Opinion: Three Ways ObamaCare Must Finish The Job

dendy Mike Dendy

No one will bring down America’s highest-in-the-world health-care prices until consumers and the employers who pay for most privately financed care know what the prices actually are, says Mike Dendy, CEO of Atlanta-based Advanced Medical Pricing Solutions. Americans not only pay the world’s highest prices for care, but what they pay varies wildly from doctor to doctor, hospital to hospital.

With Year 2 enrollment over, CEOs describe next steps to control health-care costs

By TIM MULLANEY

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With Obamacare’s second open-enrollment season ending this weekend, the giant law’s Job 1 — expanding health-care access — is all but done. The nation’s uninsured rate had been cut by a quarter through December, and will fall more by Sunday. Nearly three-fifths of the 11-point drop in the percentage of Americans without health insurance that the Congressional Budget Office predicted would happen by 2019 is done. And Florida and Texas haven’t expanded Medicaid eligibility under the law yet.

But what about the Affordable Care Act’s other job — containing costs, so health care doesn’t break our bank? How about delivering on the promise of making health care more like other industries — delivering customer satisfaction like a good car maker or client-obsessed cable company?

Good, you’re awake. Now stop laughing and listen up: The job isn’t done.

Three CEOs of health-care companies in the trenches spent time this week telling me three big things that still must happen. Really, they’re all the same thing. While the part of the law that expanded access has worked, the CEOs agree the ACA needs an even-bigger dose of the free-market medicine that has built most-revolutionary U.S. social policy in 50 years. Here goes:

The market needs way more transparency about prices.

No one will bring down America’s highest-in-the-world health-care prices until consumers and the employers who pay for most privately financed care know what the prices actually are, says Mike Dendy, CEO of Atlanta-based Advanced Medical Pricing Solutions. Americans not only pay the world’s highest prices for care, but what they pay varies wildly from doctor to doctor, hospital to hospital.

The government will eventually have to require standardized price disclosures to keep low medical inflation going, Dendy said. That’s not the same as having the government fix prices. But insurance companies’ negotiations with hospitals and doctors for discounts are secret — so even when a Cigna or Aetna gets discounts off hospitals’ list prices they don’t sent price signals to the rest of the marketplace, he added.

“What the government has to do is demand transparency,’’ he said. “Then employers have to put insurance plans in place that demand consumerism and penalize people who don’t do the right thing. You’d see the cost of health care come down 30-35%.’’

Ideally, the law should give people more flexibility to choose cheaper policies that cover less.

 

One way the law has expanded coverage is through selling millions of plans with deductibles so high that buyers still fear a disastrous medical expense, said Gary Lauer, CEO of online health-insurance broker eHealth EHTH, +0.92% In an eHealth survey, 61% of respondents said they wouldn’t be able to afford yearly deductibles and co-pays, which can top $6,000 under the law, if they ever had major health problems.

 

One reason is the law’s long list of benefits each policy must offer, Lauer said, from contraceptives to mental-health care. That mandate forces people to buy coverage they don’t need, he says.

“Insurance is there to protect against financial disaster, not necessarily to provide every kind of care,” Lauer said.

The shopping experience still needs to be much simpler, so people get insurance that’s right for them — without wasting money.

 

Look at Healthcare.gov and there’s no guidance to help people choose policiesthat match their particular health needs. That’s a problem private sellers can solve, says Noah Lang, president of San Francisco-based broker Stride Health.

Stride does something important that Healthcare.gov doesn’t — filter plans based on shoppers’ self-reported medical history and needs. It matches people to plans that offer the lowest total costs for what they need. Apparently because it doesn’t want to put the government in the position of recommending one private company over another, Healthcare.gov has nothing like it.

“They will never build a layer of intelligence on top of it at Healthcare.gov,” Lang says.

These are innovations entrepreneurs can make, within the free-market construct ACA built.

In a new book, Steve Brill argues that the answer is for government regulating essentially everything, from pay of hospital CEOs to hospital profits, all while encouraging hospitals to start their own insurance plans and create cartels. Yeah, that’ll go well. If you thought insurors had too much power, wait ‘til insurance companies belong to the highest-cost provider of health care — your local hospital. They’ll entrench the old ways, forever.

The right answer is in front of us: More-open markets, more flexibility, more transparency. Much of it is getting built already. Doing the rest is a worthier objective — politically, economically, morally — than yet another vote to take insurance away from 30 million people that Obamacare covers now.

Tim Mullaney writes about economics, often zeroing in on health care and energy. Contact him at tim.mullaney@outlook.com or follow him on Twitter @timmullaney.