The Wall Street Journal Weekend Interview (Feb. 6-7) with Angela Braly, by Joseph Rago, was well done. Titled “A Wasted Opportunity”, Rago interviews WellPoint’s CEO on ObamaCare’s mistakes and how to pick up the political pieces. Mrs. Braly did a nice job outlining the challenge as well as the path to reform in rather simple pragmatic terms. The salient points to my reading were as follows:
1. For an insurance pool to work effectively, it requires everyone to be in the pool, not opting in only when they get sick.
2. Government intervention and regulation of health care has added cost and lowered service. A better alternative to central insurance planning is public-private partnerships to create insurance pools for those at high risk.
3. The market clout of doctors and hospitals is making it increasingly difficult to contain health costs and the health care market is structured in such a way the providers don’t have a reason to control cost. The solution is to “reintroduce the consumer to the health care equation” and “insurers…to create value.”
The insurance industry has lots of data with which the “aligned” consumer can make prudent purchasing choices. Opening the insurance industry data to more transparency around price and outcome seems an important consideration. And when coupled with more reasonable first dollar deductibles, co-insurance, and co-payment opportunities to help drive consumer choice, one would expect the provider community to respond with more information regarding quality outcomes and actual experience with key goods and services. It is a mistake to entitle the consumer as envisioned under the Obama plan and standardize benefits while controlling premium price. Rather, the consumer needs to be empowered with information and economically aligned to help drive better value.
As commented on in earlier blogs, Mrs. Braly again reminds the reader of the mistake Obama made in making his case about health insurance reform exclusively. “Confiscating the 2009 profits of the entire insurance industry would pay for only two days of U.S. health care.” When most of the cost of health care is being paid to doctors, hospitals, suppliers, drug and device manufacturers, the question is how to create value and eliminate potentially avoidable costs.
Maybe going forward will represent a new beginning for Health Reform? If employers continue to push first dollar coverage to employees and insurance companies partner with information regarding price transparency, this could be a good start. Now we need the inefficient and poorly run government programs comprising almost fifty percent of the health care spending in the U.S. to follow along, making most pay something, to be engaged. That, along with a public-private partnership to negotiate rather than set provider fees, could help reform the system in ways a long-term problem could be better solved and supported. Reform is needed, just not the way Obama envisioned!
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2 comments:
I find it funny arguing with people who believe that price controls are the way to ensure everyone gets healthcare at an affordable price. These people obviously have not taken an economics course.All this does is allow those with the financial means to go around the price limit and cause a shortage of care for those people who thought they were getting the best of worlds, only to realize they're still not rich enough to force healthcare for themselves and now their in line with everyone else and that line is grinding along slowly.
Forcing healthcare providers to fight over a limited supply of money, I believe will enact the kind of reform that will lower prices. HSAs might be one way, perhaps making PHOs and hospitals fight for the right to treat employer groups. An employer group with X number of employees goes shopping for health insurance coverage and there are 2 hospitals in town. They approach both hospitals for a discount and they approach local health insurance agencies looking for discounts there.
Perhaps by commiting all of their membrs to one PHO or hospital, that provider group gves them a nice discount for a specified time when the bidding war starts all over again. Perhaps the employer didn't like any of the proposals and decides to go with the health insurance agency.
Large groups would have a natural advantage, smaller groups could band together to increase their buying power. Competition would drive the price down as the other PHO/hospital in the area would not want their competitor gobbling up the money supply leaving only the small groups who due to price aren't very likely to use their benefits.
A hospital which has the local government, a big university, and a couple of factories/plants all sending their members there will be incentivized to keep these members by keeping their costs down and freezing out the providers. This only works as long as there's competition, once a monopoly occurs then the price goes from member/group driven to health provider driven.
Price and quality transparency, coupled with a social pool (i.e. insurance program) that pays a flat rate may be the next model of payment reform. New regulations would be needed in some cases to allow provider balance billing to the consumer. But this model should certainly wake up the sleeping consumer giant and yet accomplish all the objectives you've outlined. Thanks for your thoughts.
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