Portable Health Insurance Will Drive Health Care Savings

Many Americans have had the unpleasant experience of formulating a treatment plan with their physician only to discover the medication prescribed is unaffordable. In 2018, Americans averaged $1,200 for drugs – at least 50 percent more than many other first-world nations – and we spent twice the OECD average on prescription drugs in 2015.

The industry and many of its critics would have people believe that there is an “either/or” answer to drug prices. The industry argues that research and development are expensive, and so its end costs shouldn’t be questioned. Critics say those prices give too much profit and the government must institute price controls. There is, however, a third solution – portable health insurance that puts patients in the driver’s seat of their care, combined with a streamlined generic drug approval process.

Let’s look at streamlining first. In 2018, President Donald Trump’s Council of Economic Advisors recommended that the Food & Drug Administration (FDA) aim to cut more than a year off of its generic drug approval process. If done without sacrificing patient safety, this would get drugs into the hands of people faster – and, as shown by a 2019 FDA study, drastically reduce the costs of brand drugs. The 2019 study found that prices drop almost 40 percent after a single alternative is available, and up to 95 percent once six generic alternatives are in the market.

Getting these alternatives safely and quickly into the market will save patients money through innovation permitted by the FDA staying in its lane – oversight, safety, and enforcement, not interference.

Portability is more complicated. Employer-based health insurance has had a government-provided tax advantage since Franklin D. Roosevelt’s administration. This made individual insurance expensive and turned changing jobs into a risky endeavor. Changing this tax bias would be a huge step in the right direction – which is why I don’t expect it to happen. Eighty-five years of government-preferred policies is a big ship to turn, so policymakers should focus on expanding health savings accounts, or HSAs, which were created in the Bush administration to meet the needs of an increasingly mobile workforce. HSA use should be broadened to cover virtually all types of care and be able to be rolled over year to year.

Cheaper alternatives to brand drug makers’ market dominance and HSAs would create an additional consumer benefit – changing how we think about control of our care. Right now, most Americans desire comprehensive health insurance because we’ve been taught this is an alternative to more expensive care and coverage. However, with more control of our health insurance, we would start looking at prices more carefully and consider alternatives to the insurance model like Direct Primary Care, catastrophic insurance matched with HSAs, and health-sharing ministries. We wouldn’t need government to reduce secrecy between manufacturers and pharmacy benefit managers – they’d shrink over time because consumers would be empowered to know prices, care, and best choices.

Nobody outside of drug manufacturers likes their prices. But price controls would replace one problem – high costs – with another – reduced innovation and access. Creating more opportunities for market innovation and more portability will reduce prices, increase consumer intelligence, and vastly improve patient access.

K. Nicholas Pandelidis, MD, is a founding partner of OSS Health and an orthopaedic spine care specialist.