Big Issue #4 – Harnessing Healthcare Insurance

A topic that has been highly politicized around a lightning rod of a name is what to do about Obamacare. To illustrate this point, if we call it the Affordable Care Act, approval rates increase and if we use the name KyNect in Kentucky it increases even more. In a Kaiser Health monthly poll (see Note to Reader comment below) from November, 74% of Americans and half of Republicans want the ACA to continue. But, if you dig deeper, the Republican voters heavily favor almost all features of the ACA except those dealing with the mandates for coverage for the employer and individual.

The Affordable Care Act is not perfect and is complex, but it is actually working even though it has been hamstrung and is not fully implemented in 19 states. Given the states who have expanded Medicaid, we can actually contrast their results with those who have not. What is revealed is personal bankruptcy rates have declined and hospital accounts receivable have improved in those expansion states.

Unwinding the ACA will prove difficult and a different tactic is needed. A data driven analysis would help leaving the political rhetoric aside. A key recognition is our health care costs have a tendency to increase as we have an aging and overweight population. We are also over-medicated and have more surgical procedures than needed. So, any insurance system needs to be mindful of those cost pressures. Plus, we need to recognize the restriction on funding to insurance carriers for adverse selection exposure has led to increased premiums and some leaving the market.

I have several suggestions around the idea of not throwing the baby out with the bath water, supported by many more Americans than not as well as the hospital industry. A few to consider are as follows:

– Fully fund the risk corridors for insurers to tie them over for the initial adverse selection from unhealthier risks. This will moderate premium increases.
– Expand Medicaid in the remaining states. This helps people, hospitals and economies as per several healthcare foundation studies like Kaiser, Commonwealth, RAND, et al.
– Introduce a public option in states where insufficient competition exists. This would offer choice and a lower expense option since it eliminates a profit margin expense.
– Evaluate the efficacy of various fees and improve, eliminate or validate what makes sense to continue.
– Seek more ways to offer choice, but make this less confusing. Healthcare insurance is already confusing enough.
– Legislators need to buy into this and stop political posturing. It is clear to me that any success that has been achieved has been in spite of partisan naysaying. What far too many don’t realize is the ACA borrows from a largely Republican idea that was supported by the Tea Party leadership (Google “Senator Jim DeMint and Romneycare”)

As a former actuary, the principle of insurance is the good risks pay for the bad risks. Plus, insurance is designed to keep you from bankruptcy should a catastrophic event occur. So, an effort should be made to get better risks in the plan.

What many don’t realize, by having insurance you tap the agreed upon network discounts with the hospitals. For example a double hernia operation might cost $32,000 with no insurance, but the network discounted price is $18,000. With a plan that has a $6,000 deductible, you end up saving $26,000.

So, as our leaders evaluate options, we need for them to set rhetoric aside and look at the data. Access to insurance is vital and ACA requirements imposed on all insurance, even employer-provided care, benefit far more than than the 20 million covered directly.

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7 thoughts on “Big Issue #4 – Harnessing Healthcare Insurance

    • Hugh, thanks. One survey noted about 2/3 want to keep it and fix it. The hospital industry sent a report to the President-elect and Congress to keep it, as repealing it would hurt the healthcare markets. Keith

  1. Very important topic of discussion for Americans at this time. It’s interesting because in Canada we have always had free healthcare so for us that just seems like a no brainer but as you mentioned there are a lot of intricate details that are involved. One of the main issues we deal with in my province (British Columbia) is the overuse and often abuse of the free healthcare system which has led to a long waitlist for procedures that are often vital. For example and MRI can now take up to 1 year to wait for, which is unacceptable. Many of us drive over to seattle to get private medical treatments that we need right away. It’s unfortunate because Canada does not allow for any privatized hospitals or medical practices. If it did, I think it would help.

    • Thanks for your insight. Our country is afraid to move to national health care. The naysayers highlight the negatives you mention, but don’t focus on the positives. We have also highly politicized this issue, that naysayers harp on its problems not recognizing its positives. Plus, we are far more medicated, obese and costly here than folks are in Canada, which is an underlying problem. Thanks, Keith

  2. Note to Readers: Per the Kaiser Health Tracking Poll, the following survey results are germane.
    – 74% of all Americans want the ACA to continue (with 1/2 of Republicans)
    – Of Republicans, regarding specific features of the ACA:
    — 82% like the ability to include adult kids to age 26
    — 77% like the free preventive services
    — 72% like the exchanges and 67% like the subsidies
    — 67% like Medicaid expansion
    — 63% like guaranteed issue and renewability

    Of Republicans, the only unfavorable results are on the employer mandate (45%) and individual mandate (21%).

    Again, these individual feature results reveal clearly that Republicans like the ACA except for the mandates. I think this gives GOP lawmakers clear indication of what they should consider, yet they should realize and measure the mandate fees help pay for the subsidies. Eliminating them will increase the cost of the subsidies, but improve its appeal.

    • Lisa, the ACA could be improved, but it is making sure more people are covered and getting care. Physicians do not like paper work, taking notes, etc. so they tend to hate insurers intruding on their work, whether it is managed care, Medicaid, Medicare or the ACA. With that said, the need for governance needs to be as easy to use as possible.

      My best example is physician hand writing of Rx and instructions caused deaths because of poor penmanship. This was a conclusion of the Leapfrog group and theme of the book “Internal Bleeding” written by two physicians. Although initially resistant, physicians now love entering Rx and instructions into a data base that makes things happen the way intended.

      So, we need to listen to listen physicians, but also nurses, patients, insurers, etc. to make sure the governance is electronic and easy to do and helps make care better.

      I know I am preaching to the choir here. Keith

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