By Bill Rusteberg
The American health care delivery system has reached a boiling point. The average working American can no longer afford health insurance and those who can often find they can’t afford to use it.
Many middle class Americans have become functionally uninsured and their paymasters cannot continue to absorb double digit rate increases that inevitably come with each annual renewal.
Something must give because no one disputes our current system is unsustainable.
Is the answer more government control of health care? While we see some merits we must consider real world realities. When we consider the economic impact of more government interference in health care one must understand it is not simply a product of lower health care costs through price fixing and rationing of care, it’s much more than that. There are certain political roadblocks difficult to overcome.
The medical industrial complex is too big to fail. There are 22 million workers in the health care industry, one of the largest and fastest-growing sectors in the United States that accounts for 14% of all U.S. workers, according to the Census Bureau’s 2019 American Community Survey (ACS). In addition the health and medical insurance industry employs 600,244 people according to the U.S. Department of Labor Statistics. More government control will affect the livelihood of more than 14% of American workers, most of whom are voters. A single payer system will eliminate many of these jobs. There is not a politician on the planet who wants to support job loss within their constituency. Instead they will continue to place band aids on a failing system while pandering the fake value of their efforts to solve health care.
More government interference will not quickly solve the ongoing demise of the middle class in any meaningful way. That’s a problem because we are out of time and out of money to continued participation in government mandated health insurance schemes. Yet to challenge onerous government mandates driving health care costs to unaffordable levels and subjecting non-compliant criminal plan sponsors to punishing sanctions comes with a price powered by political retribution, enforced by powerful bureaucrats with guns and badges.
Some plan sponsors have attempted to solve health care on their own with some success while remaining within federally mandated guard rails. Their strategies include narrow managed care networks, spousal carveout, wellness plans, direct primary care, medical tourism, drug importation, reference based pricing, cash pay claim strategies and other schemes including non-traditional risk transfer strategies.
Attaching to grey areas in ACA legislation opens additional strategies birthed in a mindset driven by “It’s easier to ask for forgiveness than ask for permission.”
An example of grey area strategies is a 300 member group that was facing bankruptcy seven years ago due to three plan members racking up +$500,000 per year in specialty medication. A self-funded plan, upon renewal all three were lasered. Something had to be done and we were tasked with solving the problem. We reached out to five PBMs with the following question: “Can a plan limit their Rx formulary based on price and remain ACA compliant?”
All but one said NO!. There was no hesitation in their replies. Those that said NO! were adamant and pointed to certain sections of the ACA. The Lone Ranger that said YES! also pointed to certain sections of the ACA to bolster their position.
Our philosophy has always been to ask for enough opinions until you get the one you like then seize it. We have found this to be very effective over the years (especially when dealing with the Texas Department of Insurance). Ask two lawyers for an opinion and you’ll get three.
Our client took our recommendation. They eliminated certain high cost drugs using pricing as a benchmark excluding drugs above it, a strategy they have continued to practice ever since. Had they not taken action the plan would have been terminated leaving 300 plan members uninsured including the three specialty drug users. Bureaucrats with guns and badges have yet to show up.
This strategy has become increasingly prevalent across the Fruited Plains with the same effect.
But is this enough? Or is it time for civil disobedience?
Is it time to simply disregard the ACA and offer benefits based on utilitarianism, the philosophy of “The Greatest Good for the Greatest Number.” And if so, what would that look like?
A good indication is what Sedera has accomplished through their health sharing program. Health sharing plans are not insurance plans and they are not ACA compliant either (do you hear the precursor drum beat of a revolution brewing here?). These plans incorporate certain pre-existing condition limitations and other limits that were common prior to passage of the ACA when health insurance was insurance in it’s truest sense, not a government mandated entitlement program.
Monthly member contribution rates are significantly lower than traditional insurance premiums. Age bracketed, their best plan, comparable to a $500 deductible insurance plan in many ways, has an average mean monthly contribution rate of $351. With a higher member upfront share the average mean contribution rate can be as low as $208 per month.
The Sedera health sharing plan, like others, represent a return to the philosophy “you don’t insure predictable loss, you insure unexpected loss.” There is only so much money to go around. It needs to be conserved to the good of the many rather than to the expense of the few.
A large employer group adopting similar strategies in lieu of ACA qualified health insurance would be guilty of crimes punishable by gun toting, badge bearing bureaucrats. A broader view, and what matters most, is whether these actions are right or wrong, depending on their effects.
“Let a beggar, pressed by hunger, steal from a rich man’s house a loaf, which perhaps saves him from starving, can it be possible to compare the good which the thief acquires for himself, with the evil which the rich man suffers?” – Jeremy Bentham
The effects of continuing to pay for ACA qualified health insurance are devastating. It includes less pay for workers, less opportunity for business growth resulting in fewer workers employed, ever increasing financial barriers to health care through cost shifting to plan members whose take home pay diminishes through government quantitative easing and ever increasing health care costs, leaving less money to pay for every day needs and fewer choices in health care access. This constant erosion will eventually destroy the American middle class leaving only the rich and a poor beggar class with no counter balance in the middle.
In the alternative, offering a health insurance plan incorporating common sense strategies in disregard to government oversight, covering unexpected loss with internal protections for the benefit of the majority, will bring happiness to the greatest number by providing lower cost access to better health care, more business profitability leading to higher employment rates and more pay for workers. Only under this circumstance will the American middle class survive.
Civil disobedience can be a powerful weapon. There have been times in history where it has proven to be necessary for the common good. We need a Martin Luther King, a Nelson Mandella or a Mahatma Gandhi to lead the way.
The time is now.