Despite controlling Congress and White House, the Republican Party has once again failed to repeal the Affordable Care Act (ACA). ObamaCare remains the law of the land. But will it be enforced or funded? Perhaps the time has come for the people to write a prescription for healthcare. Any healthcare-finance reforms should ensure that healthcare becomes more affordable without forcing patients to accept lower quality of care. Healthcare reform should respect our constitutional system and allow states to develop local health standards, practices and regulations, rather than imposing a one size fits all federal scheme. Outlined below are some ways these objectives could be achieved.
1. Fostering Innovation. We are witnessing an age of transformational technology. Let’s face it, that technological innovation didn’t happen in Cuba, Moscow, or Beijing. The technological innovations have been happening in places like the Silicon Valley, where inventors are incentivized to dream big because there are financial rewards at stake. Technology is the new frontier, and we should be wary of removing the financial incentives of the free market through federal regulation, as the result will not be more affordable medical care, but less innovation and progress. Any healthcare finance reform must maintain free market incentives for medical technology development. Never before have we been on the brink of so many discoveries, efficiencies and advancements as we are now. To outlaw or restrict profit-making would be to kill off this developing medical innovation
2. Medical Autonomy. Patients should demand broader choice of care options and more autonomy. The world just watched the terminally ill infant, Charlie Gard, die in the UK. His parents wanted to have the child treated in the US and had the financial means to pay for an experimental treatment. The NHS officials and UK judges denied Charlie’s parents the choice over their son’s medical care. We should resist any moves to a more centralized healthcare system that would take away the autonomy of a patient or a parent.
3. Price Transparency. Healthcare providers should be required to provide greater price transparency for the available care options. An informed consumer who understands her medical choices and the costs for a menu of services will be a savvy consumer. By informing the consumer, we foster competition in the medical marketplace. This will foster competition and impose price discipline on providers.
Consumers should understand that medical providers also make financial decisions too. Healthcare providers do not have the same profit margins on all care programs. Left to their own devices, a medical provider may recommend a procedure that may not be medically necessary if the medical provider knows he or she will be paid for that procedure.
4. Access to Healthcare. Recent GOP proposals to repeal the ACA would eliminate a mandate for all individuals to buy health insurance. Critics claim that millions of patients would lose insurance and die. To be charitable, this is hyperbole. Repealing a legal requirement to buy insurance is not the same as denying insurance coverage. It is certainly not the same as refusing medical care.
Despite the partisan rhetoric, the public wants to ensure access to healthcare. Frankly, the public doesn’t care much about the particulars of “insurance” or “healthcare finance”. They just want to know they can get adequate medical care without facing bankruptcy. And, the public at large is compassionate enough that it wants the same for other families as well.
5. Transitioning From Employer Pay to Personal Pay. Because of bad economic policy decades ago, we have created a system in which most people get their insurance through their employer. In the past, the federal government enacted wage controls. To circumvent this law, employers offered incentive packages that included medical insurance. We are still suffering from the effects of that misguided wage law now.
Because medical insurance has been tied to a job, employees stand to lose coverage if they lose a job. The COBRA laws are intended to allow a former employee to pay for coverage while between jobs, but COBRA coverage is not a good long-term plan. As more people leave the workplace, tying insurance to employment has created problems for many. This “portability” issue becomes particularly problematic if a person with a pre-existing condition (e.g., a chronic disease) temporarily loses coverage for one reason or another. He or she may have tremendous difficulty re-obtaining affordable insurance coverage for that condition.
While individual plans are available, they are often high cost, since individuals lack the bargaining power of a large employer. If more medical consumers joined in private risk pools, however, they could collectively bargain for better terms. Federal law could support collective bargaining by fostering health insurance resembling mutual companies. Mutual companies are insurance companies where the policy holders are the shareholders. Policy holders will want to ensure that necessary medical services are covered because they may find themselves in the same boat. Policyholders also seek efficiencies and cost savings since they will benefit as shareholders. If premiums are invested wisely, the investment income will be passed along to the policyholders/shareholders.
6. Medical Insurance Should Be More Like Insurance . Insurance fundamentally is a hedge against risk. If you apply for life insurance, you will be interviewed about your lifestyle choices and be required to undergo a physical exam. Healthier individuals with less risky lifestyles will pay less than unhealthy individuals who choose to take greater risks. If you apply for auto insurance, your rates go up if you have multiple accidents. Why shouldn’t medical insurance also factor in fitness and risk? The reason risk has not been a factor in health insurance premiums is that employees join employer plans under open enrollment.
One deleterious effect of eliminating risk from the insurance pricing model is that the medical consumer is not held accountable for their own behaviors. If consumers paid more for being overweight or using recreational drugs, they may choose to alter such behaviors. Ultimately, if consumers voluntarily behaved more responsibly, national healthcare costs in the aggregate would likely be reduced. So, if you have a healthy lifestyle that has lower risk of medical costs, you should pay lower premiums.
7. Healthcare, not Sick Care. Consumers need to re-imagine healthcare as wellness. By understanding medical choices and costs and reintroducing personal accountability into the insurance equation, individual consumers may start to manage their physical fitness better, rather than only seeing a doctor when they are ill. This extends not only to preventive care, but also healthier lifestyle choices in general.
8. A Two-Track System instead of Single-Payer. We live in a free society that celebrates diversity and choices. Yet, some people are pushing the concept of a single payer for healthcare. In other words, the federal government would pay for all medical care. Private pay and medical insurance would be illegal.
A single-payer system would look a little like the current Veterans Affairs (VA) healthcare system. The government would pay the hospital for the medical expenditures. The patient would have limited choices and certainly not have the highest care available. Innovation would slow to a glacial pace. Patients promised care would have long lines and wait times. If the VA hospitals are any indicator, those wait times could be deadly. As the government imposes a one-size-fits-all medical system, medical autonomy would disappear because the available choices for care would necessarily be restricted. We should expand consumers’ choices rather than eliminate them.
There is no reason that a free market in healthcare couldn’t live side by side with an expanded federal payer system. There is no consensus for a healthcare solution. Allowing the free market and government systems to function side by side, we give more people what they want.