[S2E2] Vincent Catalano on The Great American Healthcare Plan Breakdown

The president just dropped details on the "Great American Healthcare Plan" – and Vincent's breaking down why the math doesn't add up. While everyone wants lower drug costs and transparent pricing, there's a fundamental flaw in thinking a government check will fix our healthcare system.

Here's the problem: That thousand-dollar government payment might cover primary care visits, but what happens when you need cardiac bypass surgery? Or cancer treatment? The real purpose of insurance is protecting you from catastrophic costs – the kind that run into hundreds of thousands of dollars, not the day-to-day stuff.

Vincent unpacks the hidden mechanics most people never see: how hospitals rely on commercial insurance to subsidize Medicare and Medicaid patients, why your annual out-of-pocket maximum is actually protecting you from financial ruin, and what happens when hospital systems that can't even process cash payments are suddenly expected to become retail healthcare providers.

The truth? This plan will probably break everything. And maybe that's exactly what needs to happen. Because the current system – with hospital systems demanding 10-15% revenue increases year after year and healthcare costs compounding at 9% annually since the late 1980s – simply can't continue.

Whether this creates the reset healthcare desperately needs or just chaos remains to be seen. Either way, Vincent's advice is clear: take the cash they give you, save it in an HSA if you can, and most importantly – stay healthy. Because navigating what comes next is going to be complicated.

Straight talk on healthcare's biggest shake-up in decades – no corporate spin, just the reality check you need.

This episode is brought to you by HealthNEXT – the company leading the way in helping employers build enduring cultures of health and well-being, reducing medical cost trends, and increasing organizational performance. Learn more at healthnext.com.

The CLEARly Beneficial Podcast delivers unfiltered insights on healthcare benefits and industry innovation. The views expressed are those of the host and guests, not their employers or sponsors.

Transcript

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Welcome to the Clearly Beneficial podcast,

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the show where we rip off the Band-Aid and explore the future of healthcare,

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benefits,

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and the people driving innovation in the industry.

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This episode is brought to you by Health Next,

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the company leading the way in helping employers build enduring cultures of health

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and well-being,

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reducing medical cost trends,

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and increasing organizational performance.

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To learn more how they can help you, visit healthnext.com.

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Happy Thursday, and it's healthcare Thursday as usual.

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Every day is healthcare day.

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So the president just released the sordid details of the great American healthcare plan.

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And listen, we all want lower costs.

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We all want transparency and pricing.

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We all want access to care and the things that matter to us, right?

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The details are probably a little bit sketchy,

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but the high-low of it is that we're going to take a hard look at drug costs,

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which is good.

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People like Mark Cuban have been doing that for a while and definitely shining the

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light on them.

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So drug costs will be in play and that's good.

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Then there's how much money is paid to insurance companies and having them be more transparent.

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But where I think the thing falls flat on its face is this notion that the

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government is gonna give me and you cash to go pay for healthcare.

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The naive part of this great American healthcare plan is that

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The insurance companies are only half of the equation.

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Let's put drugs over here for a minute and let's talk about the insurer-provider

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relationship,

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right?

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Insurers pay providers from the premiums you pay the insurers so that you get care.

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And the way insurance plans are structured is that for the day-to-day primary care stuff,

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that's reasonably easy to pay for.

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So if someone gives you a thousand bucks to go pay for some stuff,

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you can spend that money on primary care,

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which by the way is retail about 300 bucks a visit,

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I might add.

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But let's just say you get stuck in the hospital and you're now running up a bill

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in the thousands or hundreds of tens or hundreds of thousands of dollars.

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That's the whole point of insurance.

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Insurance is to protect you against that risk, okay?

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If you now are gonna go to a hospital and say,

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oh,

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I need cardiac bypass surgery,

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what's the price?

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And they're gonna go,

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well,

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the price,

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the non-insurance price,

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see it's posted on the wall here,

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the non-insurance price is $150,000,

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and I'm being generous here,

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it's probably more like $350,000.

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The $1,000 or $2,000 the government gives you to pay for that surgery is nothing, okay?

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Every hospital plan that is out there,

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every health plan is out there,

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has this natural cap built in,

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it's called the annual out-of-pocket maximum.

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So if you present to that hospital with a large surgery requirement or cancer or whatever, and

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you max out what you pay out of pocket for those things.

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And to the tune of, could be for an individual, it could be $4,000, it could be $5,000.

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It's no worse than about 8,000 for a single person in a calendar year, right?

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That 8,000 can actually get you millions in healthcare.

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That's how insurance works.

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And if you...

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If you don't have that insurance able to back you up,

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you know, you're just going to go without care and it's just not going to be good.

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So the insurance side of this thing is messed up.

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All right.

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The provider side of this thing is messed up because they're used to insurance

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providers are,

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excuse me,

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hospitals and hospital systems need to keep butts in the seats.

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They need people in the beds who are costing a lot of money who have commercial insurance.

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Okay.

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And

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If people on the commercial side in particular stop going to the hospitals,

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okay,

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because they can't afford it,

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it's gonna be pain.

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Pain, especially to rural hospitals who are already on a financial seesaw.

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The large hospital systems are gonna have to finally do what I said they needed to

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do for years,

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and that's re-engineer themselves.

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Cut out the fat,

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run like real businesses in order to deal with this.

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So it's gonna be interesting to see how this plays out because remember,

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there are several layers of money that a hospital system receives,

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right?

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There's money from,

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the lowest cost they get is from Medicare,

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excuse me,

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Medi-Cal or Medicaid,

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lowest reimbursement for those services.

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The next lowest is Medicare,

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which represents,

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depending on where you are,

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could be anywhere between 25 to 35% of the population.

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And then the Obamacare plans,

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which tended to favor small business and individuals who did not have access to

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commercial plans from their companies,

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for many company.

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And then the top tier, which reimburses the hospitals the most,

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is the highest cost and reimbursement is commercial plans.

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And commercial plans,

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again,

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depending upon where we are in the country,

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could represent anywhere from 30% to 50% of a hospital's intake.

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So CFOs at hospitals are constantly fighting the what's called payer mix battle.

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Where's my money coming from?

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Getting some from here, some from there, some from there.

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And all of a sudden we say,

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oh,

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well,

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you know,

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we're going to give Americans money to pay for this.

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They're going to be asked to turn their businesses into a cash and carry businesses.

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A lot of these systems can't even take a credit card, take cash.

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I mean, you walk in, can I pay cash for this visit?

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No, you can't pay cash.

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You got to go through your insurance.

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So

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Will the great American healthcare plan break everything?

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Probably will.

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Everything else is getting broken, so we might as well break this.

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And honestly, it needs to be broken.

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I mean, what's been going on?

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can't continue.

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I mean, hospital systems want, you know, 10, 15% rating, you know, revenue increases every year.

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And,

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you know,

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the big bad insurance company,

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you know,

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is the one fighting against the hospital system for that,

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for,

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to keep that at a reasonable number.

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But there hasn't been a year since the early nineties, late eighties, where, um,

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Rates have actually gone down or costs have actually gone down.

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Okay.

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It hasn't happened since.

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Every year you're looking at, honestly, 9% compounded every year.

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So is this going to change that?

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Not overnight.

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It's going to create chaos in the way things are.

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And, you know,

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Be careful out there.

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Take the cash.

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They're going to give it to you.

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Save it if you can.

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Put it in an HSA if you can.

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Stay healthy.

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Please stay healthy because that's the only way you're going to avoid the hell that

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is going to a hospital.

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Take care.

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This podcast reflects the personal views of the host and guests,

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not their employers or sponsors.

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See you next time.