Is it time to consider a new approach to healthcare?
The first real information we’ve had regarding the costs and efficiencies of the Affordable Care Act (ACA, or Obamacare as many people refer to it) are in, and the patient is pretty sick. According to a study released by the Centers for Medicare and Medicaid Services, healthcare spending increased 5.3% in 2014. That’s the first full year under the ACA.
A recent New York Times article looked at individual health insurance plans in California, and found that the average deductible for an ACA plan averages around $3100 for an individual and $6500 for family. The article also said that premiums for these policies are going up, and called plans “all but useless” because of it.
Is it time for a paradigm shift? Are the mandates of the Affordable Care Act that insurance cover more procedures, and that everyone must have health insurance or pay a penalty when they pay their taxes the biggest part of the problem?
As long as insurers can continue to raise premiums, they have no real incentive to negotiate lower reimbursement rates with providers. When you use your health insurance to pay for procedures, it’s like you’re spending someone else’s money it’s an illusion, because clearly you’ve paid premiums and met your deductible but as long as the illusion exists, you have no incentive to shop around for the best prices.
As long as the ACA forces Americans to buy health insurance, and as long as it mandates that the only insurance policies that can be sold cover routine costs, then it will fail at its stated primary stated goal of containing healthcare costs. It simply brings higher healthcare spending to consumers.
If you consider the example of LASIX vision correction surgery, you can get an idea of how costs of procedures in areas where insurance is not the primary form of payment have gone down. The vast majority of medical insurance policies don’t cover LASIX. Some vision policies offer a discount on this procedure, but most of the time people pay for this surgery out of their own pockets. The result? Costs have gone down, and quality has gone up. It used to cost several thousand dollars to have LASIX surgery, and now you can have it done for less than a thousand.
It’s time to look more closely at this example. Patients are spending their own money for LASIX, so they look for facilities that offer low cost combined with high quality. Doctors who perform the surgery don’t bill insurance, so there’s less paperwork and no one in the middle.
Health insurance has traditionally covered the big expenses hospitalization, surgery, etc. and left the smaller and more routine procedures to be paid by the insured. The ACA has changed all of that, and because of it the cost of health insurance will continue to rise. In my opinion, it’s time to consider a new paradigm.
Wiley Long is President of HSA for America, and a passionate advocate for consumer-based solutions that will improve price transparency and lower health insurance and medical costs for people purchasing individual and family health insurance plans.