Time to make health care truly affordable

As the Idaho Legislature once again attempts to resolve the problem of health care, it seems fitting to look at the state of health care costs in America as a whole. Unfortunately, for more than 70,000 Idaho residents who have no health coverage at all, many will go untreated or, worse, wait until needing hospitalization, thus leaving an even bigger bill for someone else to pay. Many without health coverage will also die, or put their families at risk of financial ruin.

While Congress has wrestled to no avail with replacing the ACA, costs continue to climb for everyday citizens. Working as a freelance engineer, I have only catastrophic coverage costing $143 per month. Still it is a crapshoot, because someone will have to look at my situation then determine whether they will pay it or not. The fact is, paying $13,000 annually plus a $6,000 deductible doesn’t pencil out for me, so I accept the risk. Still the alternative costs me roughly $1,000 for visits with my physician and $200 to $700 a year for prescription medications I may need. However, I admit that after contracting the flu followed by a sinus infection, paying $300 for a visit to the doctor and subsequent prescriptions for something I diagnosed myself, it left a rather unpleasant taste in my mouth.

Republican and Democratic parties, heavily influenced by the multi-trillion-dollar insurance industry, often cite negative aspects of single-payer health care to protect health insurance companies. They lean heavily on the term “socialized medicine,” which in simple terms is a system where a significant portion of the health care system is directly owned by the government and many specialist doctors are government employees. Money to fund it is collected via taxes. In most places, citizens are enrolled automatically and anyone who is part of the system can enter a government hospital and get treatment. Even under these systems, not everything is directly owned by the government, nor are health insurance companies completely eliminated. Primary care providers are normally private entities paid by the government based on the amount of service they provide. The closest example to socialized medicine in the U.S. is the Veterans Administration.

Single Payer: The government collects taxes and uses the money to run or to support an insurance company, in which everyone is automatically enrolled. People visit medical facilities and providers are reimbursed by the government, which directly decides what it will pay and what is covered. Hospitals can be a mixture of public, nonprofit, or for-profit facilities.

Single-payer systems do not fully eliminate the concept of private insurance. In Canada and Australia, roughly two-thirds of the population has supplemental private insurance coverage for things the government doesn’t cover, like vision, dental, and private hospital rooms. Some systems let people buy-in to a parallel private insurance system. Since over 1/3 of Americans are on Medicare, single payer is the logical path for the U.S. system, because it is similar; many people on Medicare buy supplemental private insurance (i.e. Medigap) or select alternative private insurance (i.e. Medicare Advantage).

All- Payer: In general terms this is a system which contrasts the ACA, where there are a number of highly regulated private insurance companies that people can choose from or be assigned. Insurers are normally required, albeit not in the U.S., to be nonprofit, and there is some mechanism to compel people to sign up. The system is funded by general taxes, payroll fees/taxes, and/or premiums. The government does most of the critical work that it would under a single-payer system but indirectly through regulation. It decides what needs to be covered, how plans are designed, how the risk is spread between insurers, what can be charged, what is covered, how bills are processed, and how providers are reimbursed.

It should be noted that, as in the U.S., without the government creating a global reimbursement rate for all insurers, we have hundreds of insurers individually negotiating with thousands of providers for possibly millions of different payment rates. It creates a massive administrative burden, reduces competition, and empowers providers. For example, in places like Norway and Denmark, some people have private insurance/supplemental insurance often through their employers, which lets them use private clinics for faster treatment or non-covered items.

Besides what they pay in taxes, people are expected to pay basically nothing out-of-pocket for basic medical care. Most out-of-pocket health care spending is for uncovered services like dental or nominal co-pays for doctor visits or prescription drugs. The ACA had a decent definition for the minimum level of medical care, but it just didn’t make it affordable. Insurance you can’t afford to use is not really care. In response, some Republicans are trying to redefine what counts as basic care in the name of “affordability,” but insurance you can afford, because it doesn’t provide basic medical care, is even more useless.

“Affordable” must mean that making use of this basic level of medical care wouldn’t create a financial hardship. In the simplest terms, this means no one in the system seriously concerned about a health issue should be discouraged from seeking care due to cost.

This is one of the greatest shortfalls of the Affordable Care Act. Even with the subsidies, a 45-year-old making just $40,000 a year is expected to pay 12 percent ($400 monthly) of their income in premiums for a plan with a deductible around $5,500 and an out-of-pocket limit of $7,150 for covered “in-network services.”

The Netherlands and Switzerland have two of the most “market-based” health care systems in Europe. In the Netherlands, middle class people who don’t qualify for subsidies have a deductible equal to $415 (annual). In Switzerland, subsidies cap premiums at 8 percent of income and the highest deductible plan you can choose has a deductible of $2,500 USD, and further coinsurance spending limited to an additional $700. In addition, both countries provide maternity care with no out-of-pocket cost. In the U.S., with its aging population and lower birthrate, this could be a useful benefit.

Note: In Switzerland, high deductible plans are offered mainly for young adults, to effectively lower premiums. Many Swiss choose to pay slightly higher premiums for plans with a deductible of just $300.

In order to make health care “affordable” for all Americans, the highest out-of-pocket plan should resemble the aforementioned European countries, and be an absolute minimum benchmark. With 62 percent of Americans reporting they would have trouble coming up with the cash for a $500 emergency, it may make sense for this country to adopt a plan making essential care, aside from nominal co-pays, cost-free. Even so, because there are individuals in America representing strong religious or moral objections to any government intervention, opting out should be available, but at the same, any universal system still must provide basic care for everyone who wants it at prices everyone can afford. We have a system of waste and greed in this country that promotes a culture of under-insured Americans who end up costing everyone more money. Ours is a system that rewards insurers with high membership counts, allows them to cut deals for services, payment terms and cost for treatment, thus making it far more expensive for individuals and small business seeking affordable health insurance solutions. This health care free-for-all is driven by profit, not the well-being of the American public of efficiency of the system, because for insurers, drug manufacturers and providers — many publicly traded — profit, rather than medical outcomes, is what oils the machine.

Unfortunately, affordable universal care can be treated as a buzz phrase. Affordable needs to be a clear and defined benchmark based on the average wage earned by the American public, as well as an objective we can work toward. Otherwise, it is always going to be politically easier to simply redefine “affordable” or “universal” than making the tough changes our system desperately requires.

Note: Retired members pay 25 percent of the premium, but the average out-of-pocket premium costs $250 per month for FEHB. Medicare average premiums are $140 per month.

SOURCES: Jon Walker — writer, health insurance policy expert; Medicare.gov; Wikipedia, healthcare.com; Kaiser Foundation

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Reid Harlocker is a Hayden resident.