The current national discussion about health care in America is not really about health care. It is about paying for health care.
As a result, the dialogue is concentrated on questions related to the structure and cost of public and private insurance coverage and the subsidies related to that coverage (click here to learn more about our thoughts on Medicare ). In this narrowly defined arena, attainment of health insurance coverage is portrayed or seen as the solution to the nation’s health care needs.
Policymakers, however, are not focused on how to improve the quality, availability, and management of health care. They are arguing instead about how many people are insured, whether people with pre-existing conditions are protected, the cost of premiums, and the level of out-of-pocket expenses.
Coverage is, of course, one of the issues that must be addressed. But we cannot find the answers we seek and need, by addressing coverage in a vacuum that ignores the many challenges facing our health care system; the demographics driving both the usage and the cost of health care; the economic realities related to individual and institutional ability to pay and the economic implications of the policies currently already adopted; and a host of equity issues including the shifting of costs amongst current populations and to future generations. In short, as this twodimensional debate rages, broader strategic and operational questions central to our health care needs are being ignored; our understanding of the system is distorted; unintended adverse effects are obscured; and we are encouraged to ignore important actuarial, economic, and accounting principles.
In an effort to enhance public awareness and understanding, the Concerned Actuaries Group and the Committee for a Responsible Federal Budget are co-hosting a series of expert presentations and conversations on the broader and more complex spectrum of issues that must be considered in the search for an equitable, sustainable American health care system.
The series, American Health Care: Rethinking the Challenges, Opportunities, and Possibilities, first program, Big Numbers, focused on the interaction between population demographics, cost of care, and the impact on the payment for and delivery of health care.
This second program looks at the relationship between benefits, usage, and costs; and, the third program examines the allocation and management of public and private costs and payments.
In all of these presentations, we will highlight the conclusions we think critical to informed discussion of health care in America and share examples of the data and research findings that support those conclusions.
It is critical to recognize the magnitude of the numbers involved in American health care and understand how that magnitude affects both the nation’s physical and financial health. To that end, we will be talking about five major research-driven, data-based conclusions, including:
Health care cost numbers are really big and represent a very large percentage of the US economy, household budgets, and federal government expenditures.
Current growth projections indicate that without any changes, future health care spending will require a significantly larger, and arguably unmanageable, share of both individual household and government budgets.
The complexity of managing American health care is exacerbated by the large number of people affected and by the way in which they interact with the system as beneficiaries, taxpayers, and consumers.
The options being considered for changing the Affordable Care Act do not adequately address the needs, complexity of, or financial stability required by American health care.
The country cannot find the answers we seek and need, without considering the demographics driving both the usage and the cost of health care; the economic realities related to individual and institutional ability to pay; the economic implications of the policies currently already adopted; and a host of equity issues including the shifting of costs to future generations.
As we consider the relationship between benefits, usage, and costs, the following reflections should be taken into account:
• Benefit payments for health care in America are paid at or after time of service by a variety of different entities and are financed in a variety of different ways.
• The public tax-supported program enrollment and payment criteria do not meet the basic risk management criteria historically required by private insurance programs.
• The public tax-supported program enrollment and payment criteria do not meet basic sustainability criteria historically required by private insurance programs.
• Health Care Services and related costs are driven, if not determined, by the nature of the care required”.
• The allocation and distribution of payment of “benefits” has led to a series of use-driven distortions in America’s health care system.
A look at the allocation and management of public and private costs requires a “Spoiler Alert,” which is that the American Health Care business model is simply not working. That conclusion is supported by the three major takeaways including:
• The numbers don’t work in terms of sustainability or sufficiency;
• There are political and financial tensions in the American health care system that work against the system’s need for public awareness, accountability, and capacity to address problems in a timely manner; and,
• The distribution of services, costs, and payments on the one hand and collection of taxes, premiums, and fees to fund the payments on the other does not effectively recognize or manage either the differences between insurance coverage and different types of subsidized care or the redistribution of income required to support the subsidized care!