By Cooper Littlejohn | founder and CEO of the South Carolina Health Cooperative
How to fix health care without raising taxes or mandating health insurance
Like many other Americans, I have become frustrated with the Affordable Care Act. My frustration did not stem from political beliefs about the mandate but from our determination to put a Band-Aid on a health care system that is on life support and complicate an already impossible system.
The goal of the health care bill is to provide health insurance for the 49.9 billion Americans who are uninsured. Why aren’t more people insured? The simple answer is that health insurance is not affordable. A fuller explanation is that it is unaffordable because, from the consumer all the way to the insurer, the business model is broken.
For more than four years, my colleagues and I worked through the South Carolina Department of Insurance to create the South Carolina Health Cooperative, a new approach that allows small businesses to join together so that rates are based on the total group instead of on the individual member companies. I have seen firsthand how difficult it is to convince the government, insurers and health care providers that other options exist.
But we can fix this broken system – without mandates, without raising taxes, and in a bill of fewer than five pages.
Page l: Rethink Preexisting Conditions
Currently an insurer can refuse to cover a health problem that existed before the individual became its client. Changing jobs or other movement from one insurer to another can bring burdensome costs and nightmare stories of families plummeting into debt because of uncovered preexisting conditions.
Instead of punishing people for not buying insurance, let’s reward those who do. Require companies to cover preexisting conditions and disallow large rate increases for individuals continuously covered for at least two years. For those without continuous coverage, require insurance companies to offer two policies: one covering everything except preexisting conditions, and a second, more expensive one for all preexisting conditions. Completely denying health coverage for preexisting conditions, including denials based on abuse-related injuries, should be considered a discriminatory practice.
After two years, an individual with a preexisting condition should be allowed to buy insurance at the lower rate. This incentivizes both the individual and the insurance company, making health care more affordable while assuring that private insurance remains viable.
Page 2: Lower Cost Structure for Providers
While much of America worries about outsourced jobs, I worry about outsourced medicine. America is at the forefront of medical innovation, but medical developers are migrating to Europe because of stifling FDA regulations that cost them nearly 10 years and $494 million for approvals, according to a 2009 Fast Company report. Consumers pay the cost of innovation, in inflated drug costs – in many cases 1,000 percent over the cost of manufacturing. Allowing innovators and entrepreneurs to capitalize and deduct more of these expenses over the life of a patent rewards medical innovation without making the cost unbearable for consumers.
The other large cost in medicine is claims processing. We should simplify and standardize rules for how claims are inspected, filed and appealed, so that doctors are not left waiting in January to be paid for an August office visit and offices don’t employ more billing personnel than nurses.
Page 3: Create Transparency
In this information-abundant age of Facebook and Twitter, consumers still do not know the actual cost of a prescription or hospital stay. Consumers cannot compare medical quality and price as they might with other products or services and may be unaware that sometimes the best medical care is also the cheapest. Hospitals such as the Mayo Clinic tend to have lower costs and higher success rates for certain procedures because high volume has created efficiencies.
Allowing consumers to compare prices and success rates, and to choose their medical care based on quality and price, not just on insurance networks or physician referrals, can significantly reduce costs.
Page 4: Promote Employer-Based Health Benefits
Businesses can reduce the number of uninsured. If we more effectively utilize existing Medicare and Medicaid programs serving retirees and the poor, then we only need to insure working Americans. Current small-business tax credits for providing health benefits should be offered to all businesses. Such financial incentives create overall savings that businesses can use to expand and hire more people. Yes, I said it: Affordable health care can create jobs.
This solution is not a fantasy. We at the South Carolina Health Cooperative have been building this model for five years. We have no preexisting conditions for those with prior coverage. We work with providers to lower costs, educate consumers and give them access to information to make informed care decisions.
Now, hundreds of South Carolina small businesses are learning the value of running their own health insurance program. They see the costs because they as owners pay the bills. They want to make health care work for their employees but they don’t want to break the bank, either.
Health care has always been about giving people the information and the right to choose. The Cooperative gives its members the information, the right and the cost of their choices, creating a totally transparent insurance system.
