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Healthcare

Fixing America’s Health Insurance Problem Part 2: The Private Market

In the first installment, I outlined how the government could potentially save billions by transforming Medicaid into a premium assistance program that also helps with out-of-pocket costs. To do that, we need to understand how the private market works.

One of the first things I learned as a business major was how everything fits together in a world of supply and demand. Say you have Company A and Company B. In the beginning they offer distinctively different products. However, those products began to homogenize over time. Both companies saw a need to distinguish themselves from each other and began to diversify their product lines. Eventually consumers notice the difference and decide that Company B offers the best product at the best price. Company A declines and finally leaves the market. Company B is the sole seller and decides that profit is more important than its products. Consumers begin to complain about the poor service and quality from Company B so much that it leads to Company C offering a similar product, better service, and superior quality. In this economic scenario the governing body has no say in who wins. It’s called capitalism.

Capitalism has played a major part in our country from its earliest days. Producers provide a product or service to its customers for a fee. If you don’t like what they are charging, you find another producer. The same concept applies to healthcare and health insurance.

Prior to the Patient Protection and Affordable Care Act, one of the upsides to health insurance is that you didn’t need to be tied to an employer just to have coverage. There were a plethora of small insurers competing with the larger, more financially set companies. This made finding the right policy somewhat of a headache, but you had a definite choice in who provided your coverage.

Fast forward to 2014. An incomplete healthcare.gov is live (most of the time) and anyone with a registered account could lie to get the subsidy. There were six major insurers with policy offerings: Anthem-Blue Cross, Aetna, Cigna, Coventry, Humana, and United Healthcare. Throughout 2014 and 2015 the larger insurers began merging to mitigate their losses and have more control over policy premiums. We saw Aetna take in Coventry, United is taking over Humana, and Anthem has agreed to buy Cigna for $54 billion. Sure this makes the companies themselves more solvent, but what exactly does it accomplish for its members and potential policyholders?

Well, the first thing it does is decrease competition in an already less than competitive health insurance market. Instead of having six big insurers and a number of smaller companies, Americans are now forced to decide between three insurance providers who ultimately set the pricing curve. Those of us who value true competition know this will lead to exactly the opposite. Fewer insurers means higher premiums for everyone and nothing but increases in the future.

Second, this will give them more influence over state and federal policy.This will mostly be accomplished by threatening to move corporate headquarters out of state and costing that state jobs, tax revenue, and cause a negative economic impact. These conglomerates will have major influence over tax policy where it concerns the treatment of corporate profits. This shouldn’t sit well with those opposed to crony capitalism.

Third, there is a potential upside. The merging of 2 large insurers combines the customer base and could keep future premium increases under 20 percent. Premium would still be astronomical compared to pre-Obamacare prices.

What’s wrong with the American way?

Any competent business executive or manager will tell you the first step to finding a solution is to identify the problem. Although far from perfect, the American healthcare system had been seen as the best in the world. People from across the globe – and even our neighbors to the north – would come to the United States for life-saving treatments that could have been months away in their own countries. Surgeons, nurses, and administrators worked together to save those lives and countless others. Unfortunately, saving those lives doesn’t always come cheap.

For the past xis months I have worked for a medical billing company in the Clinical Appeals department. We work to get denied claims overturned and paid on behalf of the patient. The duties of my job give me access to an enormous amount of personal and medical information, 99% of which is protected by HIPPA. What I can speak to is the enormous cost that I see on a daily basis.

Take for example an emergency room visit. Here in Georgia, our insurance was charged $924.00 for the ER visit when our son had an allergic reaction. In California the rate wold be about double that amount. Both of those are ridiculous sums of money to part with, be it the insurance company or the patient paying. Just about 8 years ago, I had an ER visit that cost $124.00. The doctor’s fee was $400.00. At the time I thought it was way too much just to see the doctor for 10 minutes. In our Obamacare society, those costs have increased exponentially.

President Obama, his administration, and the media like to tell us that healthcare costs have risen at the slowest pace in 50 years. This interactive chart can show healthcare costs in a number of different ways. Let’s focus on Annual Percentage Change. According to the Kaiser Family Foundation, total healthcare spending in 2013 from all sources was 2.9%. That was the smallest increase in history. It was also before Obamacare kicked went live. By 2014 costs were increasing at 5.3% annually. According to this report by U.S. News and World Report the Great Recession was a major contributing factor in slowing the growth of healthcare costs. The Kaiser chart also looks at per capita percent change. That number increased by 2.4 basis points. Both of those figures look even worse when adjusted for inflation.

What’s the solution?

There is no one solution that will cure our health spending woes and make the system work perfectly for everyone. But the first thing to do is realize a one-size-fits-all plan just doesn’t work. It increases costs for those who don’t need it just to save money for those who benefit. Here are other places to start:

  1. End the individual and employer mandates. It’s no secret that Obamacare has increased insurance premiums for most Americans at a time when wages are stagnate or have fallen. The average premium on exchange plans is slated to increase more than 12% for 2017. The increase for non-exchange plans will likely be higher. As for the employer mandate, it adds unnecessary burden to employment costs that prevent mid-sized and small businesses from hiring much needed staff. If it were not mandated, more employees could shop around for their health insurance. As it stands now, if your employer offers health benefits you do not qualify for a subsidy. That is kind of sucky if your employer’s plan is absolute crap.
  2. Stop telling patients what kind of insurance they must carry. As Americans, our first and foremost obligation is to maintain liberty and freedom. When it comes to healthcare that means having the freedom to choose our own coverage levels. Under Obamacare everyone must maintain minimum essential coverage. Basically, bureaucrats with no knowledge of your personal health needs said “We know what’s best.” Insurance companies, although complicit in creating portions of the law, were told they have to cover certain services for everyone. We were forced by law to accept whatever the government said we needed. This is by far the wrong way to fix a broken system. Members should be able to tailor plans to their needs, not those of other people. Take for instance every single insurance plan must cover pediatric vision and dental. If you don’t have kids, this is a complete waste of money. Men shouldn’t be paying for maternity care and neither should post-menopausal women. Our plans should reflect what we feel is necessary to maintain good health as well as our ability to cover out of pocket costs.
  3. Roll back ridiculous regulations that get between doctors and patients. One such rule in Obamacare says if a patient is admitted to the same hospital for the same diagnosis and it’s not a chronic condition, the hospital is fined for not taking better care of the patient. Here is the problem with that rule: it does not take into account environmental factors such as black mold that may have gone undetected. Or, in the case of apartments and other attached housing, chemical irritants from another unit. It is completely despicable to fine doctors for factors they cannot control. Another bad rule: the formation of ICD-10. ICD-10 is the comprehensive coding guidelines by which all medical claims are coded. The issue here is that doctors and nurses now spend more time on paperwork and administrative tasks than they do actually caring for their patients.This severely affects the quality of care at a time when the baby boomer generation is hitting retirement age. An equally annoying rule: primary care physicians must now ask questions that have little to nothing to do with why you are in the office. For instance many people in 2015 complained that their doctors were asking whether or not they have guns at home. While opinions will differ on the logic behind such a question, those of us who value the second amendment find it very bothersome. The most ardent 2A supporters have gone so far as to call it back-door gun control. Due to the class of Democrats we have right now, I tend to agree on that point.

As you can see, there are a number of ways to fix our healthcare system to make it work better for everyone. It’s not just the elder, sick, or poor who deserve better. We ALL deserve better healthcare without the government intrusion.

About Nikki Bits

Growing up, my parents rarely discussed politics. When they did, it was usually my dad ranting about how republicans are evil,greedy, and racist. My father was literally raising me to be a democrat and discouraged any political opinion that did not fall in line with the democratic agenda. One year, I was even yelled at for agreeing with Newt Gingrich. Somehow, I had always known my political views did not fit in the community. I hardly ever commented on politics or conspiracy theories for fear that I would lose the few friends I was allowed to see. I did well in Civics class and even began watching more news to be better informed about current events. That did not work very well. It was not until I met my husband that I realized republicans were not as bad as I previously been led to believe. I submerged myself in politics and found that I have a passion for policy. The first two laws that I publicly opposed were the Affordable Care Act and the Dodd-Frank Wall Street Reform bill. I will be digging into Common Core legislation soon. In the meantime, I continue to follow and support establishment challengers who seek to return traditional American values to our legislative process.

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