Many critics of the Affordable Care Act gripe that the care available under the exchanges is, for lack of a better word, simply unaffordable.
While health insurers try managing costs through negotiated discounts or limited reimbursements, one huge barrier involves strategic billing at hospitals that are routinely advised to tack on fees when profits are being eroded, for example, by expensive procedures involving trauma patients or low reimbursements under Medicare.
The scenario was explained in a recent analysis by Elisabeth Rosenthal, a reporter for The New York Times who is writing a series of articles about the cost of health care.
Uwe E. Reinhardt, Ph.D., a Princeton University professor, acknowledged to SourceMedias
If you write health reform legislation and put cost containment into the legislation, it will almost always fail for a very simple reason: one persons cost is another persons income, he explains, recalling how the provider community felt threatened by President Bill Clintons attempt at reforming the system. And if you couple expanding health insurance coverage too much with cost containment, the providers of care will kill it.
He notes that President Obama benefited from the cost curve being bent in 2002 to a point where health care costs arent rising much faster than gross domestic product and prices have stabilized. In lieu of direct measures to reduce costs, he says a longer term goal of health care reform is to implement greater price transparency. Once you make prices more transparent and people realize the huge difference in prices among providers within the city, the high-cost providers will find price pressure on them, he observes.
Another notable aspect of the ACA is the intention to shift from fee-for-service arrangements to bundled payments that would be made to Accountable Care Organizations. But Reinhardt worries that this approach could produce giant regional monopolies on the supply side of the health care equation whose bundled fees may actually be more expensive than some of the individual fees under the current system.
Until prices correlate with services rendered, theres no telling when the needle will be moved on substantive cost containment. If the price of a delivery can range from $1,000 to $80,000, its not logical, exclaims Leah Binder, president and CEO of the Leapfrog Group, an employer-based coalition aimed at mobilizing employer purchasing power.
She believes the time is right for value-based purchasing to finally take hold, calling the movement a market-driven phenomenon thats inevitable. But its not being driven by the ACA. Its coming from another major sea change that employers are responsible for, she explains, and that is the advent of high-deductible health plans.
Binder, who notes that about 20% of employers are estimated to have these plans in place, describes the trend as a tsunami thats transforming health care faster than the ACA and forcing consumers to dig deeper to question not only the price of, say, an MRI, but also the value of higher-cost procedures.
We always wonder about the price, and then we wonder if were getting our moneys worth, she says. And because of high-deductible health plans, were suddenly seeing consumers worried about value-based purchasing as much as typical purchasers in the private sector like employers.
The perverse part, Binder adds, is that purchasers are still paying the bill for patients, even though theyre the ones receiving the services. The patient is the one rating the real value, and because weve had this separation between the patient and the purchaser, weve had a completely dysfunctional market, she says.
