Ezekiel (Zeke) Emanuel
Podcast - Wharton
Originally posted 12 Nov 19
Here is an excerpt:
“If you want to control costs, there are at least three main areas you have to look at: drug costs, hospital costs to the private sector, and administrative costs,” he said. “All of them are out of whack. All of them are ballooned.”
On drug costs, for example, it is not clear if that would be achieved through negotiations with drug companies or by the government setting a price ceiling, Emanuel said. He suggested a way out: “We should have negotiations informed by value-based pricing,” he said. “How much health benefit does the drug give? The more the health benefit, the higher the price of the drug. But we do need to have caps.”
Emanuel also faulted Warren’s idea to limit payments to hospitals at 110% of Medicare rates as unwise. He suggested 120% of Medicare rates, adding that it would “probably have no real pushback from most of the health policy people, especially if you do have a reduction in administrative costs and a reduction in drug costs.” he said.
Emanuel pointed to a recent Rand Corporation study which showed that on average, private health plans pay more than 240% of Medicare rates for hospital services. “That seems way out of whack,” he said. “There are a lot of hospital monopolies, and consolidation has led to price increases – not quality increases as claimed. We do have to rein in hospital prices.” The big question is how that could be achieved, which may include placing a cap on those prices, he added.
On reining in administrative costs, Emanuel saw hope. He noted that the private sector spends an average of 12% on administrative costs, and he blamed that on insurance companies and employers wanting to design their own employee health plans. He suggested a set of five or 10 standardized plans from which employers could choose, adding that common health plans work well in countries like the Netherlands, Germany and Switzerland. Japan has 1,600 insurance companies, but standardized health plans and a centralized clearinghouse helps keep administrative costs low, he added.
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