Let’s start with a very simplistic example of a market-driven exchange between buyers and a seller.
A store has a product on its shelves. If the product is desirable to customers they will buy it, up until the price outstrips the attractiveness, or it becomes out of their reach, (regardless of how much the shoppers want it). If this happens frequently enough, the store owner will tweak the price down or will alter the product to address both its demand and its pricing. Ultimately market forces bring the product to the sweet spot where the customers will buy it, while the seller has maximized the amount of profit in the transaction.
Now lay that framework over a traditional encounter between a patient and a doctor. The consumer (the patient) is in his doctor’s office with a painful knee. His orthopedic surgeon examines his knee, conducts screening tests, and explains there are a couple of treatment options ranging from a menu of low impact exercise, rest, and heat packs all the way through to full knee replacement. Considering the pros and cons of all the options, and with his doctor’s recommendation, the patient decides to go forward with surgery.
Unlike the market example above, the patient’s choice is not dictated by cost. The party paying for the surgery is not even in the room.
In this transaction, the payer- whether a private insurance company, a self-insured employer, or the Government (Medicare, Medicaid, CHIPs or another Federal program) is far removed from the moment of decision making, and is not even consulted.
When cost is not part of the decision-making process, it cannot be a market-driven encounter.
Under our traditional medical model, with little accountability in the exam room and little redress for the payers, medical costs skyrocketed during the last half of the last century.
Three decades ago insurers started pushing back. With the evolution of “Managed Care” in the early 90s preauthorization became the norm. Insurance companies demanded (through contracts) to be included in the decision-making process to a greater extent than they had been previously.
And Americans (and their doctors) hated it. The public was aghast that choices they made about their health were denied; physicians bemoaned the loss of physician autonomy and independent professional decision making.
And as a culture, we haven’t gotten over that change in all these years.
But even so, health care costs continued to rise and insurance companies (and the Government) were paying the price.
So, while preauthorization became common in the 90’s, insurance companies experimented with another way to bring accountability for cost into individual exam room conversations. Have the patient feel the economic burden of his own choices; give him a policy with a high-deductible!
Although the method worked and became increasingly popular with employer-based insurance over the years (because these policies also have lower premiums), it was a difficult sell to the open market.
Then along came The Affordable Care Act and the Obamacare marketplaces (“Exchanges”).
Insurance companies entering the Exchanges knew that they would be insuring many more people, some with higher risks than traditional underwriting would allow. They also were required to offer a larger slate of care options (“Minimal Essential Benefits”) and had to keep their costs down to remain competitive and meet the ACA rules and expectations.
But Lo! High-deductible plans were waiting in the insurance industry wings as a perfect solution.
Neither created nor mandated by the law, high-deductible insurance policies still became synonymous with Obamacare in the public’s mind.
Americans did, in fact, feel the pain of those high-deductible plans as they met the health care needs of themselves and their families. For many that pain was more than discomfort- obtaining health care became a new financial burden. And the public got angry. And they voted last November.
This past week the GOP-controlled Congress announced its first stage to “Repeal and Replace” Obamacare with the unveiling of “The American Health Care Act” [AHCA]. A large segment of the population- the anti-Obamacare voters- are applauding.
What most Americans don’t know is there isn’t anything in the AHCA that will stop the insurance industry from using the tool that they know works best to control costs. The AHCA will not in any way get rid of high-deductible insurance policies. The AHCA doesn’t even mention high-deductible plans.
In all fairness to the GOP, it is almost impossible for Congress to dictate business practices to private industry to that extent. Does the American public know that?
There are many reasons people voted to get rid of Obamacare, but hating high-deductible plans was on the top of many voters’ lists.
Americans are now being lulled to peacefulness by vague, rosy promises of a return to “Life-As-It-Was-Before“- to the time when medical decisions were made in the privacy of the exam room- to an era when health care was easy to access and not a financial burden.
Their dreamy visions will be dashed when high-deductible policies don’t go away- and they won’t.
That is the reality of achieving true “Market-Driven” health care.
Want to Know More?
The following are helpful resources on the GOP proposed Bill and the current discussion about the grading of the bill by the Congressional Budget Office [CBO]:
Resources on the AHCA:
- A full copy of the American Health Care Act can be downloaded here.
- A Summary of the AHCA, including its purpose, goals, benefits and frequently asked questions (FAQs) is available on that same website
Resources about the Congressional Budget Office [CBO]