While all of the 2020 Democratic hopefuls are debating to what extent they will buy into some kind of “Medicare for All” plan, real healthcare experts have weighed in with practical methods to slash healthcare costs that do not involve such a concept at all.
According to Sean Flynn, an associate professor of economics at Scripps College, writing for MarketWatch, “two simple policy changes could slash U.S. health-care costs by 75% while increasing access and improving the quality of care.”
Flynn explains that these policies have been proven to work by ingenious companies like Whole Foods and innovative governments like the state of Indiana and Singapore. If they were rolled out nationally, Flynn says, “the United States would save $2.4 trillion per year across individuals, businesses, and the government.”
The First Policy – Price Tags
Shop online, or any retail store for that matter, from a can of beans on your supermarket shelf to a designer dress on Amazon, and what do you see immediately on the shelf or the listing – the PRICE! Why? Because price tags are necessary to compare sellers and to shop efficiently.
However, says Flynn, under our current system, it’s nearly impossible for people with health insurance to find out what the price of a covered service will be in advance. “Patients have no way to comparison shop for procedures covered by insurance, and providers are under little pressure to lower costs.”
By contrast, there is intense competition among the providers of medical services such as LASIK eye surgery that aren’t covered by health insurance. For those procedures, providers must compete for market share and profits, by figuring out ways to improve efficiency and lower prices. They must also advertise to get customers in the door, and must ensure high quality to generate customer loyalty and benefit from word of mouth — just like every other retailer.
Flynn says this is exactly why the cost for LASIK has dropped dramatically from around $4000 when the procedure was first introduced in the 90s, to as little as $250 per eye today.
“Price tags also insure that everybody pays the same amount. We currently have a health-care system in which providers charge patients wildly different prices depending on their insurance. That injustice will end if we insist on legally mandated price tags and require that every patient be charged the same price,” says Flynn.
The Second Policy – Deductible Security
Deductible security – which has been done successfully by states such as Indiana and companies such as Whole Foods/Amazon – pairs an insurance policy that has an annual deductible with a health savings account (HSA), that the policy’s sponsor funds each year, with an amount equal to the annual deductible.
Since the amount that the sponsor places into your HAS is equal to the annual deductible, participants have money to pay for out-of-pocket expenses. But the annual gifts do more than ensure that participants are financially secure; they give people skin in the game. Participants spend more wisely on their healthcare, because they know that any unspent HSA balances are theirs to keep. The result? Massively lower health-care spending without any detriment to health outcomes.
As Flynn concludes, “If we are going to be serious about squashing healthcare costs and improving the quality of care, we need to foster intense competition among health-care providers to win business from consumers who are informed, empowered and protected from financial surprises. Price tags and deductible security are the only polices that accomplish all of these goals.”