When the new President takes over the executive branch of the U.S. government in January, she must place health care costs at the top of her domestic agenda. Considering Hillary Clinton’s handling of health care reform in her husband’s administration, this would make an interesting parallel. In 1993 President Bill named the First Lady to lead a task force to reach the goal of universal health care. The only thing universal was opposition to the plan. The new President will face a changed environment but the cast of characters is largely the same. So, the administration must develop new approaches to succeed this time around.
Insurance Carriers in Retreat
The administration announced that policy holders will receive substantial premium increases on upcoming policy renewals in the Obamacare exchanges. The rate increases are set by state regulation. Thus, they are not arbitrary price hikes. Health care costs continue to increase at a rate that has overwhelmed health care budgeting. United Healthcare, the nation’s largest insurer, is withdrawing from some markets where the company is booking losses. UHC’s action signals that the insurance companies are maxed out. An insurance company needs policy holders to do business. By leaving the market, they are saying that they cannot get enough premium dollars to turn a profit after paying legitimate claims.
Causes of Increased Costs
When health care advocates line up the usual suspects, the insurance companies are often first on the list. If the insurers aren’t the cause, what is? In America’s Bitter Pill, a book on the creation of Obamacare and its shortcomings, Steven Brill pointed out that the Affordable Care Act failed to address the cost aspect of health care. Obamacare expanded coverage without tackling the tougher issue of cost control. The pharmaceutical and biotech industries are the principal engines driving health costs.
Prescription Medicine Costs
The Obama administration agreed not to tackle drug prices in exchange for Big Pharma’s cooperation in expanding coverage. The government has no legal means of holding down prices for specialty or generic drugs. It lacks an effective bargaining position even in Medicare, where the size of the purchasing unit would compel large discounts.
The next President must engage the pharmaceutical industry meaningfully if she hopes to sustain Obamacare. There are good strategies available but the White House must be able to form a broad enough coalition in Congress to back its strength in negotiations with the drug lobby. Consequently, a new approach to control costs must win over Congress. As a result, the administration must count votes and negotiate with individual Members, not solely with leadership.
Significant advances in genetic and cellular research generate new diagnostics and therapies, broadly described as Biotech. Some of this research carries the promise of meaningful progress in combatting and preventing a number of cancers, as well as other diseases that are activated at the cellular level. The cost of these advances is massive. The procedures take enormous time to develop, and there is no assurance that one will result in effective treatment. The rewards of success must justify the attendant costs and risks.
As these therapies have become available, the cost has become a significant booster in overall healthcare benefits. Therefore, it is unrealistic to place the costs fully on the backs of policy holders because it will price out people who cannot afford to bear that cost. The expansive nature of the field requires forward-looking approaches, such as public “sharing” in the fruits of publicly-funded research. The technology becomes a public-private asset, in which the ownership of patents benefits the public in part. Public participation can result in an overall cost reduction in health-care while providing seed-capital for education and medical technology. Furthermore, the programs should be able to pay their own way.
Partnering with Providers
Engagement with the drug and biotech industries must be mutually beneficial to be successful. Policy holders won’t benefit from a punitive approach or one that threatens to disenfranchise the industries.
© 2016 The Revolted Colonies