With inflation and skyrocketing energy costs putting immense pressure on pocketbooks, Americans are having to evaluate every expenditure they make. Healthcare costs are no exception. Even in good times, we all worry about securing effective and affordable healthcare. How is it that this remains a colossal worry for us? Wasn’t the promise of Obamacare to give us more peace of mind when it comes to acquiring quality healthcare? It’s been more than a decade, and we have made very little, if any, progress.
Exactly twelve years have passed since Obamacare — the Patient Protection and Affordable Care Act (PPACA) — went into effect. In March 2022, the Department of Health and Human Services (HHS) celebrated the anniversary saying in part, “millions more Americans have gained health coverage without limits, and protections are in place for people with preexisting conditions.” HHS also cites access that people have to a whole host of other benefits, “including preventive and rehabilitative care, prescription drugs, wellness visits and contraceptives, mental health and substance use treatment, among many others.”
While increasing affordable access to insurance coverage to pay for healthcare services was a primary focus of the legislation, especially for the approximately 30 million Americans without such coverage, it was an expensive, bureaucratic, complex, often contradictory law that increased the cost of healthcare services, changed the landscape and made some services less accessible for many. It is true that some provisions were wildly popular, like requiring commercial insurers to cover all-comers at community rates regardless of pre-existing conditions, making available a list of primary care services, and enabling children under the age of 26 to remain on parental policies. These reforms were clearly improvements on the current system, but they came with a price and didn’t bend the cost curve or improve health outcomes.
Critics of this insurance reform approach to lowering healthcare expenditures, myself included, correctly noted that lowering costs is quite a separate task from improving the quality of care. Worse, the problems that would unspool were predictable from the start as lawmakers, though well intended, didn’t seem to have the expertise to see what needed to be done nor the wisdom to recognize the ultimate impact of their final product. Under pressure, they “did something” without really understanding the problem they were trying to solve. In the final bill, lawmakers made no connection between payment and outcomes, included no focus on the continuum of care, placed no particular emphasis on provider accountability, and ignored requirements for transparency in cost and quality which would allow for meaningful consumer choice and competition — all pillars of a market-based model.
A missed opportunity, healthcare reform was acutely needed at the time (as it is today), just not the reform we got. Fixing the problem of access to insurance, especially for catastrophic events, is laudable, but focusing on insurance as the means to lowering cost and improving outcomes misses the forest for the trees. We can debate how much care should be “free” and how it’s distributed, but the point is that the model on which healthcare delivery has been based is itself fundamentally flawed.
And make no mistake, the Centers for Medicare and Medicaid Services has been trying to bend the cost curve in healthcare for over 30 years. Before Obamacare, they had introduced Diagnosis Related Groups (DRGs), an effort which, as I’ve argued elsewhere, led to higher costs, poorer coordination and poorer quality — the exact opposite of what was intended.
As long as government solutions arrive divorced from a consumer orientation, we will not see any change in the industry’s consumer indifferent approach. Today more Americans see and understand this intuitively. Recent Gallup polls tell the story; in 2022, only 17% of Americans said they were very satisfied with the quality of their healthcare, 29% were somewhat satisfied, and a majority (53%) were somewhat to very dissatisfied with the quality.
Further, 64% were very or somewhat dissatisfied with the availability of affordable healthcare.
As recently as March, respondents were asked how much they worry about availability and the affordability of healthcare; a whopping 49% report worrying a great deal and 29% a fair amount. A data point from November revealed that 77% were dissatisfied with the total cost of healthcare in the country.
What we have is a deteriorating system that is failing Americans on all of its main dimensions: quality, affordability, and accessibility. No doubt, dissatisfaction ran high on these dimensions before PPACA, but even with a period of short-term and positive approval for the handling of the pandemic, we are back where we started.
Even compared to other nations, we spend more on healthcare and get far less for it. In a recent analysis from the Commonwealth Fund, the U.S. ranked last on measures relating to access to care, administrative efficiency, equity, and overall health care outcomes, even though we devote nearly twice as much of our GDP as the average OECD country to it. It follows that preliminary estimates suggest further declines in life expectancy in the U.S. compared to other OECD nations in recent years, erasing almost two decades of improvement.
The principal reason is that top-down government reforms like Obamacare — which incidentally, amounted to the biggest transfer of power from the legislative branch to the executive branch — have not been designed to empower patients to take ownership of their care, nor do they allow consumers to make fully informed choices about the care they select. They were improperly targeted at reforming insurance which ultimately came at the expense of patients.
Indeed, on one important dimension, PPACA didn’t do much to control cost, and this has contributed to high levels of consumer dissatisfaction. Unintentionally but predictably, in the push to increase coverage through the provision of mandatory government approved options, many consumers chose the cheapest ones available. This has left them vulnerable to high deductibles and high copays resulting in higher out-of-pocket costs for physician visits and medications, leading some to forego care altogether.
In terms of access, PPACA encouraged provider and payer consolidation accepting the argument put forward by industry incumbents that such moves were needed to improve outcomes, decrease health care spending by eliminating duplication, standardizing treatment protocols and incentivizing better utilization. In the process, providers and payers amassed more power and more market share, eliminating competition in many markets, and leaving patients in the lurch. At the end of the day, duplication is still rampant, coordination is not normative, the patient/consumer experience has not improved, outcomes have not advanced, and healthcare systems have been loathe to accept accountability for their services and engage in the transparency that is needed to create real competition.
The devastating impact of consolidation on consumers has been pretty clear. The closing of facilities left people in remote areas, for example, with the challenge of acquiring care that had been relocated to denser population centers. At the same time, inadequate consideration was given to how to alleviate these conditions by failing to adopt technology, such as remote monitoring, virtual healthcare, and telehealth, that could provide a continuum of care for patients who found themselves without a local in-person provider.
What HHS has touted as successes in March — access, cost and quality, are the very touchpoints of patient dissatisfaction. To have any hope of repairing this, we must reorient our thinking to a population health model that embodies truly market-based reforms. These include the pillars of a market model that focus on increased transparency in cost and quality; accountability for care across the continuum with payment tied to outcomes that matter; and competition. Together, these pillars will lower costs, increase quality and bring value to patients, increasing patient satisfaction and enduring improvements to health. Perhaps an important side benefit may be restoring confidence in those we have historically trusted the most — our healthcare providers.
Life Sciences, Forbes – Healthcare