By Alfredo Ortiz
The healthcare system in the U.S. has long been hurdling down the wrong path. Since the mid-1980s, healthcare costs in the U.S. have been rising faster than other member countries of the Organization for Economic Cooperation and Development, such as the U.K. or Switzerland.
In fact, spending on healthcare in 1985 was roughly $3,900 per capita in current U.S. dollars, and in 2016 that number was more than $10,000.
Doing nothing is not an option.
The previous administration took a shot at fixing the system in 2010 with the passing of the Affordable Care Act. While the attempt was well-intentioned, the law only further increased healthcare costs by subjecting individuals and businesses to additional taxes and regulations, creating a health system teetering on the edge of total collapse.
The skyrocketing healthcare costs have led to real trouble for small businesses of all sectors — including many AAHOA members… and the 56 million employees that rely on them. According to a 2017 study from the American Action Forum, since the ACA was implemented, premium hikes for small businesses have “been associated with $19 billion in lost wages, 10,130 fewer business establishments and nearly 300,000 lost jobs.”
It’s obvious that the current healthcare system is unsustainable, but what can we do to fix it? The first step is to find the root of the problem. And that root is accountability.
Health insurance companies play a valuable role in modern convenience. They remove much of the worry and risk associated with the potential for catastrophic health crises, like cancer or a car accident, by spreading the liability. But over time they have morphed from a beneficial tool within the relationship of a patient and their doctor into a third party that acts as a firewall, severing the direct financial ties almost completely.
This dynamic has some very negative consequences, the biggest being neither the doctors nor the patient really know how much procedures — even ordinary ones like x-rays — cost. And why would they? While there are sometimes copays and other shared cost mechanisms, patients often times see very little change in direct personal costs despite the level of care.
It creates a spending paradox in which neither party is concerned about the price of services. Hospitals know that they’ll get a check from the insurance company, even if prices are unreasonable, and healthcare consumers know that the insurance company will pay the hospital regardless of the cost.
The lack of price accountability causes vast amounts of wasteful spending and bloated prices to be injected into the healthcare structure. And if it goes on for much longer, that waste will build up and cause the whole network to collapse — harming individuals, insurance companies and businesses alike.
Simply tinkering with the already existing healthcare system will not address the systematic accountability problem. It will only shift the direct financial burden from one party to another, but will eventually trickle down to all healthcare system actors.
Thus, the challenge for lawmakers is to construct a healthcare system that addresses the accountability issue while keeping many of the ACA’s benefits, such as pre-existing conditions, without bankrupting the country. To do this government needs to take a step back from the healthcare industry in order to allow private individuals, hospitals and insurance companies to work out what’s best for all participating parties. And for the minority group of people who want healthcare but can’t afford it, or for those with pre-existing conditions, the government can step in to reform Medicaid to work on their behalf. That way, a majority of Americans are able to gain healthcare through a market in a reasonably priced way, while those who do need public support don’t get thrown under the bus.
Americans — especially small business owners — deserve a better healthcare system. Let’s give it to them through free enterprise, not more expensive government intervention.
Alfredo Ortiz is president and CEO of the Job Creators Network.
