In casual conversations about healthcare and health reform, I often find, as healthcare advisers, it is our fault that things are broken. It is amazing how many people really do not understand the big picture of healthcare.
A recent conversation with a dinner guest opened with the question, “How can other countries provide free healthcare to all?” The last time I checked, nothing is free and those items and services that you do receive for free, are free, including the value, quality and service that is received or derived. I believe that we all derive greater value when we pay for a product or service.
The first shot over the bow during our conversation came when my guest asked why healthcare costs on the public exchange are increasing. My flip response, “Do you mean the single-payer system?”
Many politicians and tax payers have been pushing for a single-payer system. Over the past 2-3 years, we have seen a number of commercial carriers pull out of the public exchange space, due to poor experience. The end result is an exchange with a single carrier or “payer,” to take care of our national health care needs.
Do we really have an exchange if we have only one manufacturer? Nope, if it looks like a single-payer system and it works like a single-payer system, it must be a single-payer system.
What is now happening is the last carrier standing will adjust the pricing accordingly, to price for the risk and profit. This carrier is now in a position where competition is eliminated; they will set the price for care and we will all pay. “We” defined as those working and paying taxes as well as premium for our employer-sponsored plans.
This was not headed in the direction that my “free healthcare for all” guest was hoping, so it was time to change direction.
Lots of blue
The second shot over the bow: All of this M&A activity within the healthcare space is bad. Please keep in mind, this is an individual who supports a single-payer system — well, at least he thinks he does. The last time I counted we had four major commercial carriers — Anthem, United, Cigna and Aetna, the non-profit BCBS world, and a large number of local and regional health plans.
Assuming Anthem and Cigna stop the bickering and Aetna takes over Humana, we now (in my humble opinion) have three national carriers: United, Anthem and Aetna. UHC is now rethinking their position on the public exchanges. They are a for-profit company and, regardless of your position, they must do what is best for their stockholders.
Looking into my crystal ball, I see lots of blue. Between Anthem and the non-profit BCBS world, we will end up with a single-payer system. My guest was not happy with this, either. We have eliminated competition, and without competition we will not have competitive pricing. Nevermind he is 100% behind a single-payer system. How much competition do we have with a single-payer system?
Shot number three: This crazy idea came from me. I proposed that if we really want to manage and lower the cost of care, we must manage health, not healthcare. All of a sudden I thought I was looking at a deer in headlights. My guest asked me what I meant, so I elaborated:
As a country, why don’t we become proactive, why don’t we let those that are healthy pay less, why don’t we reward for healthy behaviors, why don’t we reward for getting your annual physical and age appropriate testing?
I then jumped into my underwriting 101 pitch. It has been my opinion, for a number of years, until we lower the claims, not just the cost of care, we will not lower the cost of healthcare. Let’s put that into a formula: Lower Claims = Lower Cost of Healthcare.
This is when I lost my guest. The fact is there will always be certain claims that occur, that we cannot prevent. However, if we decreased obesity, smoking and sugar intake by 10%, all while increasing exercise and health awareness by 20% I am convinced that we would see a drop in claims, ultimately driving down premiums. Why did I lose my guest, you ask? He informed me that we do not have a right to mandate what someone eats, drinks, smokes and most of all, if and when they exercise.
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