Affordable, quality health care. For everyone.

To The Point

Let’s Talk About the Money

lets talk about the money

Health insurance has gotten a lot of airtime in past Democratic debates — most of it devoted to how candidates would ensure that more Americans have it. It’s an essential conversation to have but it’s not the only health care issue that concerns voters.

Most Americans — seven of 10 — say reducing health care costs should be a top priority for national policymakers. That’s no surprise: 35 percent of working-age adults reported not getting needed care because of cost in 2018 and almost a quarter with insurance may not be able to afford the care they need.

Americans pay substantially more for care than people in most of the industrialized world, and it is going to be much more expensive to cover everyone if we don’t get those costs under control.

For voters hoping for health cost relief, 2020 offers an important opportunity to elect officials at every level of government who are committed to reducing costs.

Americans should look for the following from candidates promising to cut health costs.

First — a plan for prices. Americans use about the same amount of health care services as people in other countries — and sometimes less — but still pay more overall. The reason is high, often exorbitant, prices. This is most obvious when it comes to prescription drugs. Americans pay many times what people in other countries pay. Other outrageous charges for health care services are also part of the problem.

Candidates should have a clear, compelling approach to managing health care prices, not only for prescription drugs but throughout the health care system. Right now, congressional and administration officials are promoting price transparency as a way to cut costs. Price transparency is a reasonable first step, but is by no means certain to lower costs for consumers. Liberals and conservatives debate whether market competition or market regulation is the best strategy for price control. We may need some of both. But whichever strategy they believe in, candidates should clearly, consistently, thoughtfully, and emphatically advocate for price management.

Second, something must be done to protect sick Americans from unlimited out-of-pocket costs. Part of the problem is high deductibles and copays that have become common in employer insurance plans. More than 40 percent of privately insured Americans now face the risk of high out-of-pocket health care spending because they are enrolled in high-deductible health plans. Once deductibles are met, people can be on the hook for thousands more because of copays. Even Medicare imposes large deductibles and copays. For people with chronic illnesses who need expensive medications, bills quickly skyrocket and medical bankruptcy looms large.

The Affordable Care Act (ACA) forbids insurance companies from placing an upper limit on what they will pay on customers’ behalf and prevents insurers from terminating coverage for people with high expenses. The ACA caps total costs for many Americans but not all, unlike in most other Western countries. In Germany, for example, no one has to pay more than 2 percent of income each year for health care (or 1 percent for people with chronic illnesses). Voters should ask candidates whether they support limiting total out-of-pocket spending on care in a given year, perhaps tied to some percentage of an individual or family’s income. Candidates also should           have a plan to limit deductibles and copays.

Third, we need to cut the red tape. One of the major reasons for high health costs in the U.S. is administrative waste. Health insurers sell different policies to employers and individuals. Each company has its own forms and billing procedures, as well as its own systems for reviewing claims for eligibility. The result is that hospitals and insurance companies employ legions of claims gladiators — clerks who joust day and night over whether any given bill should be paid. Standardizing insurance benefits and claims forms would go a long way toward eliminating this senseless, costly administrative mess. Voters should ask candidates how they propose to cut administrative waste and simplify our health care system.

Finally, our health system is built to spend. We pay providers for each service they render, which incentivizes more, but not necessarily better, care. One remedy is to change how we pay for health care. It’s called “value-based payment.” It can take a variety of forms, but the key element is holding providers accountable for the cost and quality of services. That means that doctors and hospitals do better when their patients do better and incur fewer costs.

Accountability also encourages providers to innovate. This could include using less-expensive home care for older patients instead of hospitalization or bringing telemedicine to improve care in remote areas. Candidates who are serious about health reform should have concrete ideas for improving the way we pay for health care and support value-based payment.

Addressing the health cost problem head on is complicated but essential. Americans owe it to themselves and their families to make sure that the people they elect in 2020 are willing and able to deal effectively with what troubles voters the most — the painfully high costs of health care in the United States.

Publication Details

Publication Date: October 15, 2019
Citation:

David Blumenthal, “Let’s Talk About the Money,” To the Point (blog), Commonwealth Fund, Oct. 15, 2019. https://doi.org/10.26099/rdjg-fs74

Experts

David Blumenthal, M.D.
President, The Commonwealth Fund