In a recent guest essay in the New York Times entitled, “What’s Wrong With Health Insurance? Deductibles Are Ridiculous, for Starters” by Dr. Aaron E. Carroll, what I found the most interesting was the comment section.
It was a cross-section of all parts of America, self-identifying as conservatives, libertarians, and liberal-leaning, all in 100% agreement that our healthcare system is not working for people. Mike from South Carolina put it nicely, “You know what’s shocking about these comments? I just read about 100 of them, there’s no disagreement. This system is a shambles, it’s beyond predatory and deep into criminally fraudulent, and it seems to be impacting everyone. In nearly every other article, there are strong opposing views. D vs R, green vs drill baby drill, gun lovers vs gun haters, the believers vs atheists. Not this one. It seems that we may have all found common ground on this one, this system is awful.”
America’s healthcare system is a profit-based industry that treats patients as consumers. But, there are several differences in how consumers interact with the healthcare industry and other businesses. The biggest difference is necessity. Healthcare is not really an option so people pay whatever they must to stay alive.
Jack from Florida had this to say, “When you’re sick, or fear you may have a very serious illness, the market plays no role in who you choose as your doctor or, in serious cases, your oncologist, surgeon, and hospital. You go where you think you will get the best care. No one shops around for the best deal on spinal surgery or chemotherapy, or goes to a doctor because his fee is 10% lower than other doctors.”
And people pay it however they can, very often resulting in debt. Dr. Carroll cites disturbing facts about medical debt like these:
- More than 100 million people in America (41% of adults) have medical debt
- 1/4th owe more than $5,000
- Medical debt is underestimated because it can be hidden behind credit card balances, personal loans, or provider payment plans
Mary from Massachusetts said, “My husband and I worked all our lives and were looking at a modest but comfortable retirement. When he became sick with a very long, debilitating, and ultimately fatal illness, we watched our savings disappear. It’s baked into the system – one long illness, folks, and it’s game over unless you’re fabulously wealthy. Now I am an impoverished widow, unable to work because of age and my own health issues. I don’t feel sorry for myself because I know there are so many of us in the same precarious situation. I feel sad. And angry.”
The Affordable Care Act was designed to improve access to health insurance, which was supposed to help healthcare be more affordable. So, what happened? Dr. Carroll points to “cost-sharing”, which led to higher out-of-pocket expenses like deductibles, co-pays, and co-insurance, which the ACA did not cover.
The emphasis on sharing costs comes from the notion of “having skin in the game”, a concept used to disincentivize people from seeking unneeded care. It just isn’t working like that. According to a recent working paper from the National Bureau of Economic Research, cost-sharing impacts to older adults, who qualify for Medicare at age 65 were staggering. The researchers found a highly sensitive price effect. A minimal $10 increase in cost-sharing led to:
~23 percent decrease in drug adherence
~33 percent increase in monthly mortality
To recap, a minor $10 increase per prescription caused deaths. That’s not skin in the game, it’s woefully inefficient healthcare. There are solutions that can be implemented now, without having to wait for Congress to address the problem.
Right now, transparency is the big trend in government efforts to lower costs. A new transparency rule from the CMS went into effect on July 1 and it requires health insurers to disclose their pricing and covered services and items. The data is a treasure trove but the sheer amount of it may be too much for the average patient to parse through. This is where savvy healthcare tech companies can bridge the gap. Tech companies are already using AI to analyze millions of data points to help patients, their insurer or employer, and physicians find the right medication at the lowest price. It’s frictionless and popular, which is noteworthy considering the consensus towards the healthcare system is negative. Just look at the comments.
