July 7, 2015

Allowing Federal Health Exchange subsidies does not make healthcare available or more affordable

The U.S. Supreme Court decision in King v. Burwell, upholding federal health exchange insurance subsidies, does not address the Affordable Care Act’s fundamental issue: absent unsustainable subsidies, health insurance coverage under its present rules will become progressively more unaffordable. Patient accountability must be far more greater than it is today.

This conclusion comes from two fundamental issues:

  • Universal health insurance is for more expensive than the selective health insurance it replaced.
  • Health insurers have ineffective tools for controlling costs without adding significant patient accountability.

Universal health insurance is far more expensive than the selective health insurance it replaced.

Through the Affordable Care Act, our elected officials opted for universal health insurance, very limited ability for health insurers to differentiate among health plan members based on their behaviors, and few limits on what is covered.

Their policy decisions make it virtually impossible to make universal health insurance affordable.  Why?

Health insurers kept insurance policies affordable by being selective on whom and what they covered. Life, property and casualty, automobile, and other insurers either increase premiums, exclude excessively risky behaviors, or deny coverage altogether when confronted with a higher risk insurance applicant.  Life insurance policies are not issued to people expected to die within a few weeks.  We pay more to get property and casualty insurance when we choose to live in a flood zone.  Our teenage children are charged more for automobile insurance because their collective behaviors as more accident-prone drivers put all policyholders at higher risk.

Health insurance should not be different.  The vast majority of our healthcare costs arise from preventable chronic diseases caused by voluntary behaviors.  In any population, there are some individuals who regularly engage in more destructive behaviors than others. Covering them in a universal health insurance program costs the rest of us more, but health insurers are not allowed to charge them more.

Without the ability to deny or limit health insurance coverage, health insurers cannot make universal health insurance affordable.

How do health insurers make health insurance premiums more affordable?

  • They can raise deductibles and make healthcare system users spend more when they use the healthcare system.  We are seeing that happen everywhere now.  See the article in the July 4, 2015, issue of The New York Times, entitled “Insurers Seek Steep Increases in Plans’ Rates.”


However, they cannot keep raising rates indefinitely.

  • They can reduce what they pay doctors, or micromanage doctors to reduce excessive care.  That works temporarily, but doctors eventually make choices that reduce their overall population in commercially insured or government-funded systems.  Some leave the profession, while others refuse to accept insurance or Medicare and Medicaid patients. Healthcare provider supply eventually becomes inadequate. As noted in a report on a California state audit, the Medi-Cal plan that covers 12 million people has many pockets of inadequate healthcare access.


  • They create preferred and narrower healthcare provider networks in exchange for lower rates.  However, it means that patients more frequently have to change doctors. An unpleasant surprise also awaits an increasing number of patients: the costs patients incur from using physicians outside of an insured network are not subject to out-of-pocket maximum costs provided in the Affordable Care Act.

In many regions, patients with life-threatening conditions need providers who are outside their network to deliver certain kinds of therapies.

  • Insurers and the government can limit care in ways that reduce its effectiveness.  My sister and I experienced this years ago when my Dad had a broken hip.  The rehabilitation center nurses told us that he needed two therapy sessions a day, but that Medicare only allowed them to perform one, even if we offered to pay for extra care. In effect, Medicare controlled its own costs, but prohibited optimal care, no matter who was paying the bill.

Patients must be held more accountable, even if the prospect of doing so frightens elected and politically appointed government officials.

There are two reasons healthcare costs have ballooned out of control: providers benefit from more volume and more expensive and intensive care in a fee-for-service system; and patients have no or very little incentive to take care of themselves or limit the care they receive.

The Affordable Care Act and regulations issued pursuant to it have begun to address the first of these causes of escalating healthcare costs.  We are seeing rapid growth in “accountable care” payment systems, both for commercial insurance and government programs.

However, we need to make patients accountable for poor management of their health and for poor choices in accessing the healthcare system.  Elected and politically appointed government officials are frightened to take actions that make patients as accountable as they should be.

Fortunately, the federal government expanded the limits of wellness incentives that could be offered by large self-insured employers, limits that had been imposed on them by regulations issued in 2008 by the Departments of Labor, Treasury and Health and Human Services.  Medicare has no wellness incentives, and most states do not allow discrimination in rates based on health-related behaviors.  California has even taken the opportunity to prohibit rate discrimination against tobacco users, considering them to be addiction “victims.”

This mindset has to change.  What also has to change is the unwillingness of government officials to speak candidly about the problem of overtreatment and misuse of the healthcare system by patients.  The public will accept penalties for abuse of the healthcare system.

For example, many localities charge a person who calls 911 inappropriately a significant penalty.  My Dad, who was a victim of dementia toward the end of his life, called 911 from an assisted living facility, and he was charged $500 in 2001.  It was a harsh penalty, but, given the scarcity of emergency response resources, an understandable one.

Relative to healthcare, everyone should have the freedom to choose his or her doctors within a network.  However, someone who consults with specialists, does not fully disclose the medications he or she is taking, does not adhere to rehabilitation and treatment plans and does not have a primary care physician managing overall care should pay more for health insurance.  We are all in this together!

In many respects, what we are experiencing in healthcare is similar to what is happening with Greece.  That country rejected a bailout package because it did not want to accept the harsh reality that it cannot keep going the way it is going.  Similarly, we need patient accountability and a candid discussion of what we need to do differently with healthcare if we are to have a healthy population and the funds necessary to invest for many other critical societal needs.