recognize that nationalized models often involve longer wait times and reduced choice for elective procedures, but generally maintain high quality for emergency and specialized care.

34. Encourage Proactive Self-Regulation

Recognize that industries operating in wide-parameter free markets, like pharmaceuticals, face a choice: proactively adjust practices (e.g., drug pricing) to stay within acceptable societal parameters or risk external intervention and regulation.

35. Prepare for Coverage Re-evaluation

Anticipate that rising healthcare costs, particularly for new drugs, may force a re-evaluation of what services and treatments insurance models can cover, potentially leading to difficult decisions about coverage limits.

36. Recognize Family Long-Term Care Role

Understand that families in the U.S. bear a significant burden of long-term care for the elderly, which, while culturally positive, also represents lost wages and productivity in the economy.

37. Prioritize GLP-1 for Working-Age

From an economic perspective, consider prioritizing the application of GLP-1 drugs for working-age individuals to improve health status and economic productivity, rather than solely focusing on those over 65 where the long-term cost-benefit is less clear.

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