A lot of the debate about healthcare reform is coming from the consumer side: who’s going to lose coverage, who’s paying more than they can afford, who’s going to be paying more than they can afford?
Consumer-side reforms are all destined to be trade-offs because consumers themselves don’t have enough capitalist leverage to drive down healthcare costs. Partly, because the demand for healthcare isn’t optional, and partly because insurance insulates consumers from the actual costs as much as possible.
To figure out how to stop rising premiums, we need to look at the full equation:
supplies + services + overhead
= patient payments + government payments + hospital losses
To oversimplify, you could view healthcare costs as these things:
This would include prescriptions, which is one area where costs continue to rise, even relative to the production cost of the drugs. There are also issues of drug waste and over-prescribing.
Medical treatment also requires personal attention and expertise. There are guidelines for how something like a physician visit should be billed to the insurance company based on how long the doctor spent with you, how many conditions you’re being treated for, and what preventative evaluations the doctor performed.
But there’s some wiggle room when it comes to self-reporting how thoroughly the doctor examined you, and what the doctor charges for their visits. It might depend on how valuable their expertise is, or what magnitude of debt they’re struggling to pay off.
Lastly, there is a portion of the money paid into the system that insurance companies simply pocket. In part to stay afloat and keep their cash reserves large enough to weather a storm (like a threatened marketplace), and in part because they can.
That’s you! You pay into the system via premiums, deductibles, copays, and any other out-of-pocket expenses. Wages on average have not been growing very rapidly in recent years, at least not keeping pace with the average premium increases. So this source of funding is becoming less sustainable, and both parties seem to recognize that.
Medicare and Medicaid are the big ones, followed by the VA, but there are a ton of state and federal programs that fill particular niches. Plus there are the marketplace subsidies available nationwide under the ACA.
This funding also ultimately comes from you, but there are two important differences between government funding and direct patient funding.
- It doesn’t disproportionately hit the very people who are struggling with chronic conditions.
- These costs are growing at a consistent rate nationwide, not disproportionately affecting certain states and counties.
In the case of HMOs, this is hospitals paying themselves and investing in the success of their patient population. Hospitals also frequently foot the bill when the patient cannot — something that happened far more often when there were more people uninsured and lifetime caps on coverage.
Hospitals afford to add funding to the system via charitable foundations, or by increasing the prices of their services and supplies.
Stepping on the seesaw
The Affordable Care Act rebalanced this equation in a number of ways. For many people, it reduced the patient’s share by supplementing it with government funds. It also reduced hospitals’ net losses and reduced insurers’ potential take-home profits.
It also included reforms aimed at healthcare providers’ service costs. These reforms started by requiring doctors to report what they do for their patients more granularly. The ultimate goal was that once doctors across the country were in the practice of doing this, this reporting could be tied to payment and decrease costs. If the ACA is repealed at this point, it would be too soon to realize the savings of this reform.
AHCA (House Version)
This would rebalance a lot of the burden back to patients, both by increasing premiums, and by forcing millions of people off insurance entirely. Insurers would be free to take home a larger portion of the pie. The government would contribute less.
Dealing with a larger uninsured population, hospitals would end up footing more catastrophic hospital bills. Hospitals would have to raise prices to stay afloat. The AHCA would do nothing to curb the rising costs of prescriptions or physician services.
AHCA (Senate Version)
At the time of writing, there is no consistent information on what the Senate version of the bill will include, no bill text, or CBO score. But members of the group writing it have said that it will include about 80% of the bad ideas from the House version of the bill, which only 21% of the public approved of.
Bernie Sanders has a Medicare For All plan. That type of program would shift healthcare further towards reimbursement via the government. His plan includes restructuring of the tax code to ensure that no one is burdened disproportionately to their means. But as far as I can tell, there isn’t a submitted bill number or a CBO score, so we don’t have a full picture of this plan’s expected impact.
Claire McCaskill has a plan to allow people in areas underserved by the insurance market to buy from the DC exchange where federal employees buy their coverage. This wouldn’t radically rebalance the system, but it would alleviate a current problem under the ACA.
Lastly, Tammy Baldwin has cosponsored Al Franken’s bill S771, which aims to reduce prescription costs. Click through for Senator Baldwin’s summary of its provisions. Addressing the supply-side costs of the healthcare system is an important, necessary step to curb the rising costs of healthcare overall, including the burden that falls on American consumers.
Courtesy of https://medium.com/@IndivisibleMad. Nicholas Davies is a local member of, and regular contributor to, Indivisible Madison.