An earlier post highlighted who benefits from our nation’s dysfunctional healthcare system. Our system costs twice the average of the 12 countries that belong to Organization for Economic Cooperation and Development (OECD). In 2022 our cost was $12,555 per capita compared to the average of $6,414 according to The Peterson Foundation. In the second highest nation – Switzerland – cost was $8,049. The blog post demonstrated that we do not get better population health outcomes from the higher prices we pay. In this post, let’s look at four root causes of higher spending on healthcare in the U.S. Any hope of finding a solution requires an understanding of these factors. Our system First, we have a highly fragmented system for paying healthcare providers. Medicare, Medicaid, self-insured employers, insurance companies (paying the healthcare bills for insured individuals), and individuals without insurance each require different…
Keeping the ACA baby, but changing the bathwater
The Affordable Care Act (ACA) got a couple of things right, so right that we should not throw the baby out with the bathwater if we want to move towards a cost-effective, value-driven, and equitable healthcare system. There are four parts of healthcare insurance reform: private insurance reform; subsidies for low-income individuals who cannot otherwise afford insurance; government coverage (such as Medicare and Medicaid); and operation of markets (exchanges) where insurance is purchased. The ACA scored high grades on the first three elements and poor grades on the latter. Let’s examine why. Private insurance reform included adding children up to age 26 in insured groups (also called pools). Including young people improved the risk diversification of the pool, which was good for everyone’s rates as those twenty-year-olds are so healthy. This policy also kept more young people insured. Pre-ACA private insurance benefited insurers’…