The price of san­ity

Northwest Arkansas Democrat-Gazette - - VOICES - Bret Stephens Bret Stephens is a New York Times colum­nist.

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.

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