Category: Affordability

A common argument from health care price control advocates is that there is a significant price differential for health care services between the U.S. and other developed countries, and that these differences drive higher per capita spending in the U.S. versus developed countries. While the simple answer may be “yes” to the question of whether health care services are higher in the U.S. than in other developed countries, there are other factors that need to be considered in order to fully understand why these differences exist.Several factors can influence how much a nation spends on health care, including overall utilization of services and technology, types of professionals used to deliver care, the use of biopharmaceuticals to offset more expensive health care services, and the underlying health status of the population. These and other influencers can have a direct impact on a country’s health care spending patterns.

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• Consumers need relief from the Patient Protection and Affordable Care Act (ACA),
  which is not working as Congress intended. Allowing short-term plans to offer 12-month
  contract terms and renewal guarantees would provide protection and relief to millions of
  consumers struggling with the cost of coverage under the ACA.
• Guaranteed-renewable individual-market plans provide coverage for patients with highcost
  medical conditions that is equally or more secure than employer-sponsored
  coverage.

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Finally, we have good news on health care reform coming out of the nation’s capital.

In October 2017, President Trump issued an executive order calling for more consumer choices in the health insurance market. The departments of Health and Human Services, Labor and the Treasury responded by taking aim at an Obama administration policy that severely limits the flexibility of a coverage option called “short-term, limited-duration insurance plans.”

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Some in Washington would have us believe there is only one way to provide relief to the millions of Americans trapped between paying the high cost of Obamacare or dropping coverage altogether: Send billions of taxpayer dollars to health insurance companies.

They’re wrong. There is a better way.

Short-term plans are just what the name implies – coverage for three to 12 months, but in most cases at a much lower cost to consumers because they are only paying for services they need and no longer paying for care they don’t need. For example, that could mean men no longer paying for maternity care. As a result of this increased customization, sky-high deductibles may finally start coming down for some Americans.

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The U.S. spends about 18% of its gross domestic product on health care, far more than most countries. One contributing factor that often goes overlooked: the high cost, in time and money, of becoming a physician. In a recent paper for the Mercatus Center, Jeffrey Flier and Jared Rhoads argue that the amount of time it takes to become a doctor—almost always at least a decade—constrains the supply, driving up prices. Physician incomes in the U.S. well exceed those in Europe; American generalists earn twice as much as Dutch ones.

In 2005 and 2009, Elizabeth Warren and her co-authors released two papers claiming that more than 50 percent of all bankruptcy filings in the U.S. were caused by medical debts. I wrote about the problems with these studies when they first came out, and even testified in Congress against reading too much into the findings of these studies because they suffered from several biases. Now an academic study published in the New England Journal of Medicine is skeptical of these results as well. The study tracks a stratified sample of adults between the ages of 25 and 64 who were admitted to the hospital for non-birth-related reasons between 2003 and 2007. It finds that fewer than 4 percent of hospitalizations resulted in bankruptcies, far lower than the 2009 study’s claimed 62 percent.

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According to a new brief from Altarum, health care prices have risen 2.2% since March of last year, the fastest annual growth rate since January 2012. One of the largest drivers of that price growth was hospitals. Altarum found that hospital prices have been growing annually at nearly 4%, the highest level in eight years.

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CBO is anticipating a 21% jump in the cost of federal subsidies this year, driven by a 34% jump in premiums for the “benchmark” plans to which those subsidies are pegged.

But after that, CBO expects a big slowdown. Federal spending on the ACA’s premium subsidies will likely grow by about 5% per year for the rest of the next decade, the budget office said. Those annual increases are mainly a result of rising health care costs.

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In tiny Marion, North Carolina, the Buchanans decided that $1,800 a month was too much to pay for health insurance, and are going without it for the first time in their lives.

In Harahan, one bend of the Mississippi River up from New Orleans, the Owenses looked at their doubling insurance premiums and decided no, as well. “We’re not poor people but we can’t afford health insurance,” Mimi Owens said.

And in a Phoenix suburb, the Bobbies and their son Joey will go uninsured so the family can save money to cover their nine-year-old daughter Sophia, who was born with five heart defects.

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Health-insurance premiums are likely to jump right before the November elections, a result of Congress’s omission of federal money to shore up insurance exchanges from its new spending package.

Lawmakers from both parties had pushed to include the funding in the $1.3 trillion spending law signed Friday, but they couldn’t agree on details. A battle has already begun over how to cast the blame for the expected rate increases.

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