Tag Archives: Insurance exchanges
I like the state health insurance exchange concept. It offers a necessary corrective to our failed employer/government-dominated group insurance system by giving American consumers the direct power to hold their insurers’ feet to the fire to deliver value. Letting exchanges operate at the state level also allows 50 different experiments to discover what works best, something we’re already beginning to learn from Utah’s promising marketplace and Massachusetts’ deeply troubled one.
The problem is that the Affordable Care Act’s version of insurance exchanges is to this consumer-market ideal what Victor Frankenstein’s creation was to humanity—a good idea gone so very wrong. But unlike the good doctor’s bad doppelganger, ACA is reparable. The fix requires major surgery to excise the Abbie Normal parts of ACA’s monster, replacing them with features that enable consumer purchasing power to transform health care into just another, normally affordable necessity of modern life.
Here are the essentials for fixing the exchanges:
THE RISE OF LOCAL, HIGH-VALUE HEALTH PLANS
Despite its deep flaws, the new health reform law, ACA, has three aspects that make me optimistic about medical entrepreneurs being able to surmount the law’s barriers and create a consumer-dominated, market-based system of medical care and health insurance that will ultimately deliver high-quality, affordable medical care to everyone:
1. The creation of consumer value
2. The rise of high-value local health plans
3. The achievement of effective disease prevention
In Part 2, I discussed the creation of consumer-value as a result of ACA eventually forcing most people to pay for their own, normally consumed medical services in lieu of their insurers. In this third of five installments, I address the promise of local health plans sponsored by high-value medical providers.
Part 1: Even a Blind Pig Finds an Occasional Truffle
I’ve made no secret of my disdain for the Patient Protection and Affordable Care Act (ACA), the new health reform law. It is a bad bill that focuses the wrong “solutions” on the wrong problems and promises to visit unnecessary economic distress and destruction on America’s providers, consumers, taxpayers, and insurers. Even the IRS is protesting.
Yet, rather than continue to bash it, I’ve taken my summer hiatus from writing this blog to focus on a more constructive approach. The law is a fact we have to deal with, and despite a lot of talk about a subsequent Congress overturning it, I’ve concluded such an action to be both unlikely and unwise. The opposition has nothing better on the table and the ACA situation is actually far from hopeless. The focus needs to be on repairing, not revoking it.
MEDICAID, MEDICARE, AND THE INSURANCE EXCHANGES
The new health reform law’s central message to America’s hospitals is a classic good news/bad news story. First, the good news. Hospital exposure to 46 million uninsured Americans showing up in their ERs is about to drop by two-thirds over the next several years. Medicaid alone is predicted to take on 15 million of them, as the states—with temporarily enhanced federal assistance—expand eligibility to cover all non-seniors who fall below 133 percent of the federal poverty level ($24,350 for a family of three). And assuming the individual insurance mandate survives likely court challenges, another 17 million uninsured will be required to buy subsidized private health insurance through new state health insurance exchanges beginning in 2014. This adds up to 32 million people who hospitals will no longer have to treat for free under the federal EMTALA law and their own charity-care policies.
We know that more than half of all medical cost is wasted, adding no value to the patient. We also know that the total costs of medical provider billing, collection, and payment consume as much as 30% of every health care dollar—about ten times the transaction costs in every other industry. If medical care were as efficient as, say, our economy’s food sector, it would provide higher quality for a third of today’s $2.6 trillion cost and free up $1.7 trillion every year for higher wages, lower federal deficits, and a major boost in job-creating private-sector investment.
Moreover, 75% of all medical spending now goes to treat preventable chronic diseases. If we could figure out how to get people to stop eating, drinking, and smoking themselves to death, and cut out the wasteful spending, our total medical bill would plummet to only 10-20% of today’s level.