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What should we do about the payer-provider disconnect?

May 15, 2020

Topics: Quote of the Day

By Merrill Goozner
Modern Healthcare, May 14, 2020

Call it the big disconnect. Thousands of healthcare provider groups face financial ruin. Tens of millions of Americans are losing insurance coverage. Yet private health insurers are doing just fine, thank you.

So far, Congress has responded only to the provider crisis. Social distancing has cut hospital revenue by an estimated 30% to 40%. Local physician practices, with primary care hardest hit, have seen declines of up to 90%.

It’s nearly impossible for actuaries to estimate how much of the lost healthcare spending will reappear in the second half of the year as businesses gradually reopen. Some, certainly. But with 30% of healthcare considered waste, and tens of millions of laid-off Americans returning to work slowly, most of that potential revenue is probably gone forever.

As things stand now, the government is doing everything in its power to reassure providers and payers that not much will change.

If the current crisis teaches us anything, it’s that healthcare providers need far greater flexibility to respond to emergencies like the current one. What is a “bailout” but a guaranteed budget? Isn’t this a logical direction for payment reform to take post-COVID-19?

And as for an insurance system that leaves private insurers with no responsibility for those suddenly uninsured, it’s way past time for designing a seamless system where everyone is covered, and people never fall through the cracks. This country needs mechanisms for people to switch automatically between private plans and public programs so no one ever gets left out.



By Don McCanne, M.D.

The current pandemic certainly demonstrates the payer-provider disconnect in health care. The private insurers are doing spectacularly well whereas the players in the health care delivery system – many hospitals and especially physicians – are facing a financial crisis.

The view expressed by Merrill Goozner – the editorialist of Modern Healthcare, a publication that covers the medical-industrial complex – provides a lesson for us all. The solution for the disconnect is to have a guaranteed budget (including provisions to fund surge capacity), with him stating, “it’s way past time for designing a seamless system where everyone is covered, and people never fall through the cracks.”

He then suggests that we need mechanisms to switch automatically between private plans and public programs. Of course, this is where he veers off track. The administrative complexity and high costs of such a system are not warranted when you can have a single, seamless public program that covers everyone forever. By acknowledging that a public program must be there as the safety net that the private sector does not provide, he has presented an ironclad case for the single payer model of an improved Medicare that will always be there for all of us, no matter what crises we face.

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About the Commentator, Don McCanne

Don McCanne is a retired family practitioner who dedicated the 2nd phase of his career to speaking and writing extensively on single payer and related issues. He served as Physicians for a National Health Program president in 2002 and 2003, then as Senior Health Policy Fellow. For two decades, Don wrote "Quote of the Day", a daily health policy update which inspired HJM.

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