The America’s healthcare system has been developing over the years. There are new laws such as Patient Protection and Affordable Care Act (ACA), commonly referred to as Obama Care Act, technological advancements in health care information systems, developments of treatment methods and drugs, and access systems. The advancements are further supported by communication technology which allows healthcare professionals to reach patients via online platforms. Nonetheless, accessibility of healthcare in America still needs to be improved when compared to the other nations such as Israel. This is based on the fact that the existing insurance system makes it expensive for many people (Flanagan, 2017). This paper seeks to critically analyze and discuss the problem of costs as associated with privatization of healthcare insurance and how it affects the healthcare system and the need to make reforms in that respect.
Statement of the Problem
Research shows that America spends more money in the health care system than in other department. According to a report made by The Balance America spent $ 3.2 trillion in providing the services in the year 2015(Amadeo, 2017). This amount is very high as it amounts to 18% of the gross domestic product. The problem was created by the now famous ACA. This act has provisions under Medicaid demand that even individuals who cannot afford insurance are catered for by the government (Amadeo, 2017). Being that insurance system is majorly private, the insurers increased the amounts of money they charge for the premiums (Blumenthal & Collins, 2014). On the same note, the most common diseases affecting a large population Americans are expensive to treat. They include heart problems, diabetes, high blood pressure, and cancer. As a consequence, even patients have to spend more money where their insurance policy is copayment. Thus, privatization of healthcare insurance is generally slowing down the life of Americans; people spend more money in healthcare than education, food, mortgage, or investment. The government can change this situation through amending the relevant laws, especially ACA.
Subtitle C of ACA stipulates that all Americans are entitled to ‘quality health insurance coverage’ (The Patient Protection and Affordable Care Act of 2010). Specifically, subpart 1 introduced a general reform to the Public Health Service with the effect that no American will be denied healthcare services based on any grounds of lack of insurance or insurability of the disease (The Patient Protection and Affordable Care Act of 2010). This law opened the way for the challenges of high cost of medicare experienced today. This section is one of the weaknesses of the health law. On one side, it is allowing a high number of people to access healthcare, which is a positive move. On the other hand, insurers have taken advantage and defraud both the government and the citizens of the money through high charges. In overall, the cost of healthcare in America becomes high and unaffordable.
The effect of the high costs are felt by the poor and the aged. According to Amadeo’s article, the elderly members of the American society are unable to pay for the high health insurance charges. This is also facilitated by the fact that most of them are suffering from chronic diseases such as diabetes. The aged can only afford cheap medication to sustain their existence. It is thus arguable that the current healthcare structure and related insurance charges are existing to delay death of the aged rather than improve their quality of life. Nevertheless, the problem can be addressed through legal and policy means.
Proposal for Reform of ACA on Insurance Provisions
To curb this challenge, legislators need to amend the ACA or enact a new law which regulates health insurance. This can be done in a myriad of ways. First, the laws should specify the amounts of premiums which insurers can charge. Secondly, legislators can reinforce the antitrust laws to include healthcare insurance to curb inflation and monopoly in the sectors (Glied & Altman, 2017). The main function of these laws would be regulatory. The problem with the insurance sector is that the laws are weak and allows policy providers to operate beyond the boundaries of the law. The best solution is to manage the insurers (Einav & Levin, 2015).
In order to carry out this proposal effectively, the law can use a system in which healthcare services are bundled according to diseases or the resources used. According to Uwe E. Reinhardt, hospitals can be used as the payment points for the insurance premiums to reduce fraud (Feldman, 2015). Here, the health facilities will record the patients who have been treated for particular diseases. The resultant values are then used to get conversion value which becomes the price indicator for the cost of insurance (Feldman, 2015). Similarly, if the factors used for calculating the cost of service is based on the resources, the same procedure applies. The law must make it clear that any health facility which does not have a program which implements this law would be penalized. As a result, hospitals and other healthcare institutions will charge less money to get more clients. Patients will choose hospitals whose medical care services cost less and reflect less insurance policy amounts.
Another viable proposal is to make insurers to have a common rate for payments, a system Flanagan (2017) refers to as ‘all-payer framework.’ An all-payer system is organized in such a manner that third parties pay not similar but level charges. That is, hospital or physician A charges what hospital or physician B charges, albeit with slight or minimal variations. This setting will ensure that patients are spending almost similar costs to acquire healthcare services. In the end, insurance charges will also be limited by the all-payer rates. The only hindrance now is lack of a law to enforce this proposal. Undeniably, there are a lot of benefits which come with all-payer rates for medical services whose effect trickle down to insurance premiums. To support this idea, Flanagan indicated the following:
“While there is no one approach to health care reform that will solve every problem, all-payer rate regulation would lead to a more efficient health care system for the United States due the existence of multiple private and public payers. All-payer rate setting can 1) eliminate price variations; 2) equalize market power between providers and payers; 3) eliminating price discrimination and cost shifting (to the extent that it exists) (pp. 87).
The method of all-payer rates can thus be indirectly beneficial to Americans if it is implemented with the intention of leveling insurance premiums charged by insurers. When every hospital have the limits within which they can charge patients on certain diseases and resources used, the high charges will considerably reduce in an attempt to avoid legal penalties.
Alternatively, the government can make limited network insurance plans mandatory. Studies have proved that when limited plans are used, the cost of insurance is lowered (Gruber & McKnight, 2016). This strategy simply means that there are a number of diseases and conditions which are not insured. In effect, the insurers also have limited basis for defrauding the government. An effective way of implementing this proposal is to avail incentives. Gruber and McKnight (2016) examined how Massachusetts had applied it and the effects on the cost of healthcare. They found that when selected groups were given incentives in the limited insurance network plans, more people subscribed to health insurance while at the same time the insurers could not charge more than the received services. The advantages of this plan can be summarized in three words-affordability of healthcare. To support this position, Gruber and McKnight (2017) noted the following:
“We find that incentives to switch to a limited network plan induced a sizeable reduction in spending for the GIC of 4.2%, implying that the marginal person induced to switch plans by this incentive spent 36% less. Spending falls significantly for most categories of spending and the spending decline appears to be caused by reduction in both the quantities of care received and the prices paid for care (pp. 220).
This study suggests that if the federal government can enact a legislation providing for these types of insurance policies, its expenditure on medical insurance would be less. Consequently, this proposal can help America to cut down its annual expenditure on health insurance
How the Government May Make the Changes and Pay For Them
While the proposed reforms may be hard to implement, the government may use the legislature to make the provisions of the law mandatory. It can make changes to the existing ACA, create an independent law, or regulations to oversee how insurance companies working within the limits of the law. If the proposals are made mandatory, it t would mean that every state must adhere to the changes. The process will be funded through tax-payers money or other means through which the government facilitates legislation processes. Moreover, hospitals and physicians should pay for the services of reorganizing their billing systems to accommodate the diagnosis-based and/or resource-based payments plans which are used to find indices for insurance premiums.
Conclusion
Undeniably, America’s healthcare system is in a bad state. The intention of Medicare and Medicare provisions of ACA have caused economic challenges to the people. The current insurance systems overcharge their services. In effect, the government is made to pay for non-existent costs. The tax payer is also affected directly. Howver, the challenge can be addressed through changing hoe service providers are grouping and charging their services. Additionally, the government can introduce limited network insurance plans to save on cost of premiums. From this analysis, I have learnt that when health laws leave regulation gaps on healthcare stakeholders, it is the common citizen who suffers as indicated by the legal lacunae in ACA. If the current situation persists, America’s healthcare system in the next one year will be affordable to fewer people than now. More and more individuals will shy away from health insurance. The government will spend even more money in health sector if no action is taken to reform it.
References
Amadeo, K. (2017, October 26). See for yourself if Obamacare increased health care costs.
Retrieved from https://www.thebalance.com/causes-of-rising-healthcare-costs-4064878.
Blumenthal, D., & Collins, S. R. (2014). Health care coverage under the Affordable Care Act—a
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Einav, L., & Levin, J. (2015). Managed competition in health insurance. Journal of the European
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Feldman, R. (2015). The Economics of Provider Payment Reform: Are Accountable Care
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Flanagan, E. (2017). All-Payer Rate Setting: A Framework for a More Efficient Health Care
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Glied, S. A., & Altman, S. H. (2017). Beyond antitrust: health care and health insurance market
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Gruber, J., & McKnight, R. (2016). Controlling health care costs through limited network
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The Patient Protection and Affordable Care Act of 2010, 42 U.S.C. § 18001 et seq. (2010).
