Health Care Reform and You

WILL I PAY LESS? Two factors could help drive down the premiums for those who are insured. In the short-term, if reform manages to cover most of the uninsured, that should greatly reduce the amount of charity care delivered by hospitals and eliminate the need for the hospitals to shift such costs to patients who have private insurance. One oft-cited study estimates that cost-shifting to cover care for the uninsured adds about $1,000 to a family’s annual insurance premiums; other experts think it may be a few hundred dollars. In theory, eliminating most charity care should help hold down or even reduce the premiums charged for private insurance. When, if ever, that might happen is unclear. In the long run, if reform efforts slow the growth of health care costs, then the increase in insurance costs should ease as well. And if the new health insurance exchanges — and possibly a new public plan — inject more competition into markets that are often dominated by one or two big private insurance companies, that, too, could help bring down premiums. But these are big question marks, and the effects seem distant.

This is actually the big question. Under Obama’s reformations, will you pay less for health insurance than what you can purchase it today? It does not seem likely for the following reasons:

  1. Mandated coverage for an agreed upon set of basic visits and preventive measures. This injects insurance companies into, by law, mandating that your insurance company pays for the equivalent of oil changes. If your auto insurance was required to cover routine maintenance, your premiums would go up.
  2. Community ratings. The feds would mandate that insurance companies cannot deny anyone for age or pre-existing conditions. There are a few states in the country with this state regulation. One of them is NY. NY has one of the highest average premium rates in the country. See this report for the average costs. But those states with mandated coverage for basic visits and community ratings have the highest cost.
  3. Health insurance premiums have doubled in the last 8 years. They are going to rise even higher in the next 8 years. This means that in 2017, the average premium will consume about 40% of your pre-tax income (shared between you and your employer, but the trend is to dump the majority of these costs off on you).

These reforms mandate insurance with premiums that will not decrease and will cost you double what you’re paying today 8 years from now. The least expensive plans will cost significantly more in your state due to the community ratings and mandated basic visits and preventive services. These reformations essentially outlaw high deductible plans as we know them today. Combined with the fact that only 5% of doctors are choosing primary care means that in just a few years, our physician workforce will be about 85% specialists rather than primary care doctors. You won’t be able to find a primary care doctor that’s taking new patients. So all care will be delivered by specialists who command higher prices for basic visits, therefore, your premiums will increase even further.

The reformations include a few billion dollars for pilot projects exploring ways to rein in doctors’ orders. Meanwhile we’ll all be mandated to purchase healthcare that costs twice as much as it should because the federal government cannot control our physician’s culture of practicing quantity medicine. These reformations also place more regulation on the practice of medicine making the lives of physicians even more of a headache. I think you’ll see doctors dropping out of these plans at record rates and becoming even more siloed as more and more docs become independent practitioners writing on paper.

I absolutely hate being so negative. I do have hope. But I don’t have hope that these reformation are anywhere near the direction we should go.

My suggestion is to invest hundreds of billions of dollars in startup companies that are designed from the ground up in totally new ways to deliver healthcare as a carefully constructed, Toyota-lean efficient process for half as much and twice the quality using doctors, mid-level practitioners, and technology to deliver healthcare and measure its results. The federal government needs to give these startups the freedom to fail or to wildly succeed. And these programs cannot be started by the established players. They must be large initiatives with large groups of doctors and patients delivering and receiving healthcare in a measurable environment.

Health Care Reform and You