Health Care to Be “Most Dynamic Growth Industry Ever”

By: Peter Pollack

Steve Forbes offers thoughts on future of health care

"Why is demand for health care considered a crisis, but demand for anything else … considered a great opportunity?” asked publisher Steve Forbes, speaking at the Your Academy 2017 meeting at the AAOS Annual Meeting. “People want more apps; a lot of writers would be glad to help you out,” he noted. “People want more cars; Detroit [would be] glad to come to your assistance. So what’s with health care? Why is demand [in that industry] seen as, ‘Oh my God, what do we do now?’”

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Steve Forbes

Mr. Forbes noted that the current healthcare system grew out of World War II and tax decisions that were implemented in ensuing years.

“We don’t have free markets,” he explained. “It’s all based on third-party [payers]. No one designed it. It wasn’t meant to be evil; this is how it evolved.”

According to Mr. Forbes, the next generation can expect to see big changes to the healthcare industry. As a publisher who started in the print industry, he sees parallels.

“Those who know how to ride these changes are going to do well,” he argued. “Those who don’t, won’t. […] Everything I learned about print media went out the window with the rise of the Internet. We had to start all over again in terms of assumptions, how we did content, how we sold everything. That’s going to happen across the economy, including health care. But the end result is going to be fantastic. ‘Huge,’ as the president would say.”

Mr. Forbes predicts that the next stage of health care will be more patient-oriented, reduce bureaucracy, and enable physicians to focus more on healing patients and less on doing paperwork.

Republican replacement plan
In Mr. Forbes’ opinion, Republican legislators may have moved prematurely with a plan to repeal and replace the Affordable Care Act (ACA, colloquially known as Obamacare). The plan to repeal and replace the ACA has received the support of President Trump and U.S. House of Representatives Speaker Paul Ryan (R-Wis.).

“As they’ve discovered, the whole industry is very complicated,” he said. “It’s 18 to 20 percent of the economy.”

He argued that it would have been wiser for Republicans to address tax reform first while they worked to develop a path around Senate filibuster rules.

“One of the reasons that the healthcare bill coming out of the House has got some flaws in it is because of reconciliation,” he explained. “In the Senate it takes 60 votes to pass something. […] The only way you can get around it is through reconciliation, which is a word for saying you’re dealing with budget and tax matters. This is how we got Obamacare, through reconciliation; they didn’t have the 60 votes in the Senate, and this is how they’re trying to get this healthcare bill through.”

He noted that, now that Republicans have promised to reform health care, they will “own it,” whether the ACA replacement is flawed or not. In his opinion, the American Health Care Act (AHCA) contains a number of positive and negative points.

“They’re getting rid of the individual mandate,” he said. “Good thing. They’re getting rid of the employer mandate. Good thing. Getting rid of most of the taxes on medical devices, not to mention dividends and capital gains. All to the good. They’ve loosened up a little bit on mandates and policies. They should have taken all those mandates out. You buy exactly what you want. When I buy an insurance policy I don’t need pregnancy services, but I have to buy it anyway. Kind of crazy. They should have cleaned that up, but they made a step in the right direction.

“But … they didn’t deal with nationwide shopping for health insurance,” he continued. “Now the health insurance industry blanches at this, but it’s going to come, not this time but in the next couple of years. […] Before Obamacare, I could buy a perfectly good policy in Pennsylvania at half the price I could in New Jersey, but I wasn’t allowed to do it. You can buy a car in Pennsylvania if you live in New Jersey; you can buy a necktie, a purse, whatever, but you can’t buy the insurance.”

Despite the difficulties in passing an ACA replacement, Mr. Forbes predicted that legislators will complete the task, most likely this year.

“Why will it pass?” he asked. “Not because of the particular virtues in the bill, but because of a saying of [18th Century English writer] Samuel Johnson. He said the prospect of a hanging concentrates a man’s mind wonderfully. The prospect of a political hanging, which the Republicans will be facing in a few months, will focus their minds wonderfully. […] You’re starting to see stories on it now. [They’re saying], ‘If we don’t get something done, we’re not going to be able to blame the Democrats, Barack Obama, George Bush, or the moon. We’re going to own it, and we’re going to get slammed on it.’”

Congressional Budget Office
Mr. Forbes took issue with recent projections from the U.S. Congressional Budget Office (CBO), which found that implementation of the AHCA bill would reduce the federal deficit by $337 billion over a decade, yet increase the number of people who are uninsured by 14 million through 2018 and 24 million through 2026.

“The [CBO] … is a bunch of people who supposedly calculate the impact that taxes and regulatory changes have on the economy. The idea that these people can predict the future is preposterous. Their track record is awful. If it was good, they’d be in the private sector selling their services,” he said to laughter from the audience. “… Three years [ago] they said reducing the capital gains tax would cost money, even though experience shows that every time you reduce the capital gains tax, revenues go up. […] Yet they continue to insist that it will cost money.

“In 2013 … [the CBO] said in 2015 there would be 13 million signed up through the Obamacare exchanges for individual insurance policies,” he continued. “13 million in 2015, 24 million in 2016, and 26 million in this year. […] So what happened in 2015? Instead of 13 million, there was 11 [million]. In 2016, when it was supposed
to be 24 [million], it clocked in
at 12 [million]. This year, it was supposed to be 26 [million], looks like it’s going to clock in at 10 million. Garbage in, garbage out. Yet in Washington they worship [the CBO] like it’s Moses coming down from the mountain with the tablets.”

Positive changes
According to Mr. Forbes, recent and coming trends will push health care in a more consumer-oriented direction. He gave credit to ACA exchanges for encouraging purchasers to consider the quality of their insurance. He noted that shoppers on the exchanges were often surprised to find their bronze or even silver category plans had high deductibles.

“I may be covered for catastrophic, but what do I do for more normal costs?” he asked. “So you’re starting to get more of a consumer awareness. You’re going to see more of walk-in clinics and the like … and that’s going to be the salvation of this industry. […] You’re going to [see the rise of] a whole new healthcare industry, more oriented to the patient, and that’s going to be profoundly positive. It’s going to mean more productivity; it’s going to mean more sensible safety nets; and it’s going to mean you’ll be allowed to practice medicine again instead of spending a big part of your time filling out forms.” 

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