Our Current Health Care Challenge
A NATIONAL CRISIS
- The United States spends 18% of Gross Domestic Product on health care (twice as much as most other developed nations).
- Health care inflation, at 4% a year, is growing faster than the economy as a whole.
- The Congressional Budget Office has identified federal spending on government health programs as the primary driver of long term budget deficits.
A PERSONAL NIGHTMARE
- U.S. consumers often pay two to three times as much for medical procedures as people from other countries.
- These prices are normally not disclosed until after the service has been performed.
- Inflated medical prices are a major driver of consumer debt and personal bankruptcy.
Why Obamacare Won’t End It
COVERAGE vs. AFFORDABILITY
- Prior to 2014 insurance companies could, in many cases, discriminate against (or drop) you if you had a pre-existing medical condition. The Affordable Care Act (also known as the ACA or Obamacare) has now outlawed these practices.
- As currently structured, however, Obamacare will not make health care more affordable (for 2017, Obamacare premiums are increasing an average of 22% nationwide, with some states like Arizona seeing increases of over 116%).
- Obamacare subsidies partially reimburse insurance companies for high medical costs, reducing the incentive to negotiate lower prices.
- High deductibles and co-pays guarantee that consumers will absorb most of the initial costs before insurance companies have to pay anything.
- In creating narrow networks of medical providers, insurance companies also force many consumers to go “out of network” for care, where hospitals can charge whatever they want, insurance companies provide only partial reimbursements (often at Medicare rates), and patients are left paying the difference (what is known as balance billing). Because of this, consumers can still be bankrupted by medical bills.
- And by requiring insurance companies to pay at least 80% of all income on medical care (what is known as the medical loss ratio), Obamacare incentivizes them to accept higher medical prices, increase premiums, and thereby drop more profit to the bottom line (20% profit off an inflated price is greater that 20% profit off of a competitive one).
MEDICAL PRICE GOUGING
- Obamacare isn’t allowed to use the Federal Government’s purchasing power to negotiate lower medical prices on behalf of consumers.
- Furthermore, because medical providers aren’t required to provide guaranteed prices up front, there is no way for consumers to do price comparisons and negotiate on their own behalf (have you ever noticed how restaurants without prices on the menu are always more expensive than those who display prices up front).
- In addition, medical providers who receive a fixed payment for patient care (known as the “accountable care” model) have a strong incentive to deny or reduce patient services (the less care they deliver, the more money they get to keep as profit).
- In setting up healthcare marketplaces (or “exchanges”), government has moved from “regulating” to “operating” the individual and small business health care markets (large employer-based insurance remains largely untouched, for now).
- Poorly paid (at least by the government) bureaucrats are negotiating with insurance company fat cats regarding what type of insurance and benefits should be offered, but exercise little authority in who sells where. This leads the insurance companies to avoid more costly regions, and to structure restrictive networks that keep most people from access to affordable care.
- Health care bureaucrats are claiming they are more qualified than individual consumers in determining what kind insurance products should be offered in the marketplace.
- But by charging a 3% commission on every policy sold, they are incentivized to work with the insurance companies to sell bloated policies at prices high enough to fund their operations. Many consumers have compared these prices to the equivalent of a car or mortgage payment.
What We Can Do
FRAMING THE QUESTION
- To paraphrase Adam Smith, the father of modern economics: “It is not from the benevolence of the hospital, or the insurance company, or the government bureaucrat that we should expect our affordable care, but from their regard to their own self interest.”
- We need to align the health care industry’s self interest with our own by bringing true competition to the health care marketplace.
- But how?
SCOPING THE PROJECT
- By launching educational and legislative efforts which force up front pricing transparency, we can bring competition back to health care.
- At a high level, these campaigns would push hospitals and insurance companies to provide the following before any service is delivered:
- A written estimate for those services
- What the hospital charges.
- What the insurance company will reimburse or credit against a deductible/coinsurance towards a maximum out of pocket expense.
- The patient’s financial responsibility (if any) for the difference.
- An acknowledgement that any medical services delivered without a price quote will be provided to consumers free of charge.
- An acknowledgement that any requests for insurance reimbursement rates which are not met will be reimbursed at 100% of the consumer quoted rate, with consumers owing nothing.
- We expect to get an estimate before we take our cars in for repair—why shouldn’t we expect the same when we go to see the doctor?
How You Can Help
We are looking to identify, organize, and mobilize at least 586,000 like minded people who can work with us get a health care price transparency initiative qualified for the 2018 California state ballot (this campaign will also serve as a template for the 24 other states in our union who have ballot initiative processes capable of championing this kind of change).
To support our fundraising and grass roots campaign efforts, please visit https://rally.org/showmetheprice.
To sign our online petition supporting mandatory health care price quotes, please visit change.org.