Urgent Care: 10 Cures for America’s Ailing Healthcare System
by Minda Wilson, J.D.
As I write this in early 2017, there is much chatter about the potential repeal and replacement of the Patient Protection and Affordable Care Act (ACA) commonly known as Obamacare. I was motivated to read this book to get beyond the myopic hysteria and gain a deeper understanding of the problems and possible solutions presented by healthcare attorney Minda Wilson.
“The United States has the world’s highest [per-capita] healthcare cost, double that of Canada… The number one cause of personal bankruptcy in the United States is due to overbearing healthcare costs… A devastating illness means that, beyond your deductible, you could be responsible for a minimum of 30 percent of the medical bills incurred if you stay in-network. If you go outside of your network, then you could be responsible for between 50 percent and 100 percent of every bill.”
Wilson asks, “Why did the [ACA] focus on providing insurance and not healthcare?” I think this is the fundamental issue. The cost of insurance is a function of the cost of claims. So if the main focus is on subsidizing premiums, the law simply masked the underlying problem rather than solving it. “To be clear, deductibles, copays, and/or the costs of excluded care or limits on care were not included in this measure of affordability.”
“As with any piece of legislation, the ACA created a class of winners and a class of losers. The winners were, for the most part, the insurance companies, the pharmaceutical companies, and the working poor who were able to get insurance through the expansion of Medicaid. The losers were the healthcare service providers, the hospitals, and the middle class.”
“Immediately after Turing Pharmaceuticals acquired the drug [Daraprim] in August 2015, it raised the price from $13.50 a tablet to $750 a tablet, bringing the annual cost of treatment for some patients to hundreds of thousands of dollars.”
How is this possible after passage of the “Affordable” Care Act? Under the ACA, the government may not “interfere” with prices charged by pharmaceutical companies. Furthermore, “the ACA ensures that less expensive, equivalent drugs manufactured outside of the United States will now be illegal to bring in.” As an aside, Wilson points out that the Trans-Pacific Partnership (TTP) free-trade deal would have given “Big Pharma unprecedented protections against overseas competition for cheaper generic drugs.” She argues, “There is absolutely no reason to object to the government negotiating for better prices from drug companies.”
Health Insurance Carriers
“Since the ACA was passed in 2010, the co-called ‘Big Five,’ soon to be the ‘Big three’ health insurers—UnitedHealth, Aetna, Cigna, Humana, and Anthem—have all outperformed the S&P 500 and the Dow Jones Industrial Average by a wide margin.” In addition to subsidizing premiums for millions of policyholders, the government also reimburses the insurance companies’ losses. “If an insurer received less in premium payment from an exchange customer than monies paid out in expenses for that customer, the government reimbursed the insurer 80 percent of the costs over $45,000. In addition, further government guarantees limit losses sustained by insurance companies through what is termed a ‘risk corridor program.’”
“The ACA requires health insurers in the individual and small group market to spend approximately 80 percent of their premiums, after subtracting taxes and regulatory fees, on ‘medical costs.’” This formula allows the insurance company’s 20 percent (overhead and profits) to grow at the same inflationary pace as the cost of claims.
Wilson proposes a different approach. “States should require insurance companies to reduce premiums to reflect what goes in against what comes out (i.e. premiums received minus money paid out for direct healthcare costs reimbursed to providers).” She points out that investing the float “is the bread and butter of insurance companies… Let them live on the profits from their investments. If they are smart about it, it gives a very good living indeed. Look at Warren Buffet.”
Health insurance premiums continue to rise steeply. “Essential Health Benefits” were mandated under the ACA. “Wellness… alone could increase policy costs by up to 20 percent… The ‘Mini Med’ and the ‘Catastrophic’ products that provided low-cost coverage under catastrophic circumstances, such as serious injury or illness, are now illegal to offer. You can no longer pay a small amount to be covered in the event of a disaster.”
Access to Doctors
Access to health care remains a problem even for those with insurance. “Insurance plans on government-run ACA exchanges on average have 34 percent fewer hospitals and doctors… In big cities such as Los Angeles, large medical centers are opting out of providing services to exchange policyholders because reimbursements from insurers are less than their cost of doing business… For example, on the west side of Los Angeles, if you have an exchange policy, there can be up to a five-month wait for an in-network colonoscopy, even if you experience bleeding.”
One of Wilson’s proposals is to pay doctors more. Intuitively, this would not seem to be an effective way to reduce the cost of healthcare. I believe her point is that low reimbursement rates reduce access to healthcare—particularly primary care physicians.
“Prior to the implementation of the ACA, emergency rooms served as the nation’s healthcare safety net and healthcare delivery system for those who could not afford to pay for care, including the nation’s uninsured. The reality, though, is that even with the implementation of the ACA, nothing has changed.”
“The Emergency Medical Treatment and Labor Act (EMTALA) ensures that anyone who comes to an emergency department, regardless of insurance status or ability to pay, must receive a medical screening exam and be stabilized… Federal subsidies previously paid to hospitals to offset their costs in providing for the uninsured are being drastically reduced… An astonishing 55 percent of emergency care goes uncompensated… Ezekiel Emmanuel, a White House health policy special adviser who helped shape the ACA, forecasts that as a result of increases in the costs of doing business, one in five hospitals—over 1,000—will close by 2020.”
“Since very few physicians accept Medicaid, to be treated in a timely fashion, many Medicaid recipients go to emergency rooms to obtain their basic medical care… Since 71 percent of the cases seen in an emergency room do not actually require an emergency level of service, it makes no sense for this facility to serve as the catch-all for care.”
Wilson recommends amending “EMTALA to allow urgent care centers to replace emergency rooms as the healthcare safety net… For non-life-threatening problems, providing treatment in urgent care centers instead of emergency rooms could result in more than $18 billion in annual savings for patients.”
Employer-provided Health Benefits
“In 2010, when the ACA passed, annual premiums for employer-sponsored family health coverage averaged $13,700, with the employee contribution equaling just under $4,000. By 2015, annual premiums for employer-sponsored family health coverage reached $17,545, with the employee contribution equaling $4,995.”
“The additional administrative burden associated with this law has been strangling to businesses. The cost of compliance with the ACA to large U.S. employers (10,000 or more employees) is estimated to be between $4,800 to $5,900 per employee… Employers are now responsible for reporting household income, information that, if the employee is not the sole income earner, creates a real problem for employer reporting compliance.”
“Self-insuring, then hiring a third-party administrator under an administrative service only (ASO) contract, can save employers 10 percent to 25 percent on their healthcare costs… Already, 96 percent of workers in firms with more than 5,000 employees are in self-insured health plans. For firms between 1,000 and 5,000 workers, 79 percent are in self-insured plans. For employers with 2000 to 1,000 workers, self-insured rate is 50 percent.”
“Small businesses pay on average 20 percent more for insurance than large businesses… They must keep a watchful eye on if and/or when they cross both the fifty full-time equivalent mark requiring them to offer healthcare and the fifty full-time employee mark requiring both offering healthcare as well as additional reporting. Once they cross over, administrative costs will escalate dramatically.”
“In January 2015, Jeff Alter, chief executive of UnitedHealthcare’s employer and individual business, reported that the decline of small businesses offering insurance has been significant under the ACA.” It is cheaper to pay the fine. “While nearly all large companies provide healthcare benefits, for firms with between three and forty-nine employees, the figure is only 54 percent.”
“If you have employees and want to establish a group plan for you and your employees, you cannot do it unless your business is set up as a separate legal entity… Remember, reimbursing employees who purchase policies on the exchange is also not permitted. This is true even for incorporated entities… If corporations are people, why can’t people get the same tax treatment for their healthcare as corporations?” Wilson argues that “tax benefits for individuals who purchase health insurance for themselves and/or their employees should receive the same favorable tax treatment/deductibility as do their corporate counterparts.”
The author also discusses other taxes imposed under the ACA. “The taxation of benefits that becomes effective in 2020,” the so-called Cadillac tax, is imposed on employers providing expensive health benefits to their employees. Why on earth would the government discourage employers from providing good health benefits? Other taxes on insurers and medical device manufacturers are explained as well.
“At least one-third of all healthcare dollars is spent on administration, not on care—in some settings, this cost can exceed 50 percent. And most of this is due to legislative and regulatory reporting requirements. So it’s clear that simplifying and cleaning up these regulations would offer a wiser use of healthcare dollars.”
“Hospital administration costs in the United States run about $667 per American each year, whether they’re hospitalized or not, for about $215 billion in total. That compares to $158 per person in Canada, $164 in Scotland, and $325 in the Netherlands… The primary reason for the extraordinarily high level of administrative burden points back to private insurance. Adding insult to injury is the fact that most private insurance cost are related to marketing and underwriting, processes that do not improve medical care.”
Wilson also explains numerous requirements under the ACA which have not been implemented. For example, “the U.S. Department of Health and Human Services’ own study found that ‘we still know very little about how best to design and implement value-based payment programs’ … And yet, outcome-based payments are the law.”
“This country doesn’t need more cronyism when it comes to healthcare. We need competition to improve quality and lower costs.” I would add that we need price transparency and competition at the level of health care delivery where the costs are incurred, not just competition at the insurance level.
In this book, Wilson provides detailed insights about the dysfunction of the American healthcare system along with some proposed remedies. I appreciate the intelligent discussion even if I don’t agree with all of her proposals. This is a complex problem with no simplistic answers. Congress needs to put aside partisan bickering and pandering to campaign donors in order to come up with sustainable legislation that works for the American people. I am not holding my breath.
Wilson, Minda. Urgent Care: 10 Cures for America’s Ailing Healthcare System. 2016. Buy from Amazon.com.