Bot­tom line in re­form de­bate: We need to ad­dress costs

Modern Healthcare - - COMMENT -

Bill or no bill. Re­peal or re­place. As a na­tion, we must ad­dress the cost cri­sis grip­ping our sys­tem. As a pol­icy, the Af­ford­able Care Act re­formed in­sur­ance cov­er­age. It ex­tended cov­er­age to peo­ple with pre-ex­ist­ing con­di­tions and young adults un­der 26. Men­tal health and sub­stance abuse re­ceived more fund­ing. And Med­i­caid was ex­panded in sev­eral states to cover more peo­ple in need.

But none of this made health­care af­ford­able. In fact, law­mak­ers ex­pected that ex­panded cov­er­age would equal in­creased cost. They even tried to solve for it by in­tro­duc­ing tax penal­ties and in­sur­ance re­im­burse­ments.

The Se­nate bill missed the mark, as well. It was just too hard to stom­ach 22 mil­lion Amer­i­cans los­ing health plan cov­er­age.

Yet, the prob­lem re­mains: How do we lower costs? To­day, the av­er­age per­son with an ex­change plan pays al­most $4,000 in de­ductible fees. Fam­i­lies can be on the hook for over $12,000. How­ever, in any given year, more than 80% of non-chron­i­cally ill in­di­vid­u­als spend less than the av­er­age de­ductible for a sil­ver plan (with an av­er­age of about $4,000) on the ex­changes. That means for most Amer­i­cans, health­care is paid for with cash out of pocket.

This gives us an in­cred­i­ble op­por­tu­nity to in­tro­duce mar­ket dy­nam­ics that let peo­ple shop for high-qual­ity, low-cost care—and lower costs for all through the eco­nomic prin­ci­ple of price elas­tic­ity.

We’ve seen that when pa­tients con­trol the mar­ginal dol­lars, health­care mar­ket­places emerge. For in­stance, the cost of con­ven­tional Lasik surgery de­creased 25% from 1999 to 2011.

And con­sumers can save sig­nif­i­cantly when they shop for rou­tine med­i­cal ser­vices. Through claims data, we’ve ver­i­fied that when mem­bers shop for CT scans, they save an av­er­age of $507; an av­er­age $586 on MRIs; and an av­er­age of $1,250 for colono­scopies. Th­ese sav­ings add up. With 80 mil­lion CTs per­formed in the U.S., there’s the po­ten­tial to save $40.6 bil­lion on that ser­vice alone.

Con­sumers can’t af­ford to over­pay for care. Cash re­wards, price com­par­isons, op­tions to shop via the web and with pow­er­ful phone sup­port can breed mar­ket com­pe­ti­tion that moves vol­ume, saves money for con­sumers and low­ers prices over­all.

Hey­ward Doni­gan Pres­i­dent and CEO Vi­tals Lyndhurst, N.J.

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