The Same Script: Value-Based Payment, Managed Care, and Neoliberalism, The Law and Political Economy Project, July 15, 2025, by Hayden Rooke-Ley
Ultimately, the private rationing of managed care and value-based payment is an abdication of governance – a failure of policymakers to wield the public authority required to equitably and efficiently administer a public health care program. A post-neoliberal health care agenda, by contrast, would contain costs through proper price administration and cutting private-sector administrative waste – the true drivers of overspending. It would directly reimburse physicians and other clinicians and nurture their professional autonomy, rather than empowering corporate executives and financiers to control them. It would use savings to make Medicare and other insurance programs more affordable for patients, and to properly pay overworked and underpaid caregivers. Now is the time to depart from the four-decade experiment with managed care and to structure financing policy to serve the interests of clinicians, patients, and their local communities.
Delays and Denials in Medicare Advantage, JAMA, June 25, 2025, by Hayden Rooke-Ley et al.
The growth of privatized Medicare is increasing the rates of prior authorizations and claim denials creating barriers to care, increasing administrative waste, and demoralizing clinicians. At the core of this problem lies a conflict of interest: the Medicare Advantage (MA) insurance companies that profit from denials are entrusted to make neutral determinations of medical necessity as they apply Medicare’s coverage rules. They do not. Unsurprisingly, MA plans serve their financial interests first.
Privatized Medicare was not supposed to work this way. MA plans are mandated by law to cover the same benefits as Traditional Medicare (TM) and follow Medicare coverage rules. However, MA insurers often refuse to follow them.
For decades, observers have raised concerns about denials in managed care, researchers proposed various solutions, and regulators have promulgated rules to clamp down on certain conduct. However, these solutions stop short of addressing the core conflict of interest. Fortunately, a solution lies in plain sight. TM uses third-party contractors, known as Medicare administrative Contractors (MACs), to implement coverage rules, engage in targeted prior authorization, and process and adjudicate claims. Although MACs are not perfect, they do have one major advantage over MA insurers: they are not biased toward denying care. MACs are paid a simple administrative fee. They are not at risk for medical costs and have no financial interest in denying services or payments. This process is efficient: CMS spends less than 2% on administrative costs, compared to 13% in MA.
Comment:
By Don McCanne, M.D. and Jim Kahn, M.D., M.P.H.
Health care in the United States is far costlier than in all other countries, and the performance of our system falls near the bottom of industrialized nations. As often discussed in HJM, we understand the functional reasons for this underperformance – grossly inefficient processes and massive financial access gaps.
In these two publications, Hayden Rooke-Ley digs deeper to explore underlying causes. He cogently critiques our neoliberal economic approach, which places blind faith in private sector mechanisms to optimize system performance. The fundamental problem is: optimize for whom? The private sector-dominated insurance system prioritizes creating wealth for investors at the cost of depriving consumers of the medical care they should have. He finds a defective nexus of managed care, value-based payments, prior authorizations, and denial of care and/or care payments.
These highly detrimental dynamics could be resolved by applying a sound policy principle: return control of decisions that affect patients to individuals who have no financial stake in the decisions. These are public guardians and their agents, interacting directly with medical providers. Remove the profit-seeking intermediaries. This would also help us end other faulty policies such as narrow provider networks and excessive patient cost-sharing should.
Hayden Rooke-Ley has also written about how to transform the provider side – i.e., how the harm from private equity could be mollified by the revitalization of public provisioning of medical resources.
Both of these papers are well worth downloading to be fully consumed. And to be used to explain to others why our system is functioning so poorly considering its high costs. They can serve as a springboard to a system that would be affordable and work well for all of us: a single payer national health program.
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