(Part Two of a Four-Part Series,
Making the Healthcare Debate Understandable)
Overview of Part One
Part One of this community education series clarified differences between delivery of healthcare services and how we pay for them. This article addresses why it’s hard to understand (let alone control) what we’re paying for and outlines the ACA’s purpose and protections.
Why is Controlling Healthcare Costs So Hard?
Healthcare service and financing costs hard to understand and control for three reasons:
First, healthcare costs aren’t “transparent.” When you buy a product, like a television, cell phone, or car, you know how much it costs as a basis for making your purchase decision. There’s a “sticker price.”
That’s harder to figure out for healthcare services. Each provider may have a different price for the same service. Further, the relationship between patient and the referring physician is often strong enough in healthcare that we do what he or she suggests and let the payer (private insurance, Medicare, and so on) sort out what’s “allowable” and what’s not.
Second, many prescription drugs are costly. One cause is high research and development costs, but the American College of Physicians reports that the lack of price competition among different drug makers for the same drug is another cause. The Medicare Modernization Act of 2003 banned Medicare—the largest American purchaser of drugs—from negotiating volume discounts from manufacturers, even though Medicaid and the Veterans Administration can do so. Many drugs are made and sold for less overseas, but their import is restricted, supposedly for safety reasons.
Third, health insurance policies vary in prices and benefits. They’re hard to compare in apples-to-apples terms for what services and providers are covered, and to what degree.
Why Should I Care If I’m Not Sick?
Young people can’t imagine getting really, incurably sick. Medical bills are hard to anticipate, control, and pay, especially when you’re diagnosed with a serious illness. Statistics prove that costly diseases don’t respect age, where you live, or your political affiliation. Even kids get sick, and if you’re not sick now, you may be soon.
- The American Heart Association reports that cardiovascular diseases affect more than 1 in 3 adults (over 92 million) and are the most frequent cause of American deaths. Almost 1.6 million people have a heart attack or stroke each year.
- The American Cancer Society reports that one in two men and one in three women will get a cancer diagnosis in their lifetimes. That means nearly 1.7 million new cancer cases and over 600,000 cancer deaths in 2017, with a total of over 15.5 million cancer survivors. Some survivors relapse, and others experience treatment after-effects.
These are not small numbers, and they pertain to only two of the diagnoses that cause huge treatment costs and lost income from work absences. In 2016, the largest proportion of all personal bankruptcies each year (around 62%) stemmed from medical bills. Around three quarters of those with medical bankruptcies had medical insurance but learned after diagnosis that the policies they’d bought didn’t pay enough to protect them from debt.
Intent of the Affordable Care Act
ACA is a nickname for the Patient Protection and Affordable Care Act (PPACA). The law was intended to protect patients while simplifying the system for buying health insurance and paying healthcare providers. Standardizing benefits and terms for health insurance contracts nationwide was supposed to make it easier to choose, improve care, and provide more complete coverage for the most-needed services.
Regardless of whether you liked the ACA or not, it’s important to understand what it was supposed to do. Before the ACA was passed, each insurance company had different restrictions as to what services it would cover, at what premium cost, and from what providers. Someone at the company would then review each claim and decide what to pay. Standardization of options was intended to reduce non-medical administrative costs and make insurance more affordable.
The ACA defined what benefits insurers would be required to include in order to enroll consumers in “health insurance” products (including Medicare and Medicaid). The intent was to:
- Cover 10 “essential health benefits,” including preventive (wellness exams, colonoscopies, mammograms, chronic disease management, etc.); doctor visits, surgery, and hospital stays; outpatient care; maternity (including pregnancy and newborn care); mental health (including substance abuse); lab services; prescription drugs; emergency services; pediatric (including children’s dental and vision care); and rehabilitative care.
- Prevent insurers from capping either annual or lifetime payments for subscribers.
- Prevent insurers from refusing to cover or setting prohibitively high premiums for pre-existing conditions (like cancer, heart disease, high blood pressure, substance abuse, and so on) that were diagnosed before the patient applied for coverage from a given insurer.
- Make health insurance more affordable by expanding access to Medicaid benefits for lower income and disabled citizens.
The Center for American Progress (an independent, nonpartisan policy institute) estimates (based on government data) that over half of non-elderly people nationwide (including children) have pre-existing conditions and so are protected by this ACA provision.
The ACA also required everyone to purchase insurance, even though most people had job-based group coverage. The point of this requirement, as with any kind of insurance, was to create a large enough pool of premiums that costs incurred by older, sicker people could be funded by premiums paid by younger, healthier people.
In other words, the national and state insurance marketplaces or “exchanges” feed business to the insurance companies and cushion their financial risk. The law also required insurers had to pay out in benefits at least 85% of the premiums they receive from subscribers.
The next part of this series will address different ways of paying for healthcare services, and the fourth will explain healthcare financing bills currently filed in the Massachusetts Legislature and how to talk with lawmakers about them.