Since the early 1980’s I have found myself in the challenging position of trying to get people to talk about and understand the complexities of the health care delivery and financing systems in our country. The sheer volume of dollars that run through this system and poorly integrated multiple levels within it have been a concern since I started studying this segment of our economy.
The fact that it operates like no other segment is even more challenging. Where else does supply create demand? I am reminded of the movie line: “build it and they will come”. Add a new technology to a geographic area and you will see geometric progression in the use of that service. Add new hospital beds and they will likely be filled.
I had been frustrated by the lack of concern or national serious dialogue about a system that consumed so much of our GDP.
Then comes the Affordable Care Act. The authors of this legislation were inspired by the German health care system that is employer based. One of the key features of the law is the employer mandate. Theoretically this would be appropriate for a capitalist based economy. This was to protect against accusations of socialism.
Of course, this ignores the fact that our Medicare, Medicaid (MediCAL in CA) and VA systems combined are likely the largest socialized medical system in the world.
The initial thrust of the law was to bring more people into the system and provide them with health insurance. The employer mandate and the individual health market reforms are the primary tools to do so.
The advance premium tax credit (APTC), also known as subsidy, allows lower income families access to insurance at an affordable rate. A tax credit is much more valuable than a deduction and in this case, the credits are applied directly to the insured’s premium, immediately. This is a huge incentive to get people into the market.
Requiring insurers to eliminate any pre-existing condition limitations further increases the incentive.
Most recently in the news is the Cadillac tax. The tax is 40 percent of the value of employer-sponsored plans that exceed certain thresholds: $10,200 for individual coverage and $27,500 for family coverage. In its first year, 2018, it would have affected 26 percent of all employers and nearly half of larger companies, according to the nonpartisan Kaiser Family Foundation. Since the tax is indexed to general inflation, which rises more slowly than health care inflation, it would have affected a growing share of health plans over time.
Congress has just voted to postpone implementation of this tax until 2020. One might ask “Why such a tax in the first place?”.. After all, if the goal is to provide good benefits, then they will likely be expensive. Why punish those that do so?
The goal was simply to try to rein in spending on health care. With almost 20% of our GDP spent in one segment of the economy, we are in danger of sacrificing others. By reducing spending on benefits, plans would be forced to control costs by a combination of benefit design and plan management.
Total spending per capita on health care in the US far exceeds any other industrialized nation. The rate has progressed as follows since 1970 according to the Kaiser Family Foundation:
1970: $356,
1980:$1091
1990: $2810
2000: $4703
2008: $7508
Since I began sounding this alarm in 1980 it has been my contention that Americans can do better. We spend more on health care than any other industrialized nation, yet we are not more healthy. Large scale overview statistics are daunting and somewhat overwhelming. But, they tell us about trends on the whole and are important for us to consider as we plan the future of our nation as well as our individual use of health care services.
There is a trend toward more transparency in health care, but it is far from where it should be. As consumers it is my belief that we must be given the information to make good decisions. We have to be able to know what questions to ask and work in concert with our providers to manage this resource, particularly in the presence of a serious diagnosis. .
First and foremost though, we must take responsibility for our own health. Now is the time for New Year’s resolutions. Can we make and stick to a commitment to exercise and health diet? Per chance to dream that we as a nation did just that! Then we would really see the American exceptionalism that we all would like to believe exists!
