With the pending Supreme Court decision on the ACA subsidies, Health Reform 2.0 may happen sooner rather than later.
Senior Fellow, Georgia Public Policy Foundation
By Ronald E. Bachman
Whatever you think about the Affordable Care Act (ACA), more changes are on the way. What will the next wave of health reform look like and when will it happen? With the pending Supreme Court decision on the ACA subsidies, Health Reform 2.0 may happen sooner rather than later.
Whether the changes are modifications, replacements, repeal or expansion, certain basic principles should be at the core of Health Reform 2.0.
Objectives:
1. Personalized Healthcare – Government mandated one-size-fits-all plan designs should be eliminated in favor of more options that are affordable and meet individual and family needs. Individuals should be rewarded for healthy choices and engagement in healthy lifestyles and treatment compliance.
2. Consumer-Centered – Consumerism requires choice, flexibility and options. Small group and individual insurance product laws prevent creative products and services from being offered. A majority of the uninsureds are the working poor employed by small companies. Archaic state insurance laws and a lack of competition have prevented entrepreneurial solutions to lower premiums and provide consumer options. Large self-insured groups regulated under ERISA laws are leading the way to consumerism with an emphasis on information and incentives for wellness, prevention, engagement and compliance.
3. Patient-Centered – Patients should have care options, choices, information and flexibility to choose providers and/or treatment plans. Too often provider guilds use laws, regulations or professional standards to prevent alternative delivery models. Any reform legislation should focus on providing and promoting care options and strengthening the doctor-patient relationship (e.g. allied providers, telemedicine, incentives for wellness, rewards for treatment compliance, concierge services, direct pay models, etc.).
Principles:
1. Personal Responsibility – Everyone should be responsible for his or her personal health and healthcare choices. There should be financial consequences among those who are healthy and want to remain healthy, those who are unhealthy but want to get better, and those who are unhealthy and don’t care.
2. Transparency (The Right to Know) – Free markets and product/service choices can only exist if there is free flow of information on price, quality and services. Hospital cost and quality information must be provided with full disclosure on hospital-generated complications and deaths. We should provide legal safe havens for disclosure and corrections (much like the FAA after a plane crash).
3. Portability – Insurance must not be dependent on where or whether one works. If insurance is provided through an employer that insurance should be transferable to an individual policy or to another employer without a break in coverage or loss of benefits.
4. Individual Ownership – Individual insurance would assure portability between jobs. The current ACA restriction on employers paying for individual policies should be eliminated.
5. Self-Help / Self-Care – Support for self-care and alternative care options are critical for lowering healthcare costs. Telehealth, mobile care, medical apps, health wearables and consumer monitoring should be promoted as part of any reform.
Strategies:
1. Guaranteed but voluntary insurance – The ACA’s individual and employer mandates should be removed. Originally the ACA proposed to cover 26 million uninsured. In 2015, 9.5 million enrolled in government exchanges, but only about 3 million purchased insurance for the first time. Millions have been forced to drop previous insurance in favor of more expensive government-mandated coverages that also include higher deductibles and higher copayments.
2. High-Risk Pools – Federal or expanded state high-risk pools with government subsidies are an alternative to stabilize insurance pricing to assure a viable market for selling products
3. Tax Credits – Much like a child tax credit, money would be used only for insurance premiums and contributions into a Health Savings Account (HSA). Using a common fixed tax credit would eliminate the complexity of the ACA’s income-based subsidies that rely on IRS filings and audits.
4. Competition – Insurance capital and start-up costs need more flexibility to allow for increased local and regional competition. Alternative “provider insurance” should be legalized (e.g. direct pay, pricing below Medicare reimbursements, concierge services).
5. Personal Care Accounts – The customer is the one who pays the bill. Today, insurance pays the bills and the patient’s interests are secondary. Insurance premiums should be minimized with catastrophic coverage maximized. Paying for medical services through savings rather than premiums should be encouraged.
6. Fair Pricing – Individuals and families should be able to pay premiums based upon a broad category of similar risks. Lifestyle, treatment compliance, age, gender, geography and profession should be allowed in pricing assumptions. Pricing should be actuarially appropriate.
7. Malpractice Reform – Fear of lawsuits has increased the prevalence of “defensive medicine.” Litigation reform regarding malpractice could lower the cost of insurance by an estimated 5-20 percent.
In conclusion, the ACA has failed to cover the 26 million uninsured as proposed. It has failed to lower costs by $2,500 per family as promised. You cannot “keep your doctor”, as promised. It penalizes small businesses that want to grow beyond 50 employees. It encourages larger groups to shift work to part-timers or outsource overseas. The added mandated insurance costs are pushing employers to replace human capital with robots and new technologies to lower employment costs. The working poor, who remain uninsured, suffered an average ACA uninsured penalty of $1,200. Without the ACA requirements, it is estimated that 11 million people will be freed from coverage mandates and find insurance at an estimated savings of $1,000 or more per family. In addition, 1.2 million people will be able to join the work force as full-time employees.
Health Reform 2.0 is needed sooner rather than later. If only politicians would act responsibility and in the interest of healthcare consumers, who are after all also voters.
Ronald E. Bachman FSA, MAAA, is a Senior Fellow at the Georgia Public Policy Foundation, an independent think tank that proposes market-oriented approaches to public policy to improve the lives of Georgians. Nothing written here is to be construed as necessarily reflecting the views of the Foundation or as an attempt to aid or hinder the passage of any bill before the U.S. Congress or the Georgia Legislature.
© Georgia Public Policy Foundation (June 12, 2015). Permission to reprint in whole or in part is hereby granted, provided the author and his affiliations are cited.
RON BACHMAN
Senior Fellow, Georgia Public Policy Foundation
By Ronald E. Bachman
Whatever you think about the Affordable Care Act (ACA), more changes are on the way. What will the next wave of health reform look like and when will it happen? With the pending Supreme Court decision on the ACA subsidies, Health Reform 2.0 may happen sooner rather than later.
Whether the changes are modifications, replacements, repeal or expansion, certain basic principles should be at the core of Health Reform 2.0.
Objectives:
1. Personalized Healthcare – Government mandated one-size-fits-all plan designs should be eliminated in favor of more options that are affordable and meet individual and family needs. Individuals should be rewarded for healthy choices and engagement in healthy lifestyles and treatment compliance.
2. Consumer-Centered – Consumerism requires choice, flexibility and options. Small group and individual insurance product laws prevent creative products and services from being offered. A majority of the uninsureds are the working poor employed by small companies. Archaic state insurance laws and a lack of competition have prevented entrepreneurial solutions to lower premiums and provide consumer options. Large self-insured groups regulated under ERISA laws are leading the way to consumerism with an emphasis on information and incentives for wellness, prevention, engagement and compliance.
3. Patient-Centered – Patients should have care options, choices, information and flexibility to choose providers and/or treatment plans. Too often provider guilds use laws, regulations or professional standards to prevent alternative delivery models. Any reform legislation should focus on providing and promoting care options and strengthening the doctor-patient relationship (e.g. allied providers, telemedicine, incentives for wellness, rewards for treatment compliance, concierge services, direct pay models, etc.).
Principles:
1. Personal Responsibility – Everyone should be responsible for his or her personal health and healthcare choices. There should be financial consequences among those who are healthy and want to remain healthy, those who are unhealthy but want to get better, and those who are unhealthy and don’t care.
2. Transparency (The Right to Know) – Free markets and product/service choices can only exist if there is free flow of information on price, quality and services. Hospital cost and quality information must be provided with full disclosure on hospital-generated complications and deaths. We should provide legal safe havens for disclosure and corrections (much like the FAA after a plane crash).
3. Portability – Insurance must not be dependent on where or whether one works. If insurance is provided through an employer that insurance should be transferable to an individual policy or to another employer without a break in coverage or loss of benefits.
4. Individual Ownership – Individual insurance would assure portability between jobs. The current ACA restriction on employers paying for individual policies should be eliminated.
5. Self-Help / Self-Care – Support for self-care and alternative care options are critical for lowering healthcare costs. Telehealth, mobile care, medical apps, health wearables and consumer monitoring should be promoted as part of any reform.
Strategies:
1. Guaranteed but voluntary insurance – The ACA’s individual and employer mandates should be removed. Originally the ACA proposed to cover 26 million uninsured. In 2015, 9.5 million enrolled in government exchanges, but only about 3 million purchased insurance for the first time. Millions have been forced to drop previous insurance in favor of more expensive government-mandated coverages that also include higher deductibles and higher copayments.
2. High-Risk Pools – Federal or expanded state high-risk pools with government subsidies are an alternative to stabilize insurance pricing to assure a viable market for selling products
3. Tax Credits – Much like a child tax credit, money would be used only for insurance premiums and contributions into a Health Savings Account (HSA). Using a common fixed tax credit would eliminate the complexity of the ACA’s income-based subsidies that rely on IRS filings and audits.
4. Competition – Insurance capital and start-up costs need more flexibility to allow for increased local and regional competition. Alternative “provider insurance” should be legalized (e.g. direct pay, pricing below Medicare reimbursements, concierge services).
5. Personal Care Accounts – The customer is the one who pays the bill. Today, insurance pays the bills and the patient’s interests are secondary. Insurance premiums should be minimized with catastrophic coverage maximized. Paying for medical services through savings rather than premiums should be encouraged.
6. Fair Pricing – Individuals and families should be able to pay premiums based upon a broad category of similar risks. Lifestyle, treatment compliance, age, gender, geography and profession should be allowed in pricing assumptions. Pricing should be actuarially appropriate.
7. Malpractice Reform – Fear of lawsuits has increased the prevalence of “defensive medicine.” Litigation reform regarding malpractice could lower the cost of insurance by an estimated 5-20 percent.
In conclusion, the ACA has failed to cover the 26 million uninsured as proposed. It has failed to lower costs by $2,500 per family as promised. You cannot “keep your doctor”, as promised. It penalizes small businesses that want to grow beyond 50 employees. It encourages larger groups to shift work to part-timers or outsource overseas. The added mandated insurance costs are pushing employers to replace human capital with robots and new technologies to lower employment costs. The working poor, who remain uninsured, suffered an average ACA uninsured penalty of $1,200. Without the ACA requirements, it is estimated that 11 million people will be freed from coverage mandates and find insurance at an estimated savings of $1,000 or more per family. In addition, 1.2 million people will be able to join the work force as full-time employees.
Health Reform 2.0 is needed sooner rather than later. If only politicians would act responsibility and in the interest of healthcare consumers, who are after all also voters.
Ronald E. Bachman FSA, MAAA, is a Senior Fellow at the Georgia Public Policy Foundation, an independent think tank that proposes market-oriented approaches to public policy to improve the lives of Georgians. Nothing written here is to be construed as necessarily reflecting the views of the Foundation or as an attempt to aid or hinder the passage of any bill before the U.S. Congress or the Georgia Legislature.
© Georgia Public Policy Foundation (June 12, 2015). Permission to reprint in whole or in part is hereby granted, provided the author and his affiliations are cited.
