Cost of care should be focus of reform
As the U.S. Senate explores its options for replacing the Affordable Care Act, Republicans are finding “repeal and replace” harder than expected to deliver. Much of their focus has been on hot-button issues such as expanding Medicaid and subsidizing insurance premiums to reduce the prices people pay to get health care. However, like the ACA before it, this treats a symptom rather than the underlying disease. Even with subsidies, insurance premiums will continue to increase until policymakers address the rising costs of health care delivery.
The insurance premiums people pay are directly linked to the cost of services people consume. By purchasing health insurance, people spread the costs of their care — and that of others — into “risk pools” that are designed to make it easier to budget for future health care costs and protect against the financial damage of catastrophic events such as a heart attack or a car accident. This works well for unexpected illnesses or accidents, but not for managing the long-term conditions that more and more Americans face. Long-term conditions worsen over time and require more health care, which increases costs and raises insurance premiums.
While sensible changes are needed around the costs of insurance, changes also are needed around the costs of health care delivery. For example, research by the International Federation of Health Plans shows that a coronary bypass in the U.S. costs, on average, $78,318, compared with $24,059 in the United Kingdom and $14,579 in Spain. Higher costs aren’t translating to better health outcomes; in fact, deaths from conditions treatable by health care are higher than in any other developed country. Americans are not getting the care they’re paying for.
Ultimately, this means providers will need to work differently and make difficult choices. For example, hospitals could replace private rooms with general wards or treat patients using remote consultations. Doctors and nurses will also need to reconsider their expectations around compensation, so that pay is in line with levels paid in other developed countries. This is a bitter pill to swallow, but it will lead to other changes such as lowering the costs of training medical professionals, reducing the bureaucracy that distracts from patient care and recruiting clinicians from other countries to fill gaps. Executives and administrators should also reconsider their financial expectations; health care is fundamentally a public service and pay should reflect this. Pharmaceutical companies will need to change how medications are priced and likely negotiate with state and federal agencies.
Americans, as users of health services, may also need to change their expectations. Patients may find themselves staying in a ward rather than their own room when in hospital; seeing a nurse rather than a doctor for routine consultations; and possibly waiting longer to have a test or procedure done. Patients may find themselves having less choice and reduced access to the latest tests or medications. Changes such as these are necessary as the American health system transforms from delivering services to those who can afford them to providing high-quality care to those who need it.
The impasse in Congress may yet give hope to Americans wanting better, more affordable health care. If politicians take a step back and focus on the costs of care, they will find more opportunities to deliver lasting reforms.