Divided government unlikely to deliver any real health care reforms, former Permanente CEO says

Health care was what Americans listed as their number-one concern as they cast their ballots in this month's midterms, but don't expect Congress to take any meaningful steps to reform the industry next year, former Permanente Medical Group CEO Robert Pearl said Monday.

“I’m not that optimistic,” Pearl said in an interview on Hill.TV’s morning show, "Rising."

According to Pearl, who is also a member of Stanford University's business and medical school faculties, the way America's health care system is structured should be blamed for why making major changes is so difficult.

"Too many people are making too much money. In the last quarter, the number-one sector that rose was the health industry profits," he said. "The drug companies don’t want to give up their profits, the insurance companies don’t want to give up their profits, physician specialists don’t want to give up their profits — everyone in the system, except for the patients, is doing really well today."

Increasing medical costs have spurred calls from Sen. Bernie SandersBernie SandersVolatile presidential polls spark new round of anxieties GOP memo deflects some gun questions to 'violence from the left' British Bookmaker: Warren has replaced Biden as Democratic primary favorite MORE (I-Vt.) and some Democratic elected officials for the United States to implement a "single payer" system where the federal government pays for the medical costs of all citizens.

According to Pearl, switching to a fully government-run system would not solve the fundamental issue of America's health care system,  which is that medical providers get paid based on the services they perform rather than on the health of their patients.

"I think that when you ask people about single-payer, everyone has an idea, it’s a great idea, because someone else is going to pay. It sounds really good, but when you look at the details, it’s really a price control," he said.

"When you look at Sen. Sanders as an example, his estimates of cost reduction, it assumes the government will just pay doctors and hospitals less. You know what’s going to happen? They’ll just drop out of the system and people will have a problem getting the care, getting the access."

According to Pearl, doctors who remain in the federal system are likely to increase the number of services they recommend to patients to offset lower profits from each procedure.

Because costs have increased so dramatically and profits have as well, this means that the $3.5 trillion health care industry is ripe for disruption by new businesses, Pearl argued.

"Yes it can be done but it’s not going to come out of Congress, I don’t believe," he said, referring to major improvements in patient costs and health outcomes. "It’s not going to come out of the current, what I call the legacy, players. The current people who are doing really well. It’s going to come because patients start demanding it and because someone else recognizes that we can do better and makes it happen."

— Matthew Sheffield