Both Republicans and Democrats agree that health care costs are too high and that there are too many people that are not covered by health care insurance. Both the Affordable Care Act (ACA) passed during the Obama administration and several plans being discussed by the Republicans have remarkably similar goals. If the Republicans follow through on their promise to “repeal and replace” the Affordable Care Act, then they must carefully tailor their plan to (1) decrease costs of health care, (2) allow everyone to have access to some form of health insurance, (3) allow patients to have choices in tailoring their individual plans, (4) place an emphasis on preventative care so as to keep more patients out of the hospital, and (5) have some form of medical malpractice tort reform. They should also do what they can to keep the parts of the ACA that garnered good feedback.
There were several good ideas imbedded in the Affordable Care Act. For example, pre-existing conditions could no longer be used to deny a person health care coverage. Small businesses (defined as a business with less than 50 employees) were given tax credits for up to 50% of employee premiums. The cut-off age for young adults to be covered by their parents insurance was raised to 27. This was especially good for recent college graduates who were finding it difficult to get jobs in the depressed economy.
The ACA also decreased the “donut hole” by 50%. The previous hole limited prescription medication expenditures over $2,700.
Lifetime caps on health insurance expenditures were to be eliminated by the ACA. Previously, insurers could cut off patients whose bills exceeded a certain amount. With the ACA, insurers had to keep paying for health care so long as the patient was not dead. This clause has taken on more importance with the McMath case which I wrote about last month (this case described a patient who was deemed to be dead in California but alive in New Jersey).
Under the ACA, all insurance plans had to include preventative care without co-pays by 2018. Preventative care is important in keeping patients with chronic conditions out of the hospital where the costs are highest.
At this time, it seems clear that the Republicans have the votes to repeal the Affordable Care Act. There are several models being presented as to what they will replace the Act with and it is now worthwhile to look at some of these ideas. Whichever plan they choose, it would be wise for them to keep the good aspects of the ACA in place.
Here are some thoughts on what a new health plan might incorporate.
Most Republican plans will eliminate the community rating where everyone in a community are charged the same premiums. The community rating was needed to keep premiums down for people with pre-existing conditions but it forced others to pay higher premiums. Also, mandatory benefits in the ACA health plans forced people to pay for benefits they would never use. The Republicans argue that people should not have to pay for plans mandating care for such things as in-vitro fertilization, cosmetic surgery, and abortions. The ACA required this coverage so that the higher premiums could be used to off-set the costs of the patients who needed these benefits and other benefits that few would use.
There are several other ideas that are being discussed to make health care insurance more affordable. For example, vouchers of $5,000 for the purchase of health insurance with tax-free dollars would allow people to shop for policies that would meet their budget and needs. This would not require a large bureaucracy; it would only require people to process the forms and police the system for fraud. People would have a vested interest in their health care policy and, hopefully, the free market would decrease the costs. The use of vouchers would be a good way for those with pre-existing conditions to purchase policies without having everyone else pay higher premiums for coverage for things they would never need.
Currently, the states regulate health care insurance. This leads to large cost disparities. If people could cross state lines to buy insurance, then they could shop for the best deals to meet their needs. I believe the Commerce Clause would allow the Congress to pass a law to allow for this. This would probably lead to an overall decrease in premiums as the insurers would have to compete with more companies in other states.
Another way to cut health care costs is to put people in charge of their own routine care. One way to do this is to let people set up health savings accounts where tax free dollars are used to pay for routine care. Medical providers will have to compete for these dollars by offering the best service for the lowest price. Once the free market is back in play, drug companies, hospitals, and providers will not be able to raise prices without losing patients.
The health savings accounts should not be used for over the counter remedies and there would be tax penalties for those patients who make non-medical withdrawals.
Premiums for health insurance should be tax deductible. If companies can do it (and they can) then individuals should be allowed to do this also. This would allow most of the 176 million enrolled in company owned plans to buy their own insurance and force the companies to compete by offering supplemental tax free compensation to allow the consumer to buy more insurance if they see the need. This would be another way to allow those with pre-existing conditions to get coverage without having everyone else pay higher premiums.
Health coverage should be portable. Employees should be able to control their own health plans and should be able to take these plans with them from job to job. This would force employers to treat their workers better since the worker would not be locked into the job for fear of losing their health care insurance.
Health care insurance should be like other insurance i.e., auto, life, home, and fire. The plans would be private property and they would allow for maximum choice. They should be flexible and creative allowing the consumer to buy a policy they deem necessary to meet their needs. This would remove big business, labor unions, and politicians from the health insurance business and let the free market control the costs.
Updating Medicare by allowing each senior an actuarial determined $250,000 to purchase some form of elder care insurance would encourage older patients and their care-givers to shop for their own health care. Again, it is hoped that the free market would lead to decreased costs as this patient population would be empowered to look for the best deals.
Allowing the states to cover their own Medicare and Medicaid populations would encourage better management that is state specific. Each state would be given a set amount every year based on their Medicare and Medicaid population. The states could then experiment for better ways to improve care and decrease costs. Successful programs could be emulated by states that are not as successful.
Unfortunately, under the Affordable Care Act, many providers stopped seeing Medicare and Medicaid patients as the costs exceeded the payments. Costs and payments must be brought into alignment so that the providers will be willing to care for all patients in the system.
If the government would allow charitable care to be tax deductible, health care providers would be more inclined to treat the low income or uninsured patient. This would be much cheaper than having these patients rely on the emergency room for their primary care. It would also lead to a predictable continuity of care which would be beneficial for the patients and the providers. Providers who have patients for the long term are more likely to reap the benefits of managing chronic conditions in the “out of hospital” setting.
The Affordable Care Act had no provisions pertaining to tort reform. Most Republican plans recognize that tort reform is critical if health care costs are to be decreased. Malpractice insurance is costly. For some specialties, premiums can be over $200,000 per year and these costs are transferred to the patients. Defensive medicine as a strategy to defend against potential malpractice claims raises the cost of health care for everyone. Estimated costs for defensive medicine is about $124 billion per year and each year, this estimate is going up.
Some states limit the payment for non-economic damages in a malpractice suit in an effort to control malpractice premiums. Some states may soon try to take malpractice claims out of the hands of juries by using alternative forms of resolution such as Health Courts.
Limiting attorneys’ fees is another strategy being looked at to decrease the costs of malpractice premiums but attorneys are lobbying against this; since many legislators are themselves attorneys, this will be an uphill battle.
The ACA was over 2000 pages long and was very complex. The Republican plan should not try to fix everything at once. They should start with some laws that are understandable and allow some choice for the patients. The providers also need some protection to keep all the cost cuts from falling on their shoulders.
No matter what elements are incorporated in a Republican plan, it looks like they recognize the fundamental fact that optimal health care is a very personal experience between the patient and his provider. This experience must be affordable and patient centered. Patients should be allowed to pick and keep their provider. The constant switching from one plan to another from year to year which often lead to new providers who did not have an on-going relationship with the patient was not good health care. It is no surprise that the ACA was struggling to meet its mission. I look forward to studying the details in the proposed Republican plans. I think everyone should be as interested as me.
by Darryl S. Weiman, M.D., J.D.
Professor, Cardiothoracic Surgery, University of Tennessee Health Science Center and Chief of Surgery, VAMC Memphis, TN