When I was planning this blog post a few weeks ago, the Affordable Care Act (A.C.A.) was in the headlines. At the time, it was being proposed to repeal and replace it, later followed by repeal, and followed by that with creating legislation that would cause it to fail. Since before its inception, the A.C.A. has been on the political chopping block.
The politics started when the A.C.A. was nicknamed, “Obamacare”. So, anyone caught supporting it would automatically be associated with (former) President Obama. Thus, any “fixing” would also be seen as also supporting Democrats. So, the very first thing I would fix about the A.C.A. is to re-brand it. By calling it something totally different and ensuring that the new name is not linked to either party will keep it from being a political issue. Don’t kill it, because there are some good things about the A.C.A. (like the pre-existing conditions clause) that should not be stopped. Even better, have a contest to determine the new name. Let the public decide. “Obamacare” is dead and from its ashes rises…to be determined.
Despite the name change, the biggest issue of the A.C.A. is the “affordable” part. Most of the complaints I hear about the A.C.A. is the cost of insurance, such as that it is too high. Part of the agreement with the insurance companies was that requiring everyone to purchase insurance would drive down the cost. The idea was that having people pay for insurance that rarely use it would off-set the cost of people who use the insurance on a regular basis. But, there was not as much of a “reduction” as there was a slower cost increase.
Reducing costs of insurance is a very complex issue. We can’t simply tell the insurance companies to not charge as much. They are still companies and that would make them loose money or even go out of business. Which would lead to loss of jobs and deter anyone from ever going into business as an insurance company. I was pondering this part a few weeks ago when I caught the episode of Adam Ruins Everything, called, “Adam Ruins The Hospital”.
For those not able watch the episode, Adam points out how the costs of medical care in the U.S. was once a fraction of what it is now. Furthermore, the U.S. pays anywhere from 30-60% more for equipment or procedure than other developed countries. Of course, this is so the hospital can make a profit. But, anyone who has worked for or been to a hospital may notice, they are not making very much of a profit. So, why are they charging so much of a mark-up?
This is where I tell you about a document called, “The Chargemaster“. Other than California and Maryland, this is a document that the public does not get to see. It lists how much everything costs for that hospital. And, it breaks down the cost by how the patient is paying, be it cash or insurance. It is also where we see that prices are inflated in order to give discounts to patients with certain insurance companies. You see, by making a hospital “in-network”, insurance companies cause patients to choose one provider over another. And thus, they want a discount for doing that. Logically, in order to give that discount and still make enough profit to stay in business, hospitals inflate their prices.
The first thing I would do to reduce costs is to eliminate “in-network” and “out-of-network” coverage for insurance. The second item I would do is make hospitals have fixed rates for both insured and not-insured patients. This would stop the discount mark-ups. The third item would be to require hospitals to post their prices on-line, like California does. This would cause competition, which would also reduce costs.
Just like with the insurance companies, I don’t want hospitals to loose profits, so in my next post, I will explorer how to they can reduce costs.