Name: Brainstorm Health 2024: The Health Care Affordability Crisis
Uploaded: 2024-05-22
Duration: 18 min 18 s
Description: Meghan Fitzgerald, Investor; Founder, Grey Ghost Capital; Adjunct Professor of Health Policy and Management, Columbia University (appearing virtually) Larry Levitt, Executive Vice President, Health Policy, Kaiser Family Foundation (KFF) Lee Shapiro, Managing Partner, 7wireVenture Moderator: Maria Aspan, Fortune

Meghan Fitzgerald, Investor; Founder, Grey Ghost Capital; Adjunct Professor of Health Policy and Management, Columbia University (appearing virtually) Larry Levitt, Executive Vice President, Health Policy, Kaiser Family Foundation (KFF) Lee Shapiro, Managing Partner, 7wireVenture Moderator: Maria Aspan, Fortune

Brainstorm Health 2024: The Health Care Affordability Crisis

Conferences

Meghan Fitzgerald, Founder, Grey Ghost Capital; Columbia University (appearing virtually) Larry Levitt, Health Policy, Kaiser Family Foundation (KFF) Lee Shapiro, Managing Partner, 7wireVenture, Maria Aspan, Fortune

Meghan Fitzgerald, Investor; Grey Ghost Capital; Columbia University (appearing virtually) Larry Levitt, Health Policy, Kaiser Family Foundation (KFF) Lee Shapiro, 7wireVenture, Maria Aspan, Fortune

Welcome and Megan, thank you for joining us. I'd like to start with just some definitions. I mean, it's so overwhelming this problem. How did our health care system become so broken? And Larry? Uh Well, you stole all of my talking points in my data with your introduction and thank you for that. Um You know, it really comes down to, I think two things. One is price. Um You mentioned that we spend double what other high income countries spend on health care and get poorer outcomes. That's not because we use more health care. It's because we pay higher prices for health care, whether it's hospitals, drugs or, or physician care. And then the second is the structure of our private insurance system, you know that, that we uh deductibles now for people with employer based insurance, average $700 per person. So it's price that drives the overall affordability crisis and then the way people experience it is with these high deductibles. Uh Lee anything to add here. Well, I mean, we're facing a new type of pandemic. Um We've just gone through one in 2020 2021 but the affordability crisis um is a pandemic in this country with, as you mentioned, more than half of those of working age and above not being able to afford health care. And what does that do when you can't afford health care? You're not buying your prescriptions, you're delaying the delivery of care, you're not making appointments. And so all that does is result in you getting sicker and that of course, increases the cost of the entire system. So it's a massive problem that we need to address Megan. I'd like to ask you to weigh in both on the problem and on uh perhaps some of the solutions that you're pursuing at your firm. Yeah, I think, you know, from where I sit, I, I volunteer in the hospital and I also am an investor. I believe there's millions of Americans that are underinsured and unheard. So 40% of adults believe that mental health is not addressed at all and not seen as something that should be, you know, addressed by insurance or um by society at large. That's the first thing. That's a big deal. Second, I would say in terms of being under insured, um as mentioned by Larry and Lee, it's really an access issue. You have 45% of Americans who are underinsured, so you can go bankrupt from cancer care, which you can imagine what a double whammy that is to get diagnosed and then find out you get a $5000 bill and those are people that have, um, insurance. So I think for me when I think about things and how to, you know, get stuff done, you have to find things that can be done at the local level. Everyone can agree that we spend close to 20% of GDP on health care. In fact, you might say we like that for as long as I've been around, it's been 18 or 20% of GDP. But when you start to break it down, I think the few areas I would point to is primary care, a new generation of providers. And can we please address waste and bureaucracy, which I've never met anyone that hasn't agreed on targeting, that we spend about $1200 a person on administration and bureaucracy because again, we like it to be super complicated. And I also think we need more people to enter healthcare. They have to find this field as exciting as technology and finance. So one thing I always say is let's hear it for the trade degrees. It would be so great for someone to stand up and pay for someone school that is getting a twoyear nursing degree. I love hearing all these people pay for physician education, but I think we could really do well to attract more people into pharmacy nursing and just get on the ladder in hospital um in a hospital setting, we can certainly use them over the next 20 years. So I, I'd love for us to find ways to attract more thought and energy into health care. You know, you raised a lot of excellent points. And Larry, as I was preparing for this to the under insurance point, I was stunned to read a KFF stat that six of 10 people, six out of 10 people with insurance ran into a problem accessing those benefits in the past year. I mean, we're at a point where even those who are fully insured can't get health care coverage, like what's going on. No. And it, it's a and we do have to remember, I mean, we focus a lot in our political debates about Obamacare, the Affordable Care Act, Medicaid, Medicare, but most people still get their insurance through an employer and we have not done a lot for, for those people. And, you know, we're here today talking about affordability, but there's also the complexity of the system that makes it so hard for people to navigate, you know, figuring out who's in their network, you know, figuring out what their benefits are, figuring out what the price of something is going to be and what they will have to pay out of pocket ahead of time. And that complexity ends up mattering for affordability as well. Right? If you're stuck with an out of network bill, you're stuck, stuck with a balance bill, you're stuck paying out of pocket because, you know, you couldn't get prior authorization for a drug or a service, that's an affordability problem as well. So what, how much responsibility does big business bear for this? And what solutions are you seeing big business propose or put into place that could actually address this? Well, you know, employers, uh, are footing most of the bill. Uh, you know, employers pay roughly 80% of the, the, the cost of insurance for, for their workers and employers are effectively caught in the middle. I mean, they're, they're a, a they're feeling the burden of the affordability crisis because they are paying the bills. But frankly, they are part of the problem as well. You know, they're not using their leverage, whether that's economic leverage or political leverage to try and get prices down and they've been raising deductibles, I mean, employers, you know, have just been, have run out of solutions. And so the one solution left was to increase cost sharing, increase deductibles and that then exacerbates the problem uh for their workers uh and, and their families. Um you know, and I think, you know, hospitals, pharmaceutical companies have a lot of political power. Um if there's going to be any kind of political or policy solution to health care affordability problems, uh employers have to be a counterweight uh and it kind of has to be in the C Suite because it's ceos that have that uh political capital, Lee, I'd like to ask you to add on to that. And also perhaps uh from your perspective as an investor, like what sorts of solutions are you investing in one of our portfolio companies transparent is helping to equalize the playing field between self insured employers and those who are providing care or otherwise providing them with of services for their team members. And what Larry had mentioned is that we have this um disproportionate knowledge that exists between those who are providing insurance um and those who are paying for the cost of care. And what Trans Karen is doing is helping to equalize that playing field by providing employers with not only better information but guidance to their team members in order to be able to direct them to the best possible care at the lowest possible price. I'm sure many of you have seen a number of the studies that talk about the discrepancy that exists even in a given geographical market for a service like AC T scan or an MRI same equipment, same order. And yet there could be in magnitude thousands of dollars of difference just to source that type of imaging test. And so being able to provide individuals with a better understanding so that we give them the opportunity to leverage the dollars that their employers are making available to them in better ways. And to let those healthcare dollars go further is a benefit. And lastly, what I'd say is, you know, many employers don't have the capabilities to do direct contracting with providers in their area. So they rely on transparent and others to help them do that. You know, if you're Disney and you're in Anaheim, you might be able to have some direct contracting because of the concentration of employees you have there, but very few self insured employers have that ability. So relying on a third party intermediary to help you with, that is important. One other thing that, that I'll mention quickly because you asked about where we're investing. Um One of our other companies Pay Zen, which is based in San Francisco is helping individuals to better manage their out of pocket cost expenses by giving a zero interest loan to those employees. But they're doing it in partnership with health systems because health systems recognize their responsibility and frankly the burden they have. Larry mentioned cost shifting to employees. Well, now with high deductibles and large out of pocket expenses, you can't afford care. How can we use tools to help make that care more affordable? And that's what pays is doing. Megan. I wanted to ask you because you are an advisor on a new fund that was announced this morning, investing in health care. And there was, there was a uh the Wall Street journal covered it and there was a quote in there particularly about how that fund is not interested in doing physician roll up investments, which we've seen contributing to the primary care and just provide our crisis. And I wondered if you could tell me a little bit more about the philosophy behind that. And again, how you're thinking about this as a solution or a fix? Yeah. Well, I think, you know, few investments I've made this year have been in rural health care anywhere. There is a desert and there is not access to care. Um, you know, many don't have the luxury of picking where they can go. So whether it's a pharmacist or an urgent care center is super important as well as I spend a lot of time investing in caregiving. And I think we all know the stats about 50 million people that do that work for free. So huge leverage if you can have access to care in remote locations and you can stand up givers the fund this morning that was launched by Joe Not Tori very much is focused on healthcare services. And I think her view and a lot of the views is um I think 75% of the physicians right now are privately employed, so 25% are still independent. And I think what we often forget is uh many of them are fighting to stay profitable. Uh Many of them have to do paperwork every day, advertise for patients and manage risk and that's become really difficult when you go to school, do all this training and you want to treat patients and you went into the field to make things better. You didn't go into the field uh for bureaucracy. So I think it's more of an interest of where the market is going. Uh and less about a critique on one field. But what can we do to empower the front line and make it easier for people to stay in medicine and do what they signed up to do and that is take care of patients. So obviously, we're in an election year and health care affordability seems like it should be a bipartisan topic. But I wonder if, I mean, it obviously affects all of us. I wonder if I could ask each of you to talk a little bit about what you hope for and what you expect to happen after the November elections in either scenario. Well, I, I would hope for uh you know, some bipartisan consensus on issues where that's possible. Um You know, we've seen it, for example, in the effort to eliminate surprise medical bills uh for patients with broad support from Democrats and Republicans. Uh we've seen it uh around antitrust issues, um you know, dealing with anti competitive practices. Um And even at least among the public, we see it in efforts to address prescription drug prices. Uh You know, the public broadly supports Democrats, Republicans Independents, um the Inflation Reduction Act, uh negotiation of drug prices in Medicare capping insulin co-pays. Um And uh you know, so I, I would hope at least, uh you know, I mean, things are as divided as they've ever been in Washington. Uh But I would hope that we could find some ways to make some progress on, on affordability issues. Uh in a bipartisan way. Uh the marketplaces that were established by the Affordable Care Act have provided a lifeline to so many people to be able to obtain affordable care. Um In 2025 the end of 2025 some of the subsidies for the marketplace are going to expire without further political action. So my hope is is that in spite of some of the rhetoric around the Affordable Care Act, that there's a recognition of the number of people who are dependent on that as, as we said earlier about rural communities and those who lack access to care, those individuals are really dependent on the ability to get these types of policies. And I would hope that we can find ways to continue to support them. Megan, what are you preparing for in November? Um I'm with my peers there. I think the AC A worked, I also think it was ironically both a Republican and a Democratic construct at its heart and it drove down uh the uninsured rate and a lot of people benefited from it. And I also think you can't take benefits away from voters. That's just me speaking from a policy perspective. I'd love to see moving forward and I think there is bipartisan support it. Finally, an honest discussion about the socio determinants of health where and how you live affects your health more than anything. So we can talk about care in the home and all things we aspire to do. You can't discharge someone when they don't have a home, you can't give them care when they don't have the home. So I think having an honest discussion about all the things that drive health care that right now aren't directly seen as health care, uh is inspiring to me and also daunting. So I think a lot is said on the election trail. And at the end of the day, there's a lot more common ground when the rubber hits the road. If I could add, I mean, we uh uh Obamacare was uh as politically divisive a law as we've ever seen. Uh primarily because of the person who it's, it's named after. Um And I think now 14 years after the Affordable Care Act has passed, uh we've finally seen some of that change. Uh So, for example, this year, uh Mississippi, which is one of the 10 states that has not expanded Medicaid to low income. People under the Affordable Care Act came very close to, to doing so. And there's not a redder state than, than Mississippi. Uh And it was really because of that symbolism of Obamacare uh starting to fade. Uh And, you know, Republican and Democratic politicians in Mississippi seeing that it would bring money into the state. Uh And uh and frankly, a lifeline for, uh, hospitals, particularly rural hospitals. Do you see a path forward in our lifetimes for universal health care? And would that be the best fix? Well, we, um, uh, I mean, we're the only country that does not have universal health care. Uh, the only high income country, uh, we've come as close as we ever have. The uninsured rate is at a historic low. Uh, but there's still upwards of 30 million people uninsured. Um I, I uh at least in my lifetime, uh I don't think we'll, we'll get there. Um I think the politics of uh of the, the US are more about incremental progress than uh than big bang legislation. Uh And I, I expect we will continue to make incremental progress but not quite get there just a quick realization though, that the government today pays for over 50% of health care in this country doing Medicare, Medicaid subsidies into the states that, that have that expansion chips programs and the like. So, you know, as we start seeing the further graying of America, um and more people moving into Medicare. Um I think that we'll start to see a realization that um having some of these programs that are able to better regulate some of the challenge we face around pricing and the cost of care um can be meaningful in terms of extending that to the 100 some odd million people that get their insurance through employers. So it almost sounds like you're saying we might eventually get to universal health care as long as it's rebranded or under a different name. Uh Megan, would you like to close us out your outlook on the future of health care? I think the future is really bright if you listen to all these panels, the level of innovation. Um and I think, you know, our front line workers and our healthcare workforce and some of our institutions are, are world class and if you were sick, you'd want to be treated here. I think what we're discussing on this panel is that it's not equitable. Um and access is still a challenge. And I think we're in a position of power. We have the money, we, we have uh the ability to change that if that's something that we want to address. I also think the fertility uh refill rate is is falling below. So we need healthcare workers to take care of us as we age. Uh And the fastest growing segment right now is those over 80. So we all have a vested interest to keep the American health care system. It's the front line. And as we saw in the pandemic, it's the only line. So um I think we learned an important lesson of how important it is. But I'm optimistic with all the innovation. I also think we should celebrate people that solve the mundane. If you solve billing, we should be cheering you on. Thank you so much, Megan Lee and Larry. Thank you so much for joining us. Please join me in. Thanking our panelists.