By Melissa Finnegan
For quite some time now
our country has debated the successes and failures of the Affordable Care Act
(ACA) and the proposed Republican replacement plan, the American Health Care
Act (AHCA). The bulk of the conversation has centered on the cost of
health insurance. Premiums are too high and unaffordable for many.
Who has access? What's covered and what do the networks look like?
Should everyone be required to have insurance?
Years ago, as a brand
new graduate student at the Humphrey School of Public Affairs, I took a class
entitled Introduction to Policy Analysis
with Dr. Sam Myers. Dr. Myers lectures in much the same way a Baptist
minister preaches. It's enthusiastic, loud, and memorable. It’s
also designed to make you focus on deeper truths. As a result of that
class, one phrase is forever burned into my brain: “What. Is. THE PROBLEM?!
In consideration of that
fundamental question, I argue that the cost of health insurance is not the main
problem we need to solve. It is a symptom of the real problem.
So what is the problem?
Healthcare costs in the United States are entirely too high and there are not
enough structures in place to address them. Steven Brill’s detailed
exposé of medical costs in Time Magazine demonstrates how wildly inflated
pricing devastates many patients and their families. Until we can get the
escalating cost of healthcare under control, health insurance premiums will
continue to go up. It won't matter if we continue with the
ACA or repeal it and adopt the AHCA; the more expensive care is, the more
insurance costs will rise to pay for it.
The misunderstanding of
the problem is so pervasive that it's even invaded Google. I entered the
search phrase "average cost of health care" and the first page of
results were all for sites addressing the cost of health insurance. Not the question I asked.
I did finally find the
information I was looking for and it doesn’t look good. According to data
from the Organisation for Economic Cooperation and Development (OECD), the
United States spends more on healthcare, per capita, than any other
industrialized nation in the world. But that spending does not translate
into our population being healthier. As shown by the OECD chart below,
the United States is a clear outlier in terms of life expectancy related to per
capita health spending.
One of the drivers of
high health care costs is pharmaceutical drugs. For example, according to
a study
conducted by the Minnesota Department of Health, approximately 20% of
healthcare spending in Minnesota in 2013 was for pharmaceuticals. Between
2009 and 2013, prescription drug spending rose 20.6%. Developments in
Minnesota are reflective of national trends; a recent federal health report found
that prescription drug prices rose 12.6% in 2014. One can only imagine
how that these prices have grown in the past few years.
But it's not just drugs
alone. As a pregnant woman, I'm especially interested in the cost of
giving birth. Luckily, I'm insured by my employer, but many people are
not. According to a Truven
Health Analytics Marketscan Study, the average payment for a vaginal birth
for someone with employer insurance is $12,520. This price includes
pharmacy fees, radiology/imaging fees, laboratory fees, professional services
fees, professional anesthesiology fees, and facility fees.
Notice I said
"average payment" and not "average cost." That's
because how much is paid by the consumer is related to the type of insurance
they carry. The payment rates are entirely different depending on if the
patient is on private insurance vs. Medicare or Medicaid. Private
insurance plans tend to pay more. This is why, for example, the CEO of
the Mayo Clinic recently admitted that, all other things being equal, Mayo will
prioritize patients with private insurance over those on public programs.
So how do we address the
real problem? How do we bring healthcare costs down to a manageable level
and, as a result, reduce the cost of health insurance? There are a
variety of options, including prioritizing public health efforts that help
prevent people from getting sick in the first place. Regulatory
structures could set rules and guidelines for pricing. Also under consideration
is movement away from a fee-for-service structure, where items are paid for on
an à la carte basis. In this model, providers make more money based on
the number of services they provide, as opposed to results and outcomes.
My ultimately point is
that we shouldn’t assume that erasing the ACA or resisting the AHCA will solve
the deeper problem of healthcare costs that the United States is currently
facing. There is no question that the health insurance market needs to be
addressed, but focusing only on that symptom
without addressing the underlying problem is essentially putting a band-aid on
an amputation.
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This post represents the opinion of the
author in her personal capacity and should not be construed as the
official position of any agency, organization, or contractor by which the
author is presently or has been previously employed.
