I’ve long supported the premise that our health care system was in need of reform that would make care more affordable and accessible to everyone, regardless of their health or financial situation. But I’m starting to feel a bit frustrated by what feels like an over-emphasis on regulation of health insurance carriers and not enough focus on ways to actually control the cost of health care (including over-utilization). If people are thinking of this process as health insurance reform rather than health care reform, it’s doomed to failure.
A Denver Post article from last week details the negative consequences for the people of Colorado if the PPACA were to be repealed. HHS broke down the numbers for each state in order to emphasize how much the new law is already helping citizens across the country. And HHS Secretary Kathleen Sebelius explained in an op-ed why we shouldn’t turn back the clock on health care reform. She makes many valid points, but she also notes that the reform law prohibits the “worst abuses of health insurers.” Although the PPACA did include numerous provisions to address the rapidly rising cost of health care, the issues that have become popular talking points almost all center around new regulations in the health insurance industry.
I’ve addressed this point many times, but the fact remains that most Americans are very insulated from the actual cost of health care (and the problem of over-utilization and it’s impact on costs). People tend to be much more aware of the cost of health insurance. This is especially true if they purchase individual health insurance, but those with employer-sponsored group coverage also tend to be cognizant of increases in payroll deductions and rising copays and deductibles. And although the cost of health care is the primary driving factor behind the cost of health insurance, it’s the latter that people tend to focus on.
It’s true that some of the PPACA regulations specifically addressing the health insurance industry are, or will be, beneficial to a lot of Americans. They will help to make health insurance more accessible and fair, and hopefully will lead to fewer people finding themselves in positions where they are unable to get coverage. But I don’t think that the often-vilified health insurance industry is the root of the problem. I think that more focus should be directed at ways to combat the rising cost of health care (including over-utilization) rather than taking a cart-before-the-horse approach of trying to reign in health insurance premiums first.
Despite federal regulations on medical loss ratios, individual policies in Colorado are an average of 12.9% more expensive than they were last year, and the Colorado Division of Insurance has said that very little of this rate increase can be attributed to new PPACA changes pertaining to health insurance carriers. The driving factor is the cost of health care, including things like an overall decline in health, increased utilization of care, and newer, more expensive treatment options. In CA, Blue Shield has announced rate hikes of up to 59% for individual policies as of March 1. The increased rates are in compliance with the new MLR guidelines, and according to the insurer, have “almost nothing to do with the federal health reform law.” Even with the higher rates, Blue Shield still “expects to lose tens of millions of dollars on its individual healthcare business in both 2010 and 2011.” Basically, health care continues to get more expensive, and people are utilizing health care more than ever. Prescription drug usage continues to climb, and high-tech medical technology is increasingly the go-to solution for both patients and doctors. Until we figure out a way to slow the increase in health care cost, there is no realistic way to slow the corresponding rise in health insurance premiums.
