We’ve spent the last decade seriously debating healthcare reform in this country. But somehow, even after a decade of debate, we are still treating the symptoms and not the disease, like a doctor treating lung cancer as a bad cough.
Beneath all the chatter about insurance markets, premiums, coverage, and copays is a simple truth: extending the line that separates life and death is a costly venture. The main reason why we spend so much on health insurance is that healthcare costs so much.
The supply and demand curves of care are out of whack. In 2016, according to the Cato Institute, health expenditures topped $10,000 per individual. The average family healthcare plan costs over $18,000 per year. In fact, over 18 percent of the entire national economy is comprised of the health care sector.
Congress’ approach to healthcare reform has predominantly focused on how many individuals we can cover and how to make premiums more affordable. And to be sure, we need to get the health insurance market right. I supported the American Health Care Act, which I believe is the first step in making our insurance market more affordable and ensuring that more Americans have access to care. But policy makers need to dive deeper than just coverage numbers and premium costs, finding ways to actually drive down the cost of care.
Government can’t easily address the demand side of healthcare.
Of course, we should encourage insurers and employers to incentivize healthier lifestyles that can help decrease demand. Some employers have adopted effective strategies that have dramatically reduced doctor visits, sick days, and costs associated with lost productivity.
But we can’t just tell people not to be sick. That’s why we need to refocus our energy on building the supply-side of healthcare.
To do this, we first need to repeal the Affordable Care Act. The ACA drove up regulatory and provision of care costs on small physician-owned clinics and caused many clinics to sell out to hospitals, which typically have higher-priced care. Additionally, Medicaid expansion created a new paradigm where more individuals gained coverage, but doctors are reimbursed less for care provided under Medicaid. Because Medicaid reimburses at significantly lower rates than private insurance, doctors have to charge the rest of the market more in order to cover their costs.
We should repeal and replace the ACA, then find ways to supply care more efficiently. Here again, we don’t want the government mandating prices and procedures.
But government can play a role on the supply-side, by setting up an environment that promotes a functional market with competition and transparency.
According to the Cato Institute, up to 80 percent of healthcare spending is either directly or indirectly controlled by the government. The government, largely through Medicare and Medicaid, is one very big, very influential customer of healthcare. And as the adage says, the customer is always right.
The government then, as a customer, can focus on several items.
We need healthcare providers to offer more transparency in pricing, allowing consumers to shop for the best prices.
We need to continue fostering the transition to a value-based care model, where healthcare providers receive a certain amount, not for every individual procedure, visit and cotton swab used, but for the entirety of care provided during a given health episode. Value-based care discourages unnecessary tests and reliance on needlessly expensive products and devices.
We should also be speeding up the Food and Drug Administration approval process and preventing overregulation of new, more affordable drugs.
While most occupational licensing and scope of practice regulations occur at the state level, we should encourage states to create more pragmatic and common-sense licensing requirements. Physicians’ assistants and nurse practitioners, for example, can have expanded roles.
When government begins fostering innovation and requiring transparent pricing, other efficiencies will follow. Manufacturers will produce cheaper technology (so long as government isn’t overregulating the medical device market). Hospitals will seek ways to lower costs. Doctors will be encouraged to innovate, focusing even more on preventive care.
We’re not asking the medical community to take major salary cuts or stop earning profits on their technologies. We’re asking the community to continue to innovate. Innovation can increase supply, lower prices and reward the medical profession for their hard work and educational investment.
If the government-as-customer requires these reforms, we may see real change. But ultimately, our message is much stronger if each and every healthcare consumer requires the same from the healthcare market. For patients to become customers, we need to give patients skin in the game so they are spending their own money from their health savings account in a market that is providing information on cost and quality.
Consumers care about medical bills when they’re responsible for writing part of the check, the first dollar cost of their care. Unfortunately, the ACA’s surging deductible thresholds passed not only the first dollar on to consumers, but the second, third, and ten-thousandth dollar as well.
We want care to be more affordable for consumers so that they’re spending less on health expenses, but at the same time they need to know how much their procedures cost so they can find the best value. This requires pricing transparency, competition in the insurance market, and some healthy disruption in the medical industry.
Our healthcare system suffers from a cancer: exorbitant costs of care. We can overcome this disease, but the aggressive treatment must begin now.
Ken Buck represents Colorado’s 4th congressional district.
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Toward a value-based model of healthcare