Making Health Insurance "Better"

Republicans in Congress and the White House have been promising to "make health insurance better" for Americans. The proposed rule changes are potential replacement of the Affordable Care Act don't do much to address costs except to change the way tax credits are structured. The GOP plan also shifts the cost of being uninsured (a tax penalty currently) to a premium hike when you go without insurance for more than 2 months.

So, what do we really need to make health insurance better? 

My first recommendation is strengthening the 80/20 rule in the ACA and cap provider reimbursements for all private health insurance, like the government does with other federal programs. The 80/20 rule in the ACA makes it so that health insurance companies must spend 80% of your premiums on actual health care costs, and can take 20% for administrative costs (re-insurance, salaries, benefits, bonuses, etc for the company). The 80/20 rule was well intended and pretty revolutionary. However, because the government does not set caps on the 80%, if providers are paid more that means the insurance company's 20% is higher, too. 

I advocate for reasonable reimbursement caps for providers. I believe the way forward to reducing costs is for the federal government to set such rates, like states do for Medicaid. These rates would need to be higher than Medicaid rates to balance costs in the health care system. For example, an MRI at a hospital costs upward of $10,000 but at a stand alone clinic it might cost $600 (this is a real life example from my own ankle injury last year). A reasonable cap might be somewhere around $5000, the provider still gets paid but not nearly as much, and the insurance company and the beneficiary both save money. The stand alone clinic can still charge $600, and savvy consumers will price shop. But for those who don't have the ability to shop around (such as an emergency MRI), at least they would be assured that there is a cap on the cost of the procedure. 

Stay tuned for future blog posts with more recommendations for making healthcare better.