I recently interviewed Dan Munro on PopHealth Week and we discussed his book Casino Healthcare. We all know about the high costs and poorer outcomes associated with American Healthcare. In Casino Healthcare Dan explains his view of how our system, one built with Selective Health Coverage is like a casino; or really three casino’s, the insurer casino, provider casino and pharmaceutical casino.
Dan explores each of these areas and explains how they work to maximize revenue through a system of complex transactions and systems.
As an example, on the Provider side Dan explains a little known group called the AMA/Relative Value Scale Update Committee or “RUC” as its more affectionately known. This private committee formed by the American Medical Association makes pricing recommendations in secret that are used to create the Medicare Fee Schedule. Medicare accepts near 90% of the RUC’s recommendations which then become used as the basis of private insurers setting their prices.
The RUC is one of those areas where there is a clear underlying reason for pricing problems in our healthcare system. A number of examples of how pricing developed by the RUC leads to gross overpayments for the time and resources associated with various CPT codes have come to light. In fact a GAO report came out and said “…the RUC’s process for developing relative value recommendations relies on the input of physicians who may have potential conflicts of interest with respect to the outcomes of CMS’s process.” Imagine that.
The Affordable Care Act or ObamaCare is discussed as a step in the right direction, but it’s also pointed out that the costs of healthcare were an area that was not addressed. Recent results, have amply demonstrated that. While the ACA has increased the number of people with insurance, perhaps by 20 million, premium costs have risen rapidly and a number of insurers have dropped out. It appears that the Casino got a hold of the ACA as well, but why would that be a surprise. There are many examples of how the ACA was written to not only not deal with costs, but in fact created unintended consequences that incented companies to actually increase costs, such as the Medical Loss Ratio requirements.
Dan advocates for Universal Coverage, not necessarily a single payer system. Other countries such as Germany have this model where there are private and government insurance options within a universal coverage system. But even if Universal Coverage was put in place in the United States, unless something is done to wring out the excesses in the Healthcare Casino, we will continue to see costs go up.
There are many other examples and issues cited in Casino Healthcare and it’s a very good read. You can listen to Dan’s interview on PopHealth Week here:
PopHealth Week is produced by Health Innovation Media.