Health insurance offers a way for individuals to pay in advance for health care needs they may require. This is due to a shared or socialized system in which everyone pays an equal amount of cost whether healthy or sick. This is called a premium. The insurance carrier rates or premiums are set through the Affordable Care Act so that not more than 20% of premium fees go towards administrative costs of the insurance itself. The remainder of the 80% goes towards healthcare costs of patients that are insured by that insurance company. While you may be enjoying a relatively healthy life without the need to visit a doctor, your neighbor, co-worker, or family member who just broke their ankle, had a heart attack, or was diagnosed with a terminal condition has a much greater cost for their healthcare.
Hence through medical insurance we have entered into a social contract to pay for and provide care for all Americans. Healthcare is a necessary service for every individual and health has an inherently high value to the individual. This along with constant drive for scientific innovation has escalated potential costs of healthcare services significantly over the past 50 years. Currently we have health insurance companies as one of the mediators in cost between patients and health care systems or medical offices. It is not the only cost control mechanism though.
Our strongest current driver of reduced healthcare spending appears to be a patient deciding not to utilize care due to relative high cost associated with going to the doctor for evaluation in comparison with that patient’s income level. Cost may not be the only factor in keeping patients out of the medical office, but I feel it is not ethical for it to play a significant role. Cost as a reason to avoid care is subject to a wide variety of factors including patient income, patient medical knowledge base, and the underlying likelihood of seeking or avoiding care in the first place regardless of cost. Most importantly this driver of care utilization from a patient perspective is not based on medical knowledge or recommendation.
I strongly feel that we should have best practices, standards of care, quality innovation, and appropriate care that are standardized across the country so that patients won’t have to wonder if going to the doctor is the right financial decision for them. Establishing these care guidelines is a role that a national health care system could play.
Rather than care recommendations steering appropriateness of care, what I see more frequently is the patient that avoids care because consciously or unconsciously they understand that the cost of a primary care doctor (including all associated costs of staff, resources and overhead) is between $400-$800 per hour depending on the practice setting. Hourly rates between $20-$40 represent a significant percentage of income for workers in our country. So the cost of an hour of time spent with your doctor would equate to between 10-40 hours of work if your income falls in this range as a patient.
Health insurance deductibles and out of pocket costs commonly reach $3,000-$5,000 per year for an individual or $5,000-$10,000 per family. Premium costs can double this expense for individuals and families. It is true that ACA subsidies can reduce premiums, but the ACA subsidy does not touch the deductible portion of patient expense. Based on these rough calculations an individuals healthcare premium and deductible costs can easily equal between 4 and 12 weeks of work. For a family that calculation could reach between 6 and 24 weeks of work per year! This calculation does not even take into account the financial effect of the potential for lost wages due to illness or injury.
So how would a nationalized healthcare system manage healthcare costs? Most importantly it would aim to control healthcare costs without relying on such a strong financial deterrent for patients to avoid medical care. The high deductible health insurance plan is putting patients in the position of avoiding care due to their own financial calculations, not medical advice.
Certainly we need to have a system that would reduce medical costs going into the future. I suggest that a nationalized healthcare system is one means in accomplishing that goal. We could create a system that aligns the right service to the right patient at the lowest cost. I am not arguing against competition as a driver of quality and innovation. Rather, I am acknowledging that competition as it currently functions in the healthcare system has a main driver of financial outcomes. The current model aims to provide care for the largest market share of patients that consume the lowest cost of care.
What would a national healthcare system look like that did not require patients to plan to save between 4 and 24 weeks a year of their incomes for healthcare expenses? How could reducing this financial burden improve our economy? How could we fund a health care system with these factors in mind and have it work effectively and efficiently while still driving innovation and improvement? These are the questions to which I return. I believe that further nationalized standards of care and a standardized national administration process that partners with private health organizations may be part of the solution.
A national healthcare system of standards and administration is the healthcare equivalent of a peace treaty in the nuclear arms race of healthcare costs. Creating this framework would take the inappropriate burden of deciding if significant costs are medically appropriate away from the ill and suffering patient. Without agreed upon process of administration and medical practice, we have a problem of wildly varying costs in the healthcare marketplace. We can do better!
Samuel Hanson Willis, MD