The Alternative Approach to Mend the Broken System

First, let me say that Americans are blessed with the finest healthcare system in the world!  The United States employs the brightest most talented and successful Physicians, Nurses, Radiologist, Pharmacologist, etc.  Americans do not need to look further and “hope for healthcare”, we have the finest!  Americans need to be able to access our great healthcare system at a reasonable cost.

Who wants another income tax?  In 2014, the United States population reported 318.9 million people, reports came out in October of 2015 with job numbers making a very dark story – unemployment held steady at 5.1% and only 59.2% of Americans have a job.  Americans want less tax and less Government intervention. “Hope for Healthcare”, wants to implement collecting a $40.00 contribution from every working American through a payroll deduction.  This money is to be collected to form a “National Pool of Risk”, that would have administrators appointed by the Federal Government, ran by several insurance carriers “actin” as non-profit organizations.  Anyone can do the math – anyway you choose to calculate 59.2% of American workers X $40.00, it’s a complete failure from the word go.  Common Core doesn’t even make those figures fare out well!

The frequency of claims greater than $1 million, including incurred but not reported loses from 2012 & 2013 increased more than tenfold between 2006 & 2013.  Claim activity in excess of $1 million dollars proves that catastrophic claims continue to increase in frequency and severity due to our health care systems high cost and ever advancing technology.

Health insurance is regulated at the State level, with State Government enactment of insurance mandates requiring all plans in a state to cover, say, acupuncture, or fertility treatments.  Insurance mandates can raise the cost of health insurance premiums by 30% to 50%.  Georgia has six additional mandated benefits, three pertaining only to HMO policies, on top of the Federal mandated benefits required to be covered in insurance policies.  The three that effect all policies are:

  1. Morbid obesity treatment
  2. Off Label RX Drugs – RX to treat life threatening illnesses
  3. Diabetes Care Management – Diabetic Supplies

Have you ever shopped insurance across State lines? Let’s take our neighboring State of Alabama, individual prices are much lower to access coverage then in Georgia.  Have you ever wondered why?  The State of Alabama has implemented only one mandate for insurance carriers on top of the Federal ACA mandates.

  1. Off Label RX Drugs – to treat life threatening illnesses

Allowing individuals and businesses to purchase across State lines would create a more competitive insurance market. Let’s think for a moment about what health insurance carriers do, other than provide health insurance.  They build provider networks, contract with doctors, hospitals, and other providers to provide services to their policy holders for a negotiated price.  Those negotiated prices can be quite substantial.  Most importantly – it’s the biggest insurer in the State with the most market power, who are in the best position to negotiate favorable rates with powerful hospitals.

In other words, an Alabama insurance carrier may be able to offer a plan that is 30% cheaper because of fewer State mandates, but be forced to pay Georgia hospitals 30% more because the Alabama insurer didn’t have enough footprint in Georgia to negotiate better prices.

The Affordable Care Act was passed without bipartisan support.  The bill was passed into law without anyone fully understanding or reading the bill in its entirety.  The bill was perceived by the American people that this was going control healthcare cost.  This law has done nothing with healthcare cost, as it continues to rise faster than inflation – 

For several years during the 2000s, health care costs were rising rapidly, causing concern among patients and insurance companies. According to the November 2013 issue of the Journal of the American Medical Association (JAMA), the primary reason for the rise in health care costs between 2000 and 2011 accounting for 91%, was an increase in the price of drugs, medical devices, and hospital care. Since medical devices were one of the primary contributors to the rise in health care inflation, should Congress have eliminated the 2.3% medical device tax contained in the Affordable Care Act? This tax will be passed on to consumers and insurance companies, causing the price of medical devices to rise further. Rising health care inflation prompts insurance companies to raise premiums.
The following chart shows the percentage increase in overall inflation as measured by the consumer price index (all items) and health care inflation from 2005 through May 31, 2015. As you can see, health care inflation has outpaced the CPI in each year except 2008. Moreover, in 2007, 2009, 2010, 2014, and thus far in 2015, the difference is quite significant.

 CPI-Health-Care-Inflation-2005-2015

It seems that over-regulation, excessive taxation, and a few additional issues are the root of this problem. What can be done to reduce health care costs? Health care, like any other industry, needs competition to push prices lower. Unfortunately, because each policy must cover the 10 essential health benefits, insurance companies have no latitude to create innovative, customized policies. It reminds me of the original Model-T Ford. You could buy a Model-T in any color you desired, as long as it was black.

Americans need less Government intervention in our healthcare system.  Let’s open up the borders, sell and buy across State lines with a FREE MARKET!  Let the insurance companies, hospitals, physicians, etc. negotiate and compete for our business.