I’ve been meaning to write a post about how all of the health policy ideas Republicans have proposed are terrible, but it looks like someone beat me to the punch.
Republicans are ready to cherry-pick from a Rolodex of bad ideas, ones that promise a race to the bottom for consumer protection and higher costs for people who need health insurance the most.
Jason Silverstein, VICE
When people are uninsured or underinsured, they often end up with medical bills they cannot pay. Bad medical debt is a serious problem, not just for the patients (who are often driven into bankruptcy) but also for the health care providers.
Just how serious?
Hospitals and providers, historically, received 90% of the reimbursement from insurers, according to The Advisory Board. The patient portion was more of an afterthought.
That dynamic is shifting as more people come under high deductible health plans. The ratio could settle around 70-30 — with patients paying nearly a third of their bills, said Ken Kubisty, senior vice president at Advisory Board Consulting and Management.
For every patient dollar being billed, hospitals have historically failed to collect 65 cents.
So, medical providers have to make up the income from this uncompensated care somehow. But how? By demanding higher and higher fees from private health insurers in order to remain in network. This increases claim costs to insurers, which they try to offset by increasing patient cost sharing (higher and higher deductibles, etc.), which leads to even more uncompensated care.
It’s a vicious cycle that no one seems particularly willing or able to break because it requires long-range thinking. Employers and individual insurance purchasers want to minimize premiums this year. Health insurers want to minimize claim costs this year and minimize premiums in order to satisfy employers this year. Hospitals and medical practitioners need to make up for last year’s uncompensated care this year. Even politicians want to get elected this year.
Is it surprising that health care in this country costs so much?
The key thing in a health savings account is you actually put a patient in charge of his or her decisions, which we think is a vital aspect of making sure the health care system is not only modern but a health care system in which costs are not running out of control. When you go buy a car, you know, you’re able to shop and compare. And yet in health care that’s just not happening in America today.
President George W. Bush, February 16, 2006
In 2003, President Bush signed the Medicare Prescription Drug, Improvement, and Modernization Act into law. Along with the many provisions of the law directly related to Medicare (most notably the creation of the Medicare Part D prescription drug program), the law also affected people using private health insurance by creating new rules for health savings accounts and high-deductible health plans.
Without going into all of the ins and outs of how health savings accounts work, the promise behind them was to make health insurance behave more like other forms of insurance — that is, for major costs only as reflected by a high deductible. The ordinary medical expenses would be funded through a tax-deductible savings account that rolled over from year to year. This would supposedly create more rational markets and price transparency for routine health services.
Employers jumped at these new high-deductible health plans because they were relatively inexpensive to provide for their employees.
In 2012, in order for a health plan to qualify as a high-deductible health plan (and thus be eligible for the tax benefits of a health savings account), individual coverage required a deductible of at least $1,200 and an out-of-pocket limit of no more than $6,050. Family coverage required a deductible of at least $2,400 and an out-of-pocket limit of no more than $12,100. HDHPs could and did often have deductible amounts considerably higher than the minimum.
Employers funded employees’ health savings accounts with varying degrees of richness, if at all. Individuals bought many of these health plans as well but were inconsistent about funding their health savings accounts.
More than half (55%) of all accounts received personal contributions during 2012 and 44 percent of the accounts received employer contributions. Of those accounts, the average personal contribution was $2,337 and the average contribution from employers was $1,142.
America’s Health Insurance Plans and American Bankers Association. “An Analysis of Health Savings Account Balances, Contributions, and Withdrawals in 2012.” Produced July 2014.
Obviously with less than half of HSAs receiving any employer contribution, just over half receiving any personal contribution, and those contributions typically being less than the deductible amount, these high deductibles became barriers to accessing health care services for many people. Even emergency services, especially for men. None of this should have been a surprise.
But then a funny thing happened. With such high deductibles, patients became more and more cognizant of when they were met and when they rolled over. If an expensive non-emergency medical procedure covered by health insurance could be postponed until the end of the calendar year when the deductible was closer to being met (or fully met), those procedures were postponed. But those procedures weren’t eliminated — they just piled up in December when it made the most financial sense for the patients given the rules of their health insurance plans.
As the growth of the high-deductible insurance plans comes into play, we see more seasonality in elective surgery. People with high deductible plans want to have less done at the beginning of the year.
Dr. Peter Knapp, urologist, quoted in The Indianapolis Star
And those end-of-year appointments start filling up months in advance. In other words, there are those much-maligned “waiting lists” driven not by the government officially rationing care, but by patients, employers and health insurance companies.
We still have health care rationing in the United States, but it’s based on price, income and arbitrary benefit periods instead of clinical concerns. Even in the new world of the Patient Protection and Affordable Care Act, many of these issues remain.
