The price of sanity

It costs as little as $10 and as much as $10,169 to get the same blood test in California. A lower-back MRI priced at $199 at one Florida clinic goes for $6,221 in San Francisco. A shoulder X-ray can run anywhere between $21 and more than $700 across the United States.

In Spain, a 30-day supply of Truvada, which helps prevent HIV-AIDS, costs an average of $559, according to data compiled by the International Federation of Health Plans. In the United States it’s $1,301. In Britain, the average price of an angioplasty is $7,264, versus $31,620 in the United States. Hip replacement in New Zealand is $15,465. The U.S. figure is $29,067.

Many things about health care delivery in the United States are insane. Economist Kenneth Arrow crisply described the biggest insanity back in December 1963. “Insurance,” he wrote, “removes the incentive on the part of individuals, patients, and physicians to shop around for better prices for hospitalization and surgical care.” When did you last go bargain-hunting for a urinalysis?

This is the third-party-payer problem, and if Republicans had been more modest and less inept in advancing a realistic healthcare agenda, they might have spent the past seven years understanding, explaining and changing it. Instead, it was “repeal and replace” all the way to the political Verdun in which they now find themselves.

What is it that Americans don’t like about their health care? Chiefly, skyrocketing insurance premiums, higher deductibles and decreasing access to services. Obamacare has made all this worse.

Average premiums for the benchmark Obamacare plan rose 8 percent in 2016 and 21 percent in 2017, according to Kaiser Family Foundation data, while deductibles were up by about 15 percent. For some markets and plans, the increases were considerably higher: 67 percent in Oklahoma City; 71 percent in Birmingham, Alabama; 145 percent in Phoenix.

Same deal for employer-sponsored plans. “While Sen. Obama promised during his campaign in 2008 that the average family would see health insurance premiums drop by $2,500 per year, the average family premium for employer-sponsored coverage has risen by $3,671,” noted Maureen Buff and Timothy Terrell in the Journal of American Physicians and Surgeons. That was back in 2014, and premiums continue to rise.

Meanwhile, insurers keep walking away from Obamacare’s unprofitable exchanges. Anthem and MDWise announced last month that they were withdrawing from Indiana, which will leave 76,000 Hoosiers in need of a new insurer. Anthem said it would be pulling out of the exchange in Ohio. Aetna warned it was pulling out of Virginia in May and Iowa in April. Humana did as much in Tennessee in February. More than 1,000 U.S. counties — one-third of the total—are down to just one insurer, according to a Bloomberg analysis.

This was predictable. “Obamacare was sold using the language of choice and competition, but it is actually reducing both,” a Wall Street Journal editorial warned back in 2010, when the law was months old. Health insurance doesn’t work when it isn’t allowed to operate as insurance: when it cannot tailor its products to the preferences and budgets of consumers, and when it cannot make business decisions based on considerations of risk.

You do not get to insure your house after it’s on fire. Why should Americans have the unalienable right to wait till they get sick (at least during open enrollment) before buying health insurance?

Here, however, is where the philippic against the Affordable Care Act ends. Barack Obama inherited a broken health care model and made it worse, unless you count shunting millions of people into Medicaid as a triumph. For all the liberal angst about the Republican House and Senate bills, they are only tinkering with the same unfixable formula.

The only genuinely promising reform in the Republican health bills are proposals to nearly double contribution limits for heath savings accounts and allow them to be used to pay for premiums. Enrollment in tax-deductible, investable HSAs has roughly doubled since Obamacare took effect, to about 20 million, because they help cover out-of-pocket costs for low-premium, high-deductible plans.

But as Peter Ubel of Duke pointed out last year, they’re mainly attractive to wealthier people with income to spare. Government subsidies of HSAs for low-income people, Ubel writes, could turn HSAs into something other than “another tax break for the wealthy” and “make our health care system more responsive to consumer needs.” This is what Singapore does, along with mandates for employees to set aside a portion of their income for HSAs, and for employers to match it.

HSAs can restore sanity to a market in which prices are invisible and costs keep rising, and in which the concept of “insurance” has lost its meaning. Republicans who want to salvage a conservative policy victory from their health care fracas would be wise to leave Obamacare alone, so that its authors can pay the price for its failure, just as the GOP restores price to the rest of the health care system.