Lessons the healthcare industry can learn from the airline industry


Over the past several months, it has been hard to look away from the public relations nightmares plaguing the nation’s largest airlines. First was United Airline’s bloody removal of a paid passenger from his seat because United had overbooked the flight, and the unexplained death of a giant rabbit while in their care. 

Then came video of an altercation between a passenger and an American Airlines flight attendant, after the attendant had grabbed a stroller away from a sobbing mother holding a 15-month old child. And, finally, a family of four was threatened with jail time on a Delta flight after trying to use a seat they purchased for their older son for their younger son instead.

For the health insurance industry, there is comfort in having public opinion and Congressional scrutiny currently focused elsewhere. 

 

The reprieve, however, is only temporary. That’s because the funding needed for President Trump’s marquee initiatives — from tax reform, to new infrastructure, and even the border wall — is currently tied up in healthcare. 

Despite many Republicans campaigning on the need to repeal and replace ObamaCare, without an agreement on just how to do so, offsets for tax cuts and revenue for new spending will continue to be consumed by escalating healthcare costs.  

Unfortunately, Congress’ current efforts to fix healthcare are about as likely to succeed as this month’s airline hearings are likely to result in a new golden era of air travel.

That’s because what is currently happening to ObamaCare has happened before and, last time, it happened to the airline industry. One need not look further than this past month’s news headlines to know how well that worked out for the airlines.

Air travel used to be heavily regulated. The federal government gave airlines profitable routes in exchange for serving unprofitable ones. In doing so, passengers flying from Boston to Washington D.C. subsidized passengers flying from St. Louis to Omaha, to ensure that all passengers had access to the same level of service.

But, air travel was expensive. Fares were about double what they are today on a per-mile basis, which limited who could afford to fly. Congress then sought to deregulate the airlines to provide more choice and lower fares.

We are now seeing the final outcomes of this deregulation. Fares are rock-bottom. But, only four U.S. carriers have survived the airline hunger games long enough to provide those low fares through cut-throat competition. Service has been cut to the bone and customer care has devolved into, literally, the airlines punching their own customers in the nose. 

This is similar to where we were with health insurance 10 years ago. As competition to lower prices tightened over the decades, customer service and coverage became notoriously bad. The government intervened and ObamaCare is, essentially, airline deregulation in reverse.

ObamaCare requires health insurers to provide full coverage to everybody. Predictably, this is driving up costs, which leaves fewer people able to afford it. The government must then step in to help those individuals obtain coverage, either with marketplace subsidies or through Medicaid. This cycle repeats. More and more government funding is required as costs continue to rise. Without that funding, the market will enter a death spiral and collapse.

This is the fundamental flaw of the current healthcare debates; Congress seeks to have it both ways. Both ObamaCare and the House GOP’s legislative proposal to replace it seek to achieve the low prices and choice of a deregulated market, with the service levels and coverage of a regulated one. What lawmakers must realize is that this didn’t work for air travel, and it won’t work in healthcare, either.

As we saw with the first attempt at repeal and replace legislation, Congress is unlikely to make a choice. A resolution, or not, will fall to the Trump Administration. The President will need to decide whether he is willing sacrifice his policy initiatives in order to find additional funding for healthcare.

Happily for President Trump, a lasting solution is somewhere in the middle. Somewhere in between bygone luxury and getting punched in the nose, is an air travel experience, at an affordable price, that most Americans would accept. The same is true for health insurance. Somewhere in between ObamaCare’s mandatory excesses, and people dying for lack of coverage, is a healthcare solution that will offer affordable coverage, for most Americans. 

The sooner policymakers can agree on that middle solution, the sooner the President can turn his attention, and the country’s resources, to other priorities. Until then, ObamaCare will continue to be where the money is, and customers will continue to pay the price.

Rory E. Riley-Topping has dedicated her career to ensuring accountability at the U.S. Department of Veterans Affairs. Richard Topping is the CEO of Cardinal Innovations Healthcare. Find them on Twitter: @RileyTopping and @Rich_Topping.


 

The views expressed by contributors are their own and are not the views of The Hill.

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Lessons the healthcare industry can learn from the airline industry

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