Michael McKenna

I have been asked recently about the possible replacement of the ACA. The ACA, Obamacare, Trump Care, the American Affordability Act: it’s all alphabet soup. Think of the American Health Care system as a disease. We’ve become pretty good at treating the symptoms through creative cost shifting to the consumer and at the employer levels. We have yet to find a cure.

Wow! How’s that for a poor health care analogy? But it’s true. As a result, employer-sponsored health insurance has entered a slow death spiral. This entire debate continues to miss the obvious: we have a health care cost, billing and transparency problem.

The per unit cost of providing care in the United States is the highest in the world and is not addressed adequately in the proposed new legislation offered by the Trump Administration or Congress. This is the single largest driver of the inability to afford health insurance premiums. We have done a great job demonizing the insurance companies (some of it well deserved) but this was a diversion. The cost to provide health care in the United States is four times higher than comparable systems.

We are also an aging population. 77 million Americans will be enrolling in Medicare over the next several years. This staggering amount of new enrollees will be in addition to the 45 million already enrolled. Our medical providers depend on private insurers to make up for the losses incurred when accepting the relatively low Medicare amounts paid to them. This nation will have one-third of its total population paying medical providers’ Medicare allowed amounts, which cannot cover our medical providers’ costs. The average HMO and PPO payment to a hospital is 600 percent to 800 percent more than what Medicare allows. What’s the incentive to reduce their costs?

The Trump plan allows insurance companies to compete across state lines. This still doesn’t solve the cost problem. After all, if insurance companies compete across state lines they won’t have better provider contracts than those insurers who have been in their local markets for decades. How is this a solution? We don’t have an insurance problem. We have a cost and billing problem. A dramatic rollback of Medicaid funding, which this legislation also supports, could be catastrophic to struggling families who depend on such subsidies to access insurance.

We have a cost problem, not an insurance company problem.

On the provider side we have witnessed enormous provider groups not only drive up cost but shun any efforts to post their real costs to the public. In Massachusetts, there is a state law requiring transparency of these costs. This has been completely ignored by the provider community. As a result, the services that are constantly attacked are payments to our mental health community, which can least afford any reduction of their allowed amounts paid by insurers. Managed care has already squeezed out any savings to be had within the insurance industry. The product trend in the United States has been a definitive move to more PPO enrollment than HMO. In fact, PPO enrollment now exceeds that of HMOs in this country. So we are paying for a multibillion-dollar referral management infrastructure with zero ROI on medical case management and cost of services.

A few points to consider:

Eight percent of people represent 60 percent of all health care dollars spent. Until there is real provider competition, there needs to be a national reinsurance pool. The most catastrophic claims – for example, $800,000 per year per pediatric hemophiliac patient – should be carved out of our rates and handled by this national reinsurer pool. The government should then require insurance companies to pass savings on to consumers.

Get insurance companies out of the telehealth space. Insurance companies are ruining the potential of cost savings by investing in telehealth companies. We need fewer medical claims running through our system, not more.

We have a bloated administrative complex in our health care system. By mandating common medical record keeping practices and require easy electronic access among all medical providers, eliminate needless redundancy in processes, antiquated payment and billing systems, 25 percent of cost can be carved out of the American health care system.

Education matters: 70 percent of all office, ER and urgent care visits are medically unnecessary or can be handled via telephonic access to telemedicine.

Our pharmacy costs are the highest in the world: The U.S. market subsidizes the rest of the world by paying for pharmaceuticals at a rate that is not sustainable. Why?

By not playing partisan politics and giving in to the powerful health care lobby, only then can we implement real solutions to this problem. Otherwise, we continue to just treat the symptoms.

Michael McKenna is president and CEO of Comprehensive Benefit Administrators, which combines traditional brokerage services with specialty services. He may be reached at mmckenna@cbacompanies.com.