By Casey Quinlan. I will admit to a bias on the subject of health insurance, and healthcare reform: I’m one of the millions of America’s uninsured. I’m female, over 50 (I told you, now I’ll have to kill you), and I was diagnosed with cancer in December of 2007.
The first of those facts – being female – is the biggest dinger of the three when it comes to health insurance premiums. The reasoning there: women use more health services, starting in their teens and 20s and continuing through menopause. The second – my age – could signal a better rate, since women typically tail off in their use of healthcare in their mid-50s. However, the third fact – cancer within the last 10 years – gets me insurance coverage quotes of $2,000 per month, with a deductible between at $3,000 to $6,000 a year.
For the math-challenged, that’s between $27,000 and $30,000 out of my pocket per year before insurance covers Dollar One. Since that amounts to much of my annual pre-tax income in each of the two years since Cancer Year – 2008 was the last year I had health insurance coverage – I’ve remained on the uninsured list. And developed some fierce opinions about the future of healthcare and health insurance in the US.
The Patient Protection and Affordable Care Act, a/k/a “health care reform,” passed earlier this year includes some help for my situation…in 2014. Meanwhile, I’m managing to get the oral chemo meds I’ll be taking until 2013 (which cost $500 a month) with the help of a community clinic. And I’m keeping my fingers crossed that I stay as healthy as I was before the cancer diagnosis, and as I have been since I finished radiation treatment in 2008.
That’s my current health insurance policy: crossed fingers.
There are two things that I think have to happen to bring about meaningful change in the healthcare cost/payment/insurance conundrum, for me and everyone else:
- Tort reform
- Severing health insurance from employment
I realize that the tort bar, the health insurance industry, and pretty much everybody with a job-related health benefits package will take out a hit on me for making those suggestions. But the system has fallen, it can’t get up, and until major changes – not the chipping-away-at-the-edges approach of the current iteration of “health care reform” – are made in both the US legal system and how health insurance is marketed and sold, meaningful change doesn’t have a prayer.
How would tort reform help? Defensive medicine – practicing medicine with one eye over your shoulder looking for lawyers – adds as much as $45.6Billion-with-a-b annually to US spending on healthcare, according to a Harvard study published in September. That may seem like a drop in the bucket when the total annual spend on healthcare in this country is $2.3Trillion-with-a-t, but those dollars are all coming out of our pockets one way or another. Whether it’s in higher health insurance premiums, deductibles, fee increases to help providers cover those who can’t pay, fee increases to help defray the costs of malpractice insurance, or tax dollars for Medicaid and Medicare, we pay for it.
Reducing the dollar impact of medical liability would start to address some of those costs. Tort reform would give providers a defined worst-case scenario for liability, and would reduce the sue-the-bastards incentive for patients (and their lawyers) who don’t get the outcome they want from treatment. There are no guarantees in medicine, other than that there are no guarantees in medicine. Patients who are harmed by doctors that are unfit to practice wouldn’t be left without recourse, but the dollar amount of settlements would be capped.
Now, on to my really controversial suggestion: severing the link between health insurance and employment. Employer-paid health insurance benefits weren’t common in the US until World War II, when stiff wage controls made defense plants and other employers get creative to attract and keep good employees. They came up with offering to pay for workers’ health insurance. Thus was employer-sponsored group health insurance born, and the individual health insurance market stamped with an expiration date.
If you’re selling something, wouldn’t you rather package and sell it to as large a group as possible? Insurers, helped along by federal labor laws, have had a great revenue model: sell to large employers, keeping their annual premium-per-employee at an acceptable level because of the size of the risk pool. Cherry-pick the individual market, and put a high price tag on coverage for individuals who look like they might get sick – like women.
I’m actually quite pleased with one of the provisions in the health care reform bill fines employers with 50 or more employees $2,000 for each worker if they don’t provide health benefits. Why? Because the largest US employers – Walmart 1,000,000+ US employees, Verizon 200,000+, UPS 350,000+ in the US, to name a few – will look at that figure, do the math, and discover that the fine will save them money.
Again, for the math challenged: 1,000,000 employees would cost Walmart $2Billion-with-a-b in fines. Sounds like a whacking huge amount of money…until you calculate the cost health insurance benefits for those 1,000,000 employees using the average premium, which runs between $4,000 (single coverage) and $10,000 (family) per year. The fine would save Walmart $6-8B a year. They could even offer their employees help buying coverage, and still save some serious money.
And break the tie between group coverage and employment.
What would happen then? I think the American people can get together and drive the market as one big coast-to-coast group, using consumer-driven health plans (CDHPs) combined with health savings accounts (HSAs). I believe that one of the causes of the healthcare cost conundrum in the US is the passive attitude most Americans have about their health, and healthcare. Decades of coverage paid for with “other people’s money” (employer-sponsored plans) have turned us into a nation of mindless medical consumers. We want cutting-edge care, we want second, even third, opinions, we bitch about $100 co-pays, we want to never have a bad outcome. Oh, and by the way, we don’t want to pay for it.
CDHPs would help make us mindful again: about the costs of healthcare, about the impact of our choices and behavior on our health, about how to get the most value for our healthcare dollar. A consumer-driven plan – also called a high-deductible plan – has a lower premium than traditional PPO or HMO plans due to that higher deductible. It also has no co-pays. You pay for care until you max out your annual deductible – between $1,000 and $5,000 per year – and are fully covered after that. Some CDHPs cover preventive and screening care, like annual physicals and mammograms, outside the deductible.
To be truly effective, CDHPs must be tied to HSAs, both to help consumers pay their deductible costs and to encourage them to save money for future healthcare costs. Making HSA contributions with pre-tax money makes HSAs “IRAs for healthcare,” with tax penalties for non-healthcare withdrawals. Since consumers – patients – will be paying for healthcare out of their HSAs, they’ll have an incentive to both ask what a procedure or prescription costs, and to ask questions about the cost of treatment options.
We’re a consumer nation. We shop for deals on flat screen TVs, cars, iPods, and breakfast cereals. Isn’t it time we did the same thing for prescriptions and hospital costs? I for one would jump at the chance to enroll in a CHDP – unfortunately, they’re not offered to individuals in the state where I live.
Don’t get me started on state insurance commissions…
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