Commentary: As the Affordable Care Act continues to be implemented by employers, modified by the Obama Administration, and threatened with repeal by some presidential hopefuls, it would behoove business leaders to understand just what kind of health care system is being reformed by the ACA and other existing and proposed laws, since fiction tends to distort facts and bias policy.
1. U.S. health care is predominantly a private sector business. Government involvement, such as the ACA, will lead to long waiting lists, rationing, and poorer quality of care.
Actually, it’s more like a 50-50 proposition and it’s been that way for half a century. The private sector picks up 52% of the tab, while the federal and state government pays the remaining 48%. Moreover, many features in Medicare (which, along with Medicaid, began in 1966) – such as how it evaluates and pays for care – have been adopted by private insurers.
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During this time, there has been no appreciable change in the quality of care (admittedly, difficult to measure), access to care, and investments in new products and services – including pharmaceuticals, diagnostic and treatment equipment – and advances in surgical procedures.
2. The U.S. health care system is the best in the world and produces the best results.
Well, it’s certainly the most expensive. The U.S. spends about $3 trillion on health care. This represents 18% of its gross national product – twice as much as the next highest country (Norway). The U.S. has the mostly highly trained health professionals who use the most technologically advanced equipment. However, when measured against key indicators such as life expectancy and infant and maternal mortality, the U.S. ranks embarrassingly low compared to other countries. Using a list of preventable deaths in 19 industrialized countries, the United States placed dead last.
In addition, a study by the Institute of Medicine 15 years ago revealed that over a million people become ill or injured in hospitals afterthey are admitted to hospitals and 100,000 of these die there because of medical mistakes. And it's gotten worse. More recent data show that half a million patients die and nearly 10 million are harmed. Just as many may be killed are harmed in other health care settings. Sometimes patients received too much care. Blood transfusions are a prime example. Columbia Healthcare Analytics points out that many transfusions are not only unnecessary but can cause fatal reactions.
However, Medicare and some insurance companies have begun to refuse to pay for mistakes, also known as “never events.” Employers also are embracing new payment arrangements, such as pay-for-performance, that reward providers for outcomes not just procedures.
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3. Medicare pays for all of the cost of care for the elderly. Hardly. Medicare covers less than 50% of health cost for persons 65 and older persons. Thus, there is a need for the elderly to continue their coverage from their employers after retirement or seek Medigap policies in the open market. Such coverage is crucial since the elderly, although comprising only 13% of the population, account for 36% of all health care spending.
To prevent Medicare from going broke, increasing the age of eligibility and means testing are among the solutions that have been proposed. Part B’s premiums are higher for persons whose incomes are $85,000 or more, so a precedent has already been set. Also, care must be taken when buying Medicare policies. It may not be clear what parts of Medicare are providing coverage and, thus, such policies could duplicate Medicare-covered services or retain gaps in coverage, resulting in unnecessary costs.
4. The uninsured and uncompensated care are relatively new but growing phenomena. In fact, just the opposite is true. From 1987 through 2010, the proportion of the insured and uninsured barely changed from roughly 85% insured and 15% uninsured. It has stayed the same during several recessions (1981, 2001, and 2009) and during boom times. It has remained relatively constant despite efforts by state and local governments to expand Medicaid, reform the insurance market, and develop various universal and special population health programs.
This suggests that some portion of the population will continue to “go bare” at some point in their lives, either voluntarily (because of youth and good health) or involuntarily (because of income) unless mandated to buy insurance as stipulated in the ACA. The sticky wicket is that hospitals are legally obligated to treat all those who seek help. The cost of care not paid by some patients is shifted to those who can in the form of higher rates and insurance premiums. But, here again, uncompensated care has remained relatively stable for the past 25 years, varying between 5% and 6% of hospital costs – similar to the percentage that other businesses write off in losses.
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5. People would rather rely on insurance companies and doctors to pay for their care and keep them healthy, respectively, than assume this responsibility. Historically, this may have been the case. But in recent years, increasing enrollment in wellness programs and health savings accounts (HSAs) suggest things are changing. At the end of 2014, HSAs held $24.2 billion within nearly 14 million accounts, versus $19.3 billion saved in nearly 11 million accounts in 2013. Also, at last count, over 90% of employers were offering some form of employee health promotion program and over 60% of American employees participate in such programs.
Longer, healthier life expectancies and better health have been linked to improved lifestyles and people making their own, informed choices about their health care. Also, domestic and international medical tourism is gaining in popularity even as patient cost-sharing has increased. Patients now have the option of going online to seek less expensive care in other cities or states or even in other countries through services like Medibid.com, thus promoting competition.
Considering the above, some analysts have concluded that the American health care system – despite attempts at improvement – is over-rated, over-priced, confusing and risky and inevitably will become nationalized. What do you think?
Jan Peter Ozga, MPH, is president of Medical Business Exchange, a northern Virginia-based consulting firm and author of “How Safe is Your Hospital?”
