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L.A. Care CEO Dings Medicare for All, Defends Public Option

By Jack O'Brien  
   November 12, 2019

John Baackes prefers an approach to healthcare reform that builds on the Affordable Care Act.

Medicare for All-style proposals to implement a federal single-payer health system and eliminate the private insurance market have generated widespread debate among lawmakers and a polarized response from the American public.

However, executives at both health insurance companies and hospitals seem united in opposing such measures and seeking alternative healthcare reforms that build on the Affordable Care Act (ACA).

Last week, Jefferson Health CEO Dr. Stephen Klasko told HealthLeaders that he disagrees with Medicare for All-style proposals put forward by Democratic presidential candidates, arguing that more substantive changes need to be made to improve the industry.

Related: Jefferson Health CEO Gives Insight on How to Operate As Medicare for All Looms

This week, L.A. Care CEO John Baackes told HealthLeaders that he is also concerned about the potential effects of a Medicare for All system and prefers healthcare reforms that aim for incremental improvements to the existing system. 

Baackes said the federal government's first foray with healthcare programs were Medicare and Medicaid, and estimated that around 80% of Medicaid beneficiaries are also members of private plans since state programs were unable to contain unit costs. However, he said, a single-payer system would not allow for private plans to assist state-run programs, a development for which Baackes said there is "no precedent."

"To me, that seems to be the big problem with single-payer, our track record in this country with two smaller experiments focused on distinct populations have turned into being run by private businesses, some of whom compete with each other," Baackes said. 

Related: L.A. Care CEO Discusses Enrollment Increases, Policy Future

Baackes' preferred solution to issues facing America's healthcare system is the introduction of a public option, a proposed aspect of the ACA that was never implemented at the federal level. A public option would allow consumers on the individual market to opt-in to Medicare rather than being automatically enrolled in the program through a single-payer system.

Such a move would spur competition with commercial insurers and serve as the "more prudent approach" to healthcare reform, Baackes said.

In California, 16 insurers are public entity health plans, but Baackes said L.A. Care was the only one to join Covered California, the state's individual insurance marketplace created under the ACA.

Operating in the Los Angeles market, Baackes said L.A. Care achieved the lowest price point of health plans and saw its enrollment rise to 80,000. While L.A. Care has been undercut on price by four other health plans heading into 2020, Baackes argued that this result is what the public option is supposed to deliver. 

"Isn't that exactly what the point of offering a public option was: to stimulate competition, drive down prices, and encourage innovation?" Baackes asked. "That's what concerns me about Medicare for All or a single-payer system, is [that] without competition there is going to be less innovation. I'm afraid it will be a stagnant entity and costs will again begin to bloom." 

Related: California Achieves $345M in Cost Avoidance Through Federal Clinical Practice Initiative

Baackes said that if Medicare for All is enacted, there is the potential for the healthcare system to be negatively impacted in terms of cost, coverage, and access goals.

He predicted that under Medicare for All, doctors will "game the system" to maintain a certain level of reimbursement, the improvements made under managed care will be lost, and costs will "skyrocket" as more people are admitted to the emergency room (ER) for treatment.

These concerns are also shared by provider executives, which Baackes said should be considered as health policy debates continue in the coming months.

"I don't think this is providers cheering saying 'Let's maintain the private insurance industry,' but they understand the chaos of what preceded the ACA when there were many more uninsured people," Baackes said. "In a single-payer system, everyone's covered but then it becomes a question of access. The concern for providers is that people will return to the ER. I think it is a real [concern] and should be given very careful consideration as we talk about these plans."

Baackes also said that Medicare for All could be detrimental to the shift towards value-based care.

Since a single-payer system would provide patients the ability to go anywhere to receive treatment, going to different physicians or provider organizations, Baackes said measuring value will be much more difficult for health systems and government agencies.

"'How are you going to measure what the value is?' seems to bump up against value-based pricing and this sort of open, 'you can go anywhere you want' approach that Medicare for All has taken," he said. "If you're going to use value-based purchasing as a way to contain costs, that sort of like a laissez-faire approach that 'you can go anywhere, anytime,' doesn't fit in to getting those kinds of values."

Related: Price Transparency Is Coming. How Will You Prepare?

Jack O'Brien is the finance editor at HealthLeaders, a Simplify Compliance brand.

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