Bottom line in reform debate: We need to address costs
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.