Common Sense and ObamaCare Sicker Shock

Below we provide some common sense insight into 2016’s sticker shock for ObamaCare’s premiums and deductibles.

If average premium increases (like the ones postulated by this WSJ article) are justified, meaning insurers and providers aren’t price gouging, but struggling, and if plan holders aren’t cheating the system, but struggling with high premiums and deductibles, then it is not insurers, providers, or patients that are the crux of the problem.

So then, what entities haven’t we mentioned?

Government, drug makers, device manufacturers, and stock holders come to mind… but can we really call one of these the specific root of our problem? That seems to simple.

Still, if Jimmy and Timmy are in a room, the vase gets tipped over and broken, and Jimmy didn’t do it, then either Timmy did it, someone else is in the room, an event occurred we are unaware of, or neither Jimmy and Timmy did it but instead the vase tipped as an ancillary effect of their combined actions. No? Is there some other option?

This is to say, if the major insurers are loosing money, people are frustrated with high costs, providers are struggling, and costs are inflating at higher than expected levels… then there must be a root to the problem that can’t specifically be pinned on one of these front facing entities.

Perhaps the answer is it isn’t the insurers, providers, or people’s actually paying for healthcare; but rather a mix of the three combined with government, drug makers, device manufacturers, and importantly stock holders in a market that expect infinite and indefinite quarterly growth.

Lets consider this. If no one paid anything for healthcare, then the $3 + trillion system would be a $0 system. So to what extent can we really blame the 320 million funding the system (assuming everyone at least uses services when they are born)? Even if we can blame them, we can’t send them away (what insane person blames and exiles their customer base aside in healthcare; dang risk adjustment and loopholes), instead we want to be assured they will participate. The consumer is the only puzzle piece we can’t do away with, well almost the only piece.

Next we consider providers, they provide the services that consumers buy. They may be a factor in the problem, consider this list of national expenditures. Still, without providers, we get a $0 system. We can’t have that.

We need not only services, but goods. So now we must consider the drug and device makers. Certainly the Part D, do-not negotiate hole, isn’t helping the system, so we can start our next line of questions here. But again, without goods, we have little service, and thus we have a near $0 system. So we can’t exactly throw out the innovation in healthcare related to goods and expect much of a well-oiled machine.

Now we can consider the merits of government and insurers, they are adding a lot of extra cost, but is the net effect offsetting? Are cost curbing measures (like ones that tackle fraud and abuse) curbing enough long term costs, and what is the root of the increase which regulation seeks to curve? Are regulations and insurers they truly keeping rates lower than they would otherwise be? If not, then we should be looking here. Without regulation or organization there would be chaos, but it wouldn’t be a $0 system.

Is it that the base system is overinflated and thus we can’t keep up with steady growth in this market? Is there a force concerned only with short term gains working against the public interest? Or is it that each entity in the system is simply contributing a small bit to an overall problem, like a bull in a china shop, not realizing the synthetic affect.

I have far more questions than answers, but it would seem to me like blaming ObamaCare or an insurer dropping out of a market, or a provider or manufacturer trying to up their bottom line is short sighted.

Still, the yearly sticker shock story is only going to fly so many more times. In truth, those without assistance (and even some with) are being asked to pay rates to buy into a monthly contracts with unaffordable deductibles (affordable premiums, unaffordable deductibles for many). The average Joe doesn’t have the $13,000 for the deductible because of the overextension in mortgage and childcare and student debt.

No one should be fooling themselves into thinking we can shift the costs on the average joe. If we want to maintain a like system for the long-haul we need to start cutting where there is room to cut. So whoever is seeing big beautiful black numbers, should consider that their friends on the other-side of the market are in the red. At some point, when one is in the red long enough, they may just give up. Certainly we’ve seen the major insurers do it quickly, but how long until Joe just says “enough is enough”… And just to connect the dots and be clear, when the Joe’s of the world cross their arms en-mass we necessarily get a $0 system.

In simple terms, we can’t just point fingers, we need solutions coming from all sectors and entities.

The ACA has done a lot of good, but not taking reform seriously each year shouldn’t be an option on the table. Speaking of options, I’d say state based public options are a good next step.