Saturday, August 17, 2013
This past week, the New York Times published a story about yet another delay in the implementation of the Affordable Care Act. Earlier this summer, NPR also reported the delay, which concerns total limits on out of pocket costs that consumers can be required to pay. Under ACA, beginning in 2014 consumers were supposed to have to meet only one out of pocket limit--$6,350 for an individual and $12,700 for a family--including all deductibles and co-payments. But the Times story reports that insurers have been granted a year's grace in implementing this requirement and quotes an administration official as attributing this decision to the inability of insurance plans to communicate with each other in determining out of pocket costs.
Both stories emphasize the plight of patients who are covered under separate medical and pharmacy benefit plans. Pharmacy plans in particular may have very high copayments, without annual limits. Patients with expensive drug needs for diseases such as multiple sclerosis are especially hard hit by these benefit structures.
As I ruminated on this delay, it occurred to me that the problem of the plans' inability to communicate with one another is the plan's problem, not the patient's. To say the least, it does seem rather unfair to have patients bear all of the costs of the delay.
Moreover, there is a model that could have been used to implement the single limit: submission of claims for out-of-network care. Patients do this all the time and receive reimbursement to the extent covered by their plans. The payer has a record of the claim and can credit it against the patient's deductible. Why couldn't this model have been applied to the problem of multiple plans for patients? It would be simple. These are primarily patients with employer-provided plans. All that would be needed would be to stipulate which plan is primary for the purpose of maintaining the single out of pocket total. Medical plans are used to maintaining such totals. If the medical plan were stipulated to be the primary plan, all the patient would need to do would be to submit records of out of pocket payments under their pharmacy plans. When patients meet the out of pocket total for the year, they would no longer be responsible for copays or deductibles from the primary plan. How would other plans know about this? Patients will receive records from their primary plans that they have met their deductible for the year. They would then be responsible for submitting these records to their other plans--after which the other plans would no longer be able to charge copays or deductibles.
This approach, to be sure, puts the burden on patients to solve the communication problem. But I'm surprised notbody seems to have entertained this suggestion, in a health care climate that heralds patient responsibility. Perhaps the difficulty instead is that the multiple-plan structure emerged as a way to limit health care costs for payers by shifting costs to consumers.
August 17, 2013 in Accountable Care Organizations, Affordable Care Act, Consumers, Cost, Employer-Sponsored Insurance, Health Care Costs, Insurance, Payment, Reform, Spending | Permalink | Comments (0) | TrackBack (0)
Monday, July 8, 2013
In yesterday's New York Times, Ross Douthat joined the chorus that criticizes employer-sponsored health care insurance. According to Douthat, this "unsustainable relic" is a "burden on businesses, a source of perverse incentives for the health care market and an obstacle to more efficient, affordable and universal coverage."
In fact, the United States is not unusual in the extent to which it relies on companies to fund health care coverage. Indeed, employers in France, Germany and Japan shoulder a higher percentage of their countries' national health spending than do U.S. employers. Government-run systems must find sources of funding for their programs, and employers are an obvious place to look.
To be sure, there are problems with employer-sponsored coverage, but the Affordable Care Act (ACA) takes care of a very important one. Employer-sponsored coverage has promoted "job lock" in the United States. Many would-be entrepreneurs have been reluctant to start their own companies because they would lose their employer-sponsored coverage and have to pay for insurance out of their own pocket. For people with pre-existing medical conditions, insurance might not be available. Under ACA, the new entrepreneur will be able to find an affordable health care plan on an insurance exchange.
The abandonment of employer-sponsored coverage would reduce the burden on businesses only if health care costs overall were lower under the replacement system. Many health care policy experts observe that costs are lower in government-run systems overseas because the governments can exercise greater negotiating leverage with doctors and hospitals than can insurance companies in the United States. In short, the high cost of U.S. health care and its burden on business seems to be not so much a problem of relying on employers rather than individuals to purchase coverage but a problem of relying on private insurers rather than government to operate the system.