Healthcare procedural charges vary significantly, not only across
different geographic regions, but from one facility to the next,
even when the facilities are in close proximity. The charges
within a single facility, for the same treatment, will also differ
greatly depending on the network agreement with each insurance carrier.
The price differentials can be significant, regularly reaching high double
digits. The pricing levels experienced by plan sponsors have a significant
influence on the cost of healthcare delivery to plan participants.
One of the most effective approaches for controlling the cost of employee
benefit healthcare delivery is to understand how healthcare services can
be purchased more efficiently by self-funded plans and medical stop loss
captives. This discussion explores regulatory issues and complications
from healthcare pricing ambiguities, and strategies for implementing more
defined pricing structures to reduce the cost of healthcare.
The ACA regulatory wildcard
Healthcare regulatory changes will continue to be the wildcard throughout
2018. The deteriorating viability of the Affordable Care Act (ACA) has led to
continuous calls for its reform or repeal. Thus far, all replacement proposals
have lacked conceptual development depth and have proved to be
logistically and fiscally impractical. Without a well-developed replacement
plan, a full repeal of ACA would be unexpected.
Significant evolutionary reform of ACA to enhance insurance affordability
and access is a more realistic scenario until a more substantial plan is
developed. It is worth noting that a September 2017 survey by Mercer
revealed that 35 percent of large employers supported full repeal of ACA
while 51 percent were opposed. It is also important to point out that the
cost of insurance is a direct reflection of the expected costs charged for
healthcare. The only way to make health insurance more affordable, and
improve access, is to make healthcare itself more affordable.
Thoughts on the single-payer system
A universal single-payer system, aka Medicare-for-all, has been among the
most popular (and the most impetuous) suggested alternatives to ACA. A
true single-payer system would compel the abolition of all private health
insurance in favour of a single government-run healthcare system as the
exclusive remedy for all healthcare in the US.
A single-payer system would require the standardisation and regulation
of all provider charges and pharmaceuticals, probably to a level similar
to Medicare’s. This would essentially restrict the ability of all healthcare
providers to set prices and limit their capacity to generate profits. All
caregivers and physicians would likely be remunerated at a level that is
much less than current compensation levels.
A survey conducted by the Association of American Physicians and
Surgeons (AAPS) found that 90 percent of its members were opposed to
a single-payer system. The top reasons cited were as follows: increased
rationing of care (87 percent); it would be unaffordable (75 percent);
and harm to patient privacy (66 percent). Out of necessity, care is
likely to be rationed, waiting times would increase, and quality of care
would decrease. Fewer individuals would enter the medical profession,
which is already a significant problem, and medical technological
and pharmaceutical advancement would diminish as research and
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