There is truly no way to “fix” healthcare to satisfy everyone. The issue invariably becomes a political football and common sense gets lost as politicians spend most of their efforts preaching to their voting base rather than offering the necessary hard fixes. In reality, there are only two types of people that like Obamacare, those that are covered by Obamacare and are receiving generous subsidies and cost sharing, and those that are not covered by Obamacare at all. The rest of us, who are forced to sign up, pay full price or be fined, have seen skyrocketing premiums and out of pocket limits that might be triple what they used to be. I’ve heard a lot of political bantering in the repeal and replace debate about those that will lose their healthcare if the plug is pulled on Obamacare . When Obamacare was first passed, I lost my healthcare. Twice! I didn’t lose access to healthcare though. When/if Obamacare is repealed there will be those that lose their healthcare, but they should not lose access to a new plan.
But if we could take politics out of the discussion to “fix” healthcare, here are the top 5 things that need to happen:
- Price Transparency
The cost of insurance does not drive the cost of healthcare, it’s the other way around. Politicians are consumed with the concept of making insurance affordable. But insurance would be more affordable if the cost of healthcare was lower. The consumer of healthcare, us, has to make decisions based on real competition among providers (doctors, hospitals, etc.). What other product do we purchase where we do not know and can’t really even ask the price before we buy it? When was the last time you picked out a new car, drove it home and then waited for the bill to come in the mail to see how much you spent? Never, right? No one would do that with any purchase. But that’s what we do with healthcare when there is a third party payer.
Ask someone whose been taking a prescription on a monthly basis for years, “By the way, how much is the total cost of your medication?” “I don’t know,” will be the usual response, “my copay is $10, I don’t know how much the insurance company pays.”
I propose that every provider of healthcare including pharmacies should be required to present a menu of all services with exact prices, viewable by the general public. These would be prices that are not controlled by insurance company networks. With this level of transparency, you will be able to make true consumer based decisions on where to receive your care.
In addition, a complete review should be conducted of what drugs are not sold over the counter. Should we really need a prescription for antibiotics? If more prescriptions were sold on supermarket shelves, the prices would plummet.
- Insurance Companies should be able to design any type of plan and underwrite the applications
Do you think you should be able to wreck your car, call a car insurance company, buy insurance, and then say, “By the way, I need immediate repairs on my car?” Most people would think that’s ridiculous. But how is that different from allowing someone to purchase health insurance who has pre-existing conditions, with the requirement that the insurance company cover those pre-existing conditions immediately? Other than the fact that we’re talking about one’s life instead of a replaceable object like an automobile, there’s really not much difference. In 2010, before Obamacare, in my state of Tennessee, a 40 year old husband and wife with two kids could buy a major medical plan with a $5000 deductible for $262 per month. Today in 2017, a plan with a $6500 deductible for that family is $948 per month. That’s a difference of $8000 in premium and $1500 in out of pocket costs. You hear that 80% of those that apply on the exchange qualify for a subsidy which would lower the $948 premium. But 100% of those that apply off the exchange do not qualify for a subsidy. Those are the people I deal with most. Subsidy or not, the underlying cost continues to rise. Someone is paying it.
You hear a lot of talk about insurance across state lines. I’m not opposed to it, but this alone will do nothing to lower costs. If Blue Cross Blue Shield loses $300 million in TN in 2016, how are companies from other states going to sell in Tennessee with the same government designed policies for less, at a profit? They will not.
We must allow insurance companies to design the health insurance plans they offer for sale, let the consumer choose if they want to buy it and permit the insurance companies to underwrite the application. Only then could we have true competition between companies. The only government requirement I would impose is the policies must be guaranteed renewable, and one’s renewal rate could not be singled out and increased based on claims. Renewal rates must be by block of business.
- Healthcare.gov could survive with a Government Option for those with a Pre-Existing Condition.
Most people get their health insurance from an employer group plan and pre-existing conditions are covered with continuous coverage. Those without access to an employer plan with a pre-existing condition must be afforded access to coverage. As long as they maintain continuous coverage, pre-existing conditions should be fully covered. However, their risk pool must be separate from those that purchase underwritten policies. Could we get rid of Medicaid as an insurance plan for the lowest of income levels, and have a government option with private supplement plans on the exchange? Something similar to Medicare? Why not, but it must not be free. Everyone should have some skin in the game. The government option could be Medicare like, but it should have premiums that reflect the fact that this is a high risk pool. Probably two or three times as much as an underwritten plan. Why shouldn’t those with pre-existing conditions who will be consuming more healthcare services, pay more? They should. We could also require states to set up separate high risk pools, as many did pre-Obamacare, but from a practical sense, leaving pre-existing conditions up to each individual state, would never fly in today’s highly partisan atmosphere.
I have a daughter who was born with Cerebral Palsy. Her entire life, she has not been eligible for any individual plan in Tennessee (pre-Obamacare) due to her pre-existing condition. Since she was born to today at age 18, there has not been one day that has passed where she was without coverage. She always had access to coverage and we never let it lapse.
There are certainly some in our society that need subsidized care, but I contend the number is much smaller than the 80% that receive subsidies on healthcare.gov. For those truly unable to pay for the government option, subsidies should be designed, but they should take no one to zero premium except those that are mentally ill or physically unable to work. Remember, everyone must pay.
Insurance companies that underwrite policies will try and dump anyone with a slight pre-existing condition on the government option. This would need to be addressed.
- Americans Need to accept the Fact the Healthcare Costs Money and they have to pay for it
On occasion, my wife will go to a nail salon and get a full treatment of whatever it is they do there. It makes her happy and she can easily spend over $100 in the process. Now, if she takes our 15 year old son to the doctor because he’s not feeling well and they send us a $100 bill, she views this as a nuisance charge that we should not really have to pay. “The insurance company should pay it,” is her default position. We have to get in the consumer mindset when it comes to healthcare. We must accept the fact that medical bills should be no different than food or transportation expenses. Most of us don’t walk into a supermarket and somehow think the food we need to survive should be paid for by a third party. Is healthcare a right or privilege? My only position is that since it’s not free, we all should expect to pay for our care in the form of insurance premiums and deductibles. If we approach healthcare as a commodity and turn doctors, hospitals and pharmacies into sellers of their services, we will see lower prices.
The idea that anyone can walk into an emergency room, receive care and then claim they cannot pay needs to stop. If treatment is given, and it should be in an emergency situation, the bill must be due. The IRS never writes off their bills, neither should hospitals that treat those that have no insurance and no intention of ever paying. We all end up with higher costs in the form of rising premiums and medical charges. Now remember, we’re talking about a hospital that discloses its prices up front, so we should be able to get away from an emergency visit where the hospital sends outrageous bills with no relation to reality to those without insurance coverage.
- Everyone must have a deductible and access to a Health Savings Account
Everyone should have the option to open a Health Savings Account to pay their healthcare expenses pre-tax. Health Savings Accounts (HSA) are a very powerful tool to put the American consumer in charge of their health care spending. I believe everyone must have a stake in the healthcare dollars they spend. I would propose that no one could have a deductible less than $1000 (not many do any more) and there should be no doctor copays before the deductible. If everyone pays the first $1000, or $5000 if your deductible is higher, and providers are required to disclose price, we would have nothing short of a complete transformation on how healthcare services are priced, delivered and consumed.
Call us at 615-376-8899 for information on group or individual health insurance.
Rick Dixon, Dixon Advisory Group