Obamacare has problems, yet the American Health Care Act isn’t the solution. As passed by the House, this legislation is bad for businesses and employees because it doesn’t address the underlying problem: health care costs. If you don’t reduce costs or replace a complex and confusing system with free-market solutions, we’ll be left with socialized medicine.
Consider this: Today, we spend $3.5 trillion annually in our health care system – almost $10,500 for every person in the U.S. – and 17 percent of the U.S. GDP. It’s about to get worse. The Congressional Budget Office projects the Republican plan will result in double-digit premium increases, along with increases in deductibles and fewer benefits.
At this rate, health care will reach 23 percent of the GDP in the next 10 years. Yet, experts say 30 to 40 percent of health care costs are pure waste. In our experience at Redirect Health, that figure is much higher.
If lawmakers want affordable health care, they must make it simple, accessible and transparent.
- Simplicity: Current regulations don’t benefit members. They benefit insurance companies and bureaucratic hospital systems. To simplify an unnecessarily complex structure, we must reduce regulations, reduce the 85,000- plus CPT codes, restrict insurers’ rights to recover costs after pre-approval, and reduce deductibles and co-pays for routine services.
- Transparency: For patients with cancer or other serious conditions, price is their consideration. I’m not saying hospitals exploit patients in crisis, but make no mistake hospitals make a tidy profit because cancer patients rarely ask questions. No industry is more shrouded in mystery than health care. Reimbursement rates between insurance companies and hospitals rarely are disclosed, and can often be 200 and 300 times that of Medicare rates. Competition cannot exist without transparency. The best answer? Require hospitals to gain pre-authorization on pricing from members or charge no more than Medicare.
How do employers win? Get out of the game. Create a self-funded health care program that cuts the administrative costs and profit margins of traditional insurance.
Employers must strategically maneuver a wasteful system.
- Care delivery advocate. People don’t know what to do when they’re sick or injured. Do they see a primary care provider or go to the ER? For example, an MRI may cost $4,000 at a hospital, but $400 at an off-site clinic. Employees and employers need medical partners to help navigate a complicated system and determine the most appropriate place of service but at the right price.
- Self-Insurance impacts costs. The health care systems use complexity and non-transparency to guide people to expensive care. It sounds outrageous, but insurers and providers actually make more money this way. With self-funding, employers have access to every health care claim, enabling them to understand what’s driving their costs. This doesn’t mean they’re invading privacy – confidential information isn’t disclosed – but it helps companies benchmark their use, address red flags, and garner insights for managing costs.
Solutions to today’s health care debacle exist, but they aren’t going to come from lawmakers. They will come from the private sector and savvy entrepreneurs will thrive further with fewer regulations.
Paul Johnson is CEO and co-founder of Redirect Health. He can be reached at paul.johnson@redirecthealth.com
As seen in the May 26, 2017 issue of the Phoenix Business Journal