Newtown, CT – September 20, 2013
As the central component of the ACA launches in a few days, it’s important to review the macro changes to US health care – Over the next three months several million uninsured and underinsured will finally have access to more affordable coverage. Yes the picture is mixed, and yes some will underestimate the potential out-of-pocket expenses they’ll have to incur, but for the first time ordinary residents who have been denied what is a basic right in any other industrial nation, will finally have it. Beyond the societal benefits of this change, there are other very important ones that are all in play. (1) The exchanges bring competition to markets in which there has been little, if any. That competition should engage health plans in finding new ways to control health care costs. (2) That’s especially true given the limits on medical loss ratios. Without that limit it’s not really clear whether insurance exchange competition would work as well to spur payers and providers to find ways to control the increase in costs of care. (3) The introduction of several budget-based payment models by Medicare, followed quickly by private sector payers, has shifted even further the momentum from the fee-for-service status quo. (4) The increase in Medicaid rolls to comply with the goal of near-universal coverage has kicked off some far more interesting and diverse innovation at the State level to reform payment and drive better performance from health care organizations. Given these four significant pressure points on US health care, it’s pretty clear that the movement to restructure the industry is here to stay.
What this means to you – The recently released US Census Report on Income, Poverty and Health insurance Coverage is sobering to say the least. These data show pretty conclusively how a generation has become poorer. And while there are many causes, the phenomenal rise in health care costs during the study period is certainly a major culprit. Witness the rise in uninsurance rates for families with household income between $50K and $75K. The mere fact it went up at a period of time when (at least for the first half of the first decade of this century) GDP was rising and the economy was stable is more than telling. And look at the jump in total out-of-pocket expenses that came at the expense of many other discretionary expenses. Were these health cost increases inexorable? A synthesis of recommendations by organizations of various political stripes suggests it wasn't. Strikingly, the recommendations are very similar, and even more strikingly they keep being ignored. Of course, very few, if any of us are counting on the Congress to do much of anything of substance apart from engineering and then watching train wrecks. However, many of the recommendations could be implemented by Medicare and private payers without legislation, and the big question from all of us should be: What are you waiting for? The macro changes listed above will continue to exert the right type of pressure on the system, but if we want the next generation of Americans to be better off than this one, we need to more rapidly adopt consensus recommendations, not sit on them.