The Covid pandemic disrupted healthcare in many ways. Millions of people were unable to get the routine healthcare they needed because Covid fears and restrictions made it harder than ever to see a doctor. This resulted in the postponement of many elective procedures and routine medical screenings. The full impact of the Covid pandemic went way beyond the number of lost lives to Covid and the many hospitalized people who recovered. Many undiagnosed cancers , diabetic conditions, and heart disease led to many more deaths beyond Covid.

But now the pandemic is over, how is healthcare being impacted today?

Health insurers, who didn’t have to cover the myriad elective procedures that were postponed, braced themselves for the pent-up demand when the pandemic was over. But it seems their fears of elevated costs were not only prophetic, they were underestimated.

David Wainer, writing for The Wall Street Journal, tells us the return to care for things like knee and hip replacements surprised investors and insurers. Insurance companies thought they finally had a handle on things as 2023 progressed, but news from UnitedHealth and Humana about medical costs in the fourth quarter surprised investors, underscoring that a heightened demand for medical care is failing to abate. Humana recently flagged higher-than-expected costs in the fourth quarter, due to hospital admissions, members’ doctor visits, outpatient surgeries and use of supplemental benefits.

That came after UnitedHealth told investors last week that medical costs came in higher than analysts had expected. UnitedHealth said the medical-service use was largely a continuation of issues it previously flagged, including higher use of outpatient cardiac and orthopedic procedures by people enrolled in its Medicare Advantage plans.

This led to top stock-market movers telling the story of the winners and losers from the return-to-healthcare trade as the year gets underway. At the bottom of the losers column are insurers like Humana, CVS Health, Elevance, UnitedHealth, Centene and Molina—all payers. At the top of the gainers list are hospital chains like Tenet Healthcare and HCA Healthcare as well as medical device companies like Intuitive Surgical.

This is no surprise for anyone who has been following the impact of ObamaCare since it was passed by Congress in 2010 and implemented in 2014. Hospitals have been among the biggest winners since the government is now paying for healthcare they used to write-off for indigent care. Many of those who were formerly indigent now have ObamaCare or Medicaid due to wider eligibility criteria. Hospitals are also winning because of the influx of many physicians on their employee rolls that were formerly private practitioners.

These doctors are now performing routine medical office procedures, like EKGs, EMGs, kidney stone ultra sounds, and others under the billing codes of hospitals, which allow higher charges. The up-charges for hospitals can be greater than 100 percent. This explains the incentive for hospitals to acquire private practices, which is happening nationwide. Today, more than half, perhaps as much as 70%, of all doctors work for hospitals or other large corporate healthcare institutions.

If you’re an investor, you should be avoiding insurance companies with higher medical utilization, and favoring the medical providers over the payers. Just look around any growing city and you’ll notice many of the hospitals are expanding, constructing bigger and fancier buildings with their new-found earnings. They’re the real winners in the healthcare market today.

People often brag that they have “great healthcare insurance.” It is often the most important benefit employers can use to attract new employees. This can be very comforting to people who are concerned about their health and their future. But good healthcare insurance is not an end in itself; it is a means to an end. If the end never comes, what good is it?

There is reason to be skeptical of focusing too much on healthcare insurance instead of the quality of the health care delivered. John C. Goodman, writing for The Independent Institute at independent.org, says, “One reason the United States spends more on health care than other countries is that we are obsessive about health insurance instead of health care. When the British National Health Service or the Canadian Medicare system spends additional money, they spend it employing doctors, building hospitals or buying medical equipment. When the U.S. government spends more money, we give it to insurance companies.”

He cites ObamaCare as an example. According to Goodman, we are currently spending $214 billion a year insuring people through Medicaid (which is mostly contracted out to private insurers) and the Obamacare exchanges. At $1,731 for every household in America, that’s a great deal of money being transferred from taxpayers to insurance companies every year.

It is clear that insurance companies, and hospitals, are benefitting most from ObamaCare. You need only notice the size of their buildings in any downtown metropolitan community. But what about the American people? Are they getting the access to healthcare and the measurable improvements in their health that ObamaCare was supposed to deliver?

Nonetheless, one scholarly study finds there has been no overall increase in health care in the US since the enactment of Obamacare. The number of doctor visits per capita actually fell over the last decade. That’s surprising, because our population has been aging and older people require more health care.

Unfortunately, there is nothing particularly new here. When Obamacare was enacted, it was expected to cost close to $1 trillion over the next ten years. But there was no serious discussion of what we were going to buy with all that spending—not in Congress, not in the mainstream media, or even in the health policy community.

Goodman explains that Economics 101 teaches that all societies face a production possibility frontier. The typical textbook example is the choice between guns (military goods) and butter (consumer goods). In our case, it is health care versus other goods and services. To have more of one, you have to have less of the other. To have more health care, we have to have more doctors, more nurses, more hospital beds, etc. Without any increase in supply, for one group of people to get more care, some other group has to get less.

We saw a vivid illustration of that during the Covid pandemic. In order to tend to the needs of a sudden surge in Covid patients, health care providers had to delay care for the non-Covid patients. That has led to many more undiagnosed cases of cancer, heart disease, diabetes, and other chronic, life-threatening illnesses. The quality of their healthcare insurance didn’t change – but the quality of their health care deteriorated.

History tells us what happens when the healthcare delivery system doesn’t adapt to increased demand. Medicare for the elderly and Medicaid for the poor were huge programs, even when they were started in 1965. In a short period of time the number of people who lacked health insurance dropped from nearly 25 percent to under 15 percent of the population.

As a result, physician visits by low-income people increased 6.2% and surgical procedures among the elderly increased 14.7%. But since there was no increase in the ability of the system to supply medical services, these increases were offset by a decrease in care delivered to the non-poor and the non-elderly.

A study in the American Journal of Public Health found that “society-wide utilization of medical care remained unchanged.” Even though there was an increase in health care services for seniors, MIT professor Amy Finkelstein discovered that the passage of Medicare had no effect on the health of the elderly—at least as measured by mortality. The additional spending set off a bout of health care inflation for all patients, however.

You would hope that Washington politicians would have learned something from this experience. Sadly, there is little evidence of that. During the first term of the Clinton Administration, Hillary Clinton proposed a plan to reform the private health care system and insure the remaining uninsured. But although that proposal consumed thousands of pages of analysis and discussion, almost no one asked what the nation would have less of in order to have more health care. And nothing was done to increase the supply of doctors and nurses!

Has ObamaCare increased the delivery of health care?

Under Obamacare, the number of people without health insurance fell from 15.5 percent of the population in 2010 to 7.9 percent by 2022. Sounds good, huh? Yet the study cited above found that health care utilization across all of society did not increase at all! There was some shifting, as low-income patients got more care, but that care was offset by reductions elsewhere in the system. In particular, “a 3.5-percentage-point increase in the proportion of persons earning less than or equal to 138% of the federal poverty level with at least 1 office visit was offset by small, nonsignificant reductions among the rest of the population.”

It is clear we must focus more on the delivery of healthcare, rather than the insurance of healthcare, if we want to improve the health of all Americans. That is the goal, isn’t it?

It took a viral pandemic to break down the barriers to effective telemedicine, especially across state lines. Now, it seems those barriers are being rebuilt.

Telemedicine, the practice of physicians consulting with patients on the telephone, or more often online with video, became commonplace during the Covid pandemic. Patients, as well as physicians, were reluctant to see people who might be infected with the virus. Therefore, it made perfect sense for patients to stay connected with their doctors through telemedicine since in-office visits were inadvisable. To facilitate these telemedicine evaluations, interstate restrictions were also removed. This enabled physicians to help more and more people during the pandemic, even across state lines.

But now that the pandemic crisis is over, though Covid is still around, some states are reimplementing restrictions on interstate telemedicine. This not only seems petty and unnecessary, but is interfering with access to medicine for some patients, especially those who established interstate doctor-patient relationships during the pandemic.

Shannon MacDonald, a radiation oncologist at Mass General Brigham Hospital in Boston and an associate professor at Harvard Medical School, writes about the impact of these restrictions in an article published in The Wall Street Journal. Dr. MacDonald tells us of a nine-year-old boy from New Jersey she began treating in 2009 with a brain tumor, medulloblastoma. Though the boy and his family traveled between states for appointments, he remained her patient at all times. Telemedicine made it possible for her to answer his parents’ questions, discuss his imaging, and propose new therapies when others failed. He was able to receive state-of-the-art treatment and continuity of care across state lines with the aid of telemedicine.

Though the boy has since died, telemedicine was an integral part of his treatment. You would think that the Covid pandemic would have awakened state governments to the benefits of telemedicine such that the emergency orders permitting interstate treatments would have been permanently waived. But, alas, such is not the case. Some states, like New Jersey (where this boy lived) have rescinded the approval of this practice now that the pandemic crisis is over.

Dr. MacDonald explains: “Instead of enlightening local governments about the benefits of telemedicine, the pandemic highlighted what physicians are forbidden to do. While I never hesitated to pick up the phone to call the boy’s parents and give them advice, I wouldn’t legally be able to do that now because New Jersey has decided that a simple phone call constitutes the practice of medicine. Giving medical advice to an out-of-state patient over the phone can put me at risk of losing my license, and, in states such as California and New Jersey, of criminal charges as well.”

At the outset of the pandemic, some state medical boards feared that telehealth would enable out-of-state doctors to poach patients from local physicians, especially in rural communities. State health authorities also didn’t want the hassle of pursuing malpractice claims across state lines. These concerns were unfounded. Fees and carve-outs—for example, restricting interstate telemedicine to specialty care or requiring referrals—could address these issues without undue limits on access, as could a requirement that physicians adhere to the laws of the state in which the patient is located.

The benefits of telemedicine outweigh any hypothetical concerns. Rural areas lack specialists, but rural residents need specialized healthcare as much as anyone. Distant specialists, accessible to rural residents by phone, shouldn’t be thought of as competitors to rural physicians but as resources capable of extending patients’ lives.

Personally, I have never understood why physicians are not granted the privilege to practice medicine in all 50 states when they pass the National Board of Medical Examiners test, which is required by every state for licensure in the U.S. I’m sure the reason has more to do with collecting state licensure fees than with any concerns about qualifications to practice medicine. I’m sure most doctors would be happy to pay a little more for national licensure, which could be shared with other states. In turn, these states would save money because they wouldn’t have to license these physicians themselves. This is an issue that has more to do with state control and fees than it does with qualifications.

Dr. MacDonald has tried to overcome this hurdle to interstate telemedicine. She explains:

“Without interstate telehealth, I’d have to become licensed in all the states where my patients live if I wanted to continue treating their rare childhood cancers or bone tumors. Because I believe strongly in the benefits of telehealth, I have obtained licenses in six states through the Interstate Medical Licensure Compact. Doing this took months, cost thousands of dollars, and still leaves me unable to care virtually for patients in 43 states. The process is so cumbersome that less than 1% of physicians use it.”

“Military doctors have long been able to practice medicine across state lines. In 2018 it became legal for sports-team doctors to practice medicine during out-of-state away games. If we can make a law that allows treatment across state lines for a National Football League player, can’t we consider it for a child with a brain tumor?”

This is clearly a problem begging for a solution that is in the hands of politicians, not doctors. The time has come for the politicians to make it easier to practice the best possible medicine. Some day those politicians may need access to interstate physicians themselves.