By MATTHEW HOLT
DOGE, or Doggie as Kara Swisher has been calling it, has gone from being a meme about Shiba Inus to a crypto scam to a group tearing the Federal government apart.So I thought I would use the title of this piece to make a joke. Like Musk’s humor it’s puerile and not funny. What’s also not funny is what Musk’s team has done to small government agencies, like USAID & CFPB that really help people, not to mention the irrational firing of thousands of government employees that appear to be screwing up the NIH, the National Parks, the FAA and much more. But it’s all got me thinking, what in health care should an effort to quickly rationalize government spending do?
Now I’m not proposing that there’s anything OK with the way Musk and his team have been blundering around the Federal government, telling lies about what it does and indiscriminately firing the people who have the most important responsibilities and then desperately trying to get them to come back. This has been pure ignorance theater, and it would be hilarious if it wasn’t so damaging. Equally importantly the places DOG(gi)E has started are stupid because they don’t spend much money. But the government spends a lot on health care –between two and three trillion dollars, depending on how you count it.
So if you wanted to save some money and potentially change the system, what would you do? First you’d take a deep breath and get some real data, and improve your understanding about what is actually happening. There are some areas in health care where the issues are well understood and the data is clear and there are others where it’s less obvious.
Let’s start with a relatively small one–spending on Federal Employees health benefits. Chris Deacon’s Linkedin posts are a constant source of fun and games, and she has been highlighting screwups in the FEHBP administration for a long time. Essentially the government via the OPM pays lots of different insurance companies to manage Federal employees’ health care. There is very poor oversight of what happens in those programs and when the OPM’s OIG points that out, not much happens. The plans (including Horizon Blues in NJ and BCBSNC and many others) have been caught being sloppy or fraudulent but not much has happened. All DOG(gi)E needs to do is read the report on the audits, or look at what GOA said about $1bn being spent on ineligible members in 2022 and apply their recommendations.
Next let’s get into something that requires a little more investigation. In America we buy (and sell) drugs in a mind-bogglingly complex way.
The 340B program isn’t understood well (here’s an explanation from Blake Madden) but is supposed to be a way that safety net hospitals can get paid to dispense drugs. Somehow it’s turned into a slush fund that has $66bn pouring through it, and it’s become a significant source of revenue to many huge hospitals. One investigation said the “340B program has offered a major financial windfall to covered entities with little of the benefit targeted toward safety‐net providers who care for low‐income patients” I have heard that some specialty pharmacies within big hospitals make up half of the entire health systems’ profit. I don’t know how much of that is laundered through 340B, but we already have a massive FTC investigation into the PBMs and their practices. We have just begun to buy drugs somewhat more rationally by negotiating directly with drug companies. The Federal government spends a lot on drugs via Part D, 340B, VA, Medicaid, FEBHP and more. Let’s have DOG(gi)E figure that out and come up with a centralized plan that replaces all these different programs. Given the administration’s love for billionaires, I suspect Mark Cuban might help.
Another area that we need some clarity on is Medicare and Medicare Advantage. As I have whined about many times, there are competing assessments from MedPAC and the Medicare Trustees on how much is actually being spent on members in Medicare Advantage versus FFS. MedPac has estimates varying from 6-17% more, Milliman’s assessment (paid for the by MA plans) is that MA members apples to apples cost the taxpayer less and get more (see their chart below).
We for sure know that there’s a lot of effort by Medicare Advantage plans to upcode their members and also to deny them care. Hence the current investigations by the DOJ into United. We also know there’s a ton of overuse and poor care in Medicare FFS, as well as flat out fraud. But before we make more policy decisions on what is now a near trillion dollar program, wouldn’t it be good to figure out what is actually going on? Wouldn’t that be a great investigational role for DOG(gi)E?
My last suggestion is to look at the nation’s hospitals. I’ll quote from one of my previous pieces here
Over the last 30 years America’s venerable community and parochial hospitals merged into large health systems, mostly to be able to stick it to insurers and employers on price. Blake Madden put out a chart of 91 health systems with more than $1bn in revenue this week and there are about 22 with over $10bn in revenue and a bunch more above $5bn. You don’t need me to remind you that many of those systems are guilty with extreme prejudice of monopolistic price gouging, screwing over their clinicians, suing poor people, managing huge hedge funds, and paying dozens of executives like they’re playing for the soon to be ex-Oakland A’s. A few got LA Dodgers’ style money.
We know that health systems across the country are sitting on huge reserves and hiding what exactly they are doing with that money. Of course their for-profit brethren (HCA, Tenet et al) are extracting even more money from the system and sending much of it back to their shareholders. Let’s recall who is paying for most of that? Yes. It’s Medicare, Medicaid, and employers.
Meanwhile (by historical accident) employers are not being taxed on what they provide for their employees–that alone costs the taxpayer another $300bn!
Let’s have DOG(gi)E make all that transparent. Let’s have it examine the funds of the top 100 hospital systems. Let’s have it assess what they are doing with that money. Let’s have them clarify what got paid to them during the pandemic in CARES act funding. If America actually knew how this money was flowing through the health system, perhaps something might get done about it, rather than it being something that bloggers and insiders know is happening but scoff at the ability to change.
There is some historical precedent for this. In 1941 then Senator Harry Truman created the bipartisan Special Committee to Investigate the National Defense Program. Unlike the profiteering we saw during the “war on terror”, Truman’s WW2 committee was very successful at both hunting down corruption and gave the public faith that the government was spending money wisely. Why can’t we do something similar today?
If we really believe that we need government efficiency, let’s have proper assessment, let’s have rationality, let’s have transparency. There are lots of places in health care to start.
Matthew Holt is the Founder of The Health Care Blog
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