Commentary: Power to the patients

1 day ago 31

America’s health bill will surpass $7.7 trillion by 2032. That’s equivalent to one in every five dollars flowing through the economy.

To address this crisis, we must make health care work like other sectors of our economy, rather than the bloated, over-regulated mess it is today. And that will require giving patients more control over their healthcare dollars.

Because massive government programs like Medicare reimburse providers so little, hospitals and doctors charge private insurers higher rates to make up the difference. Private health plans pay hospitals 254% of what Medicare would have paid, on average.

Private insurers pass their higher costs on to patients in the form of soaring premiums, deductibles and restrictions on what’s covered.

Obamacare’s many mandates have encouraged consolidation throughout the healthcare marketplace.

Hospitals are getting bigger, too, in order to gain negotiating leverage with insurers. The 10 biggest U.S. healthcare systems now manage more than 1,200 hospitals, or about 20% of our country’s total.

All that consolidation reduces competition and nudges costs higher.

To top it all off, nobody knows exactly how much anything costs until they get hit with the bill. As of February 2023, three-quarters of hospitals still failed to publish their prices, despite federal rules requiring them to do so.

It’s time to end this madness.

The first move should be to create a regulatory environment that gives providers incentives to disclose cash prices in a clear and usable fashion. Enforcing price transparency rules would help.

But so would empowering consumers to make real choices. If patients are responsible for spending their own healthcare dollars, they will naturally become more price-conscious.

That’s where health savings accounts and health reimbursement arrangements come into play. HSAs allow consumers to set aside money tax-free, which they can use to pay for health care as they see fit. When people have control over their healthcare dollars, providers have to compete for their business. Over time, that leads to better quality and lower costs.

Congress should consider allowing Medicare beneficiaries to contribute to HSAs. Lawmakers should also raise the limits on what people can contribute to an HSA each year.

Health reimbursement arrangements allow employers to give their employees tax-free money for medical costs or insurance premiums.

Employers may prefer them to traditional health insurance plans because they’re a defined cash benefit. Employees may like HRAs because they can pick the health insurance plan that meets their needs — or use the money to pay for care from a provider of their choosing, not their insurer’s.

Finally, policymakers should relax rules that reduce the supply of health care. Scope-of-practice regulations limit what services nurse practitioners and physician assistants can provide — even when those providers are fully qualified.

A 2018 study found that patients treated by nurse practitioners had lower rates of hospital admission, readmission and inappropriate emergency department use than those treated by physicians. Allowing NPs and PAs to practice more independently would effectively expand the supply of providers — and thereby cause prices to fall.

We don’t have to let health spending spiral out of control. Common-sense, market-based reforms could unleash the power of competition to lower costs — and deliver savings for taxpayers and patients alike.

Sally C. Pipes is president, CEO and Thomas W. Smith Fellow in Health Care Policy at the Pacific Research Institute in San Francisco.