What Can the U.S. Government Do in 2022 to Fix Our Broken Healthcare System?
By Sebastian Seiguer CEO of emocha Health
In your opinion, what are the most important things the U.S. government can do in 2022 to help fix the country’s broken healthcare system?
The pandemic has caused a massive shift in how and where people access care. Since digital health solutions are now table stakes, the US government would be well-served to focus on assuring that high quality, low-cost digital care is available to everyone. Some of this work will need to be focused on key infrastructure issues, like assuring we remedy digital/broadband deserts in disadvantaged communities as we shift to virtual healthcare delivery models. Another important step that Congress could take to fix our broken healthcare system as we cement digital delivery norms would be to permanently waive Medicare co-pays for virtual services.
High drug prices are the single biggest area of overspending in the U.S. compared to Europe, where for the most part, drug prices are government-regulated – what can we learn from Europe and their regulations in this area?
One aspect of our overspending on medication concerns medication waste: prescriptions filled but only partially consumed. With as many as 50% of patients not taking their medications as prescribed, we can assume there is a great deal of medication waste. When patients with chronic conditions do not take their medication properly, the result is preventable hospitalizations, which cost the U.S. healthcare system more than $350 billion annually.
The U.S. government promotes and incentivizes this waste. The current design of many quality measures and related incentive payments focus solely on whether or not patients refill medications on schedule, not whether they actually take them. It is bizarre and perverse that it is irrelevant whether patients are actually taking these medications. Reform is urgently needed.
It is not clear that Europeans have solved the issue. Official list prices are capped, with members of the EU able to effectively accept the pricing cap negotiated by another EU member state. However, these caps are inflated, often purposely by a member state, in exchange for discounts.
All of this demonstrates that Western government involvement in medication purchasing has resulted in inflated pricing and waste. Either the government sets pricing for government programs, and errs too high, thereby also anchoring commercial buyers; or, the government institutes ridiculous policies aided by pharmaceutical experts - such as pegging some key health plan quality ratings to medication refill rates.
Governments need to recognize the unintended consequence of regulations regarding medication. Well-intended policies in this realm are increasing spend and price.
In the U.S. private insurers can negotiate drug prices with manufacturers, but Medicare cannot. Do you think this is something the government should address?
Unfortunately, the U.S. government's current role in setting drug prices has led to artificially inflated pricing. The current situation resembles the way we set tuition prices at American universities. With the government willing to write student loans (and then acting to forgive them) to cover tuition regardless of the amount, tuition rates have increased across at nearly all colleges universities. The same situation is occurring with medication prices. By accepting a list-price benchmark without the opportunity for negotiation, and with an ever-expanding population using government-sponsored health insurance (Medicaid and Medicare), the taxpayer is covering an imbalance. This removes demand from the economic equation, and sets price regardless of factors such as cost, efficacy, and patient adherence. Pharmaceutical companies react as one would expect - they offer financial assistance and patient discount programs to relieve copay burdens for many patients who cannot afford what insurance does not cover. The remainder of the costs are borne by government programs (and ultimately taxpayers) without regard to whether the medications help the patient or whether the medications are even taken at all.
What role do AI, machine algorithms and remote/home monitoring systems play to reduce the need for staffing and utilization in hospitals?
Home monitoring is the next frontier of healthcare. Over the last three years, several models of virtual visits have been created and promoted to provide care for patients in-between visits or upon discharge from the hospital. An excellent example of a novel model is the Remote Therapeutic Monitoring (RTM) code set, which goes live on January 1, 2022. Providers will be able to be compensated for monitoring whether medications are being taken properly, as well as whether patients are adhering to physical therapy plans. During a hospital stay, every single dose of medication administered to a patient is administered under direct observation, documented in the patient’s medical record, while side effects and therapeutic response are monitored. RTM codes will allow such monitoring to continue from the patient’s home and in between physical and virtual office visits.
With so many changes needed to fix our healthcare system, what opportunities exist for retail investors? (our audience is predominantly made up of retail investors, so please make sure your response to this
By the end of Q3 2021, investors had piled more than $21B into the digital health sector. At the same time, digital health companies are finally accessing public markets. The pandemic fueled extremely broad adoption in health care of the most basic consumer communication formats: live video, and app-based engagement. While one can expect the consumer to also demand in-person contact with the healthcare system for some types of medical issues, the virtual model is here to stay.
Three major dynamics are driving an incredible market for digital health investment: deregulation, transparency, and healthcare consumerism. First, regulatory barriers to many forms of virtual care were lifted during the pandemic and are still with us. Skepticism of virtual care and the perceived need to regulate will be difficult now that utility has been proven. Second, other technology innovations in unrelated markets (blockchain, cryptocurrencies) are creating an expectation of transparency among healthcare actors, which include providers, health plans, and patients. Wasteful practices in healthcare will be exposed as more and more data becomes available. We can expect that eventually, positive health behaviors such as properly taking your medication on time will be compensated in much the same way that car insurance companies use safe-driving algorithms to provide discounts to careful drivers today.
Finally, digital health platforms are reacting to the rising power of the patient as a consumer. Virtual care can be more accessible to many than the red-tape plagued bricks-and-mortar, traditional healthcare access points. Consumers will react by shifting their “business” based on convenience when appropriate.
Investors should watch companies in virtual care, transparency technologies, and novel models of care access. Digital healthcare is moving quickly, and entrepreneurs have access to capital in a way that they did not five years ago. The sector is still archaic compared to consumer markets. However, healthcare is undergoing radical transformation, which will create winners as well as losers, depending on who figures out ways to integrate into, or work around, a fragmented healthcare system.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.