Health Care Reform on Hold: Now What?
The American Health Care Act (AHCA) was pulled from the House floor before an expected vote and efforts to repeal or reform the Affordable Care Act, or “Obamacare,” could be suspended for some time. The future of health care law reform efforts remains uncertain—but confusion is nothing new to Americans navigating the complexities of health care delivery and payment. No matter the outcome last month, Americans were still going to wake up this morning with complicated decisions to make about their health care. As we move forward, continuing to make these difficult decisions, individuals and policymakers will grapple with managing and navigating intricate inter-related health care delivery and payment systems. These policy decisions should be taken seriously as they affect individuals, families, and the health and wealth of our nation.
It is widely understood that the cost of health care is high, and vastly different ideas of how to pay for it have been presented throughout modern history. Yet many don’t know as much about how the system currently works. Most people know a bit about the “big three” types of payers: private insurance, Medicare, and Medicaid. But many are unaware that there are several other complex and connected ways in which we pay for health care.
Most Americans can get private insurance either through their employers or by purchasing it through markets created by Obamacare, called exchanges. Private insurance encompasses an incredibly diverse range of plans. Although most are required to provide certain “essential health benefits” under the current law, there is still variety in the coverage available for different services and conditions. For example, a plan might not cover vision care, or it might pay for an eye exam but not the glasses you require to see. So some people have multiple plans for their medical, dental, and vision needs, while others just have less coverage. And some health care costs are covered by other types of insurance that are entirely unrelated to a patient’s health plan. For example, people who are injured at work typically must look to the employer’s workers’ compensation policy for coverage. After a car accident or other mishap, injured persons look to “no fault” car insurance, homeowners insurance, and similar policies to cover their treatment.
Then, there are federal public insurance programs. Medicare, the federal health plan for older and disabled Americans (and those with end-stage renal disease), has several “parts.” Each pays for different types of services—like doctor’s appointments, hospital stays, or prescriptions—and may or may not impose a monthly premium and other cost sharing on members. Within Medicare there are “managed care plans” run by private insurers, charged with ensuring a continuum of care for patients while achieving cost savings for the Medicare program. There is also “Medicare Advantage,” private supplemental plans that help Medicaid enrollees pay for their premiums and other cost sharing.
Medicaid provides coverage for low-income individuals and families and is funded jointly by the federal government and each of the states. Federal law gives the states some flexibility in deciding who can get coverage under the state’s Medicaid plan. In some states, Medicaid only accepts residents whose income falls below the federal poverty level (based on family size). But other states allow residents earning up to four times the federal poverty level to enroll. Medicaid also plays other important but lesser-known “safety net” roles. It covers a large share of the nation’s substance abuse and mental health treatment services—coverage that is especially critical given the current opioid epidemic (relatively new laws require private insurance to cover mental health and substance abuse treatment no less favorably than other medical services). And while Medicare (for older Americans) will not pay for long-term nursing care, Medicaid will pay for patients who are poor, or who otherwise have depleted their assets in paying for their care.
All that may sound complicated enough, but there are yet more ways that people pay for their health care. Americans who are veterans or serve in the armed forces may receive coverage under the federal TriCARE program, or may receive services directly from the Department of Veterans Affairs. There are “Taft-Hartley” plans that provide medical coverage for union members. Some employer plans aren’t insurance plans at all; they are self-funded and are backed up by the company with cash reserves. Federal, state, and local governments have their own health plans—sometimes multiple, different plans for elected officials and civil employees. And of course, some individuals simply pay their doctors in cash for their treatment.
That’s just how Americans pay for health care. Getting care is complicated, too. Individuals enrolled in an HMO, PPO, or EPO may be required/incentivized to see only doctors within their plan’s network. These plans have networks of providers, and some won’t pay for any care outside of their network (with limited exceptions for emergency care). Other plans may require a referral from a primary physician in order to see a specialist. There are also geographic areas where it is difficult to find any provider, let alone one that takes a particular type of insurance. Clinics and federally qualified health care centers receive government funding to provide care in rural areas and other places that don’t have adequate providers or hospitals.
How private and public insurance plans pay providers is also complex. Some providers have a contract with a plan and are paid a specific fee each time they treat a plan member. Other providers are paid based on their ability to contain costs and improve health outcomes of their patient populations. This involves incredibly complicated (and often controversial) decisions about how to measure the quality of providers’ services, the relative health of their patient populations, and whether treatment outcomes are better or worse than their peers.
Health care is a product, but not an ordinary one. It is vital that patients are smart consumers, and they can only do that if armed with the best information available about how to manage the costs of their care. Patients need a roadmap to the complexities of health care delivery and payment in order to budget for the future. Individuals and families make budgets for all sorts of things—paying down student loans, buying a car, or reserving some cash in case the boiler goes. It is much harder to foresee and budget for health care services that are often unexpected, deeply personal, and can come with a hefty price tag. Consumers can start by including these costs, to the extent they can be anticipated, when planning for annual expenses and lifetime savings goals, asking questions like: What will I have to pay to manage my diabetes this year? What will it cost to pay for my children’s health insurance as they grow up? What will be my health care costs in retirement?
America’s health care is delivered and paid for through an intricate and inter-connected system that is often challenging to navigate for patients, providers, and payers. Every day, policymakers are making decisions that affect the public purse; payers and providers are negotiating payments that affect their bottom line; and individual Americans are making decisions that affect their wallets. At every level, information will be the key to unlocking better, more cost-effective health care for Americans. So, even though efforts to reform health care have been stalled for now, efforts to better understand the health care system should move purposefully ahead.
Robin Gelburd, JD, is the president of FAIR Health, a national, independent, nonprofit organization with the mission of bringing transparency to health care costs and health insurance information. FAIR Health oversees the nation’s largest collection of health care claims data, which includes a repository of over 23 billion billed medical and dental procedures that reflect the claims experience of over 150 million privately insured individuals, and separate data representing the experience of more than 55 million individuals enrolled in Medicare. Certified by the Centers for Medicare & Medicaid Services (CMS) as a Qualified Entity, FAIR Health receives all of Medicare Parts A, B and D claims data for use in nationwide transparency efforts.