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Canines, Costs, and What Could Be

By Dr. Evan Saulino
. 1 Comment(s)

Right on time for a 21month old toddler, the Affordable Care Act (ACA) is about to cut some new teeth.

It’s had a few already – preventive care for seniors and other Americans, eliminating lifetime coverage limits for all Americans, and allowing those under 26 years old to stay on their parents’ insurance plans for example. But the rule issued last week by the Department of Health and Human Services will equip Americans, with some serious canines, to begin getting down to root issues and help make our health care system work better for American “consumers”.

Among the insurance market reforms included in the Affordable Care Act was a mandate that insurance companies offering group coverage spend at least 80% of customers’ dollars on actual medical care or quality improvement, rather than administrative overhead – like paperwork and profits. The target is 85% in the large-group market (large employers). If insurers are too inefficient to live within these targets, they have to send a rebate to their customers for the amount they over-spent on administration or profits. 

Though not like completing a single-payer “Hail Mary”, and not as money-saving as a public insurance plan (see the Packers’ Titletown model I’ve suggested previously), this provision in the ACA offered a prime opportunity for American consumers take back some power in the health insurance market by making insurance companies more accountable for customers’ money they spend. 

But just I imagine Mason Crosby might have said after kicking his game-winning field-goal to keep the Packers unbeaten – “it’s all in the follow through.”

 Passing the ACA only provided a road map – much of the meat of the law was left for the states and the Department of Health and Human Services to implement.

Since the Affordable Care Act became law, lobbyists have been trying to water down this provision (and others) and argue all sorts of things should be counted as medical care and quality improvement.  In particular, insurance brokers  - who have been branded “producers” in some states - have argued they need financial relief and their services should not be considered administrative overhead.    

But thankfully, the Administration sided with consumer health advocates and doctors who worked hard on the “follow through” to make their voices heard so that broker costs will be considered administrative costs, not care or quality improvement.  In addition, rebates American consumers get from insurers who overspend on administrative overhead will NOT be taxed.  These welcome rulings will take effect January 1, 2012 – in just 4 weeks.

This process has reinforced the critical importance of keeping real voices and faces - actual patients and health professionals - in front of state and federal policymakers, speaking the truth.  If we built on the steps we’ve taken with the ACA and implement it well, we can use the same regulatory reasoning triggered by advocacy to do things like ensure investment in higher-value care – as they’ve done in Rhode Island with primary care - or to invest in home-based care – and we’ll successfully control costs and provide better care over time. 

It’s through this continued work - which focuses on the fundamental bond doctors and patients have made to try to heal and keep healthy together – that will help us re-shape our health care system so that it works better for all Americans.   

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  1. GSG

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    I bet you like the provision of spending at least 80-85% of total insurer costs on providers. Now insurers have less motivation to negotiate competitive network rates so the cost of healthcare (the numerator) will continue to spiral out of control. It's the doctors stupid. They are the ones who drive utilization. The ones who order MRIs instead of X-Rays. Who 65% of the time prescribe whatever expensive brand drug the patient asks for. Don't believe me? Then the next time your doctor orders an expensive test or procedure, ask them how much it costs. Don't know and don't care.

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