David MHA
Rookie
- Sep 16, 2018
- 3
- 0
- 1
Health Sector Policy and Governance: Consumer and Provider Costs
Introduction
This paper will address several key issues relating to health insurance plans, which are increasingly being developed and featured, with the inclusion of high-deductibles, as part of their insurance policies.
The impact of these policies cause consumers to pay more, in out-of-pocket costs and spending. In an effort to make these types of policies palatable to the potential, of Patients/Consumers, who will have the option to choose them, or are subjected to them, by choice of their employers shift, to this lower premium product, they are being portrayed in a positive light, as a “consumer-based” plan, that will afford Patients more control over the choices for their medical care. In addition, since this type of plan requires consumers to pay more of their own funds, this unfavorable consequence is being reconciled, by an exchange for lower premiums, in concert with a conservative, (but misleading) justification that higher out-of-pocket costs, will encourage Patients to make better (presumably informed) healthcare choices.
This paper will also identify and evaluate the impact that Federal or State Healthcare Policies are having on consumer costs, in addition to exploring the positive and negative effects on the process of accessing care, and the cost of receiving care.
Affordable Care Act - Federal Healthcare Policies and Legislation
The Trump Administrations actions have accelerated destabilization of the ACA as a result of modifications to the “Individual Mandate” Market, which was created as the foundation of the ACA’s infrastructure. It created a full spectrum of funding resources, designed to ensure that all segments of U.S. citizens contribute and participate as healthcare enrollees.
The ACA’s “individual mandate premium”, coupled with Tax credits, were designed to create a stable market for individual insurance. However, several factors, including primarily the Trump Administrations targeted policies to destabilize the financial foundation of the ACA, that supported its fiscal viability were enacted. Additionally, the defunding of cost-sharing reduction payments and the 2019 repeal of all existing penalties associated with the “individual mandate” removed the motivation and requirement for compulsory participation by all U.S. residents, making it difficult for insurers to offer affordable rates.
As a result, steep premium increases will occur for middle-income America, while Tax credits will expand to cover these increases for lower-income Patients. Middle-income individuals are not eligible for these credits and will have to cover the full increase from personal resources, from out-of-pocket (Jost 2018).
The Implications and Impact of Shifting Consumer Risks
This system is referred to as "consumer-driven healthcare", because claims are paid using a consumer-controlled account, versus a fixed health insurance benefit. Proponents argue that it gives Patients greater control over their health budgets. However, opponents argue that these plans force Patients to avoid or postpone necessary care and treatment, until the conditions become more critical and more expensive to treat. The primary factor driving Patients focus among these plan holders, are ostensibly, concerns over remaining within the spending limits of the plan's coverage and controlling additional out-of-pocket spending.
Incentive Legislation
In 2003, with the passage of Federal legislation, it provided tax incentives to entice consumers to choose higher-deductible plans. However, with the rising costs of healthcare, these incentives are largely inadequate with respect to healthcare spending trends for many Americans, and therefore misleading consumers who do not have the ability to analyze and project, the cost of their healthcare needs, and therefore, to determine coverage needs for their annual healthcare spending patterns. The Medicare Prescription Drug, Improvement, and Modernization Act, was passed by Congress in November 2003, as an example of such incentives, as stated, to encourage the adoption of high-deductible health plans.
Consumer-based Health Plans - Impact and Evaluation
Consumers are led to believe that "Consumer-driven" health plans will reduce costs by giving Patients more control over their healthcare choices. However, certain inevitable facts remain. Doctors still retain primary control over healthcare utilization, decisions, and determinations. In addition, most Patients are both unlikely to "shop around" to determine cost conservation options, and more importantly, are untrained to evaluate the types, or extent of the treatment, or provider qualifications that are needed, or the services that are necessary for their immediate, or Specialist care.
The impact on consumer costs, cost conservation legislation, and healthcare plans that tout quality enhancements, Patient choice empowerment, and fiscally conservative outcomes in healthcare costs, are neither benign as to negative consequences, nor result entirely and consistently in cost conservation outcomes. In fact, based on the sum total of pros and cons, as evaluated within this paper, individual spending for healthcare will increase for many Americans annually. The defining difference within low-premium high-deductible plan models, is in the shift of the financial burden upon the Patient, once fund allocations, within their healthcare plan, has been exhausted. Many of these Patients will never reach their deductibles, and others may have expenses that far surpass the limits of their plans monetary fund allocations.
Consumer-driven healthcare (CDHC) and Consumer-directed Health Plans (CDHPs) are nearly identical versions of plans that include high deductibles, classified as High Deductible Health Plans (HDHP). Consumer-driven plan Patients, are also twice as likely as Patients in traditional plans, to ask about costs for services, and three times as likely to choose a less expensive treatment option (Solomon 2017). Opponents point to this statistic as confirmation that HDHP Patients are making strict decisions for healthcare, based on the spending limits of their health plan, as a primary criteria, and medical needs as a secondary consideration.
PROS - Consumer-based/Consumer-driven Plans
· Patients are forced to take an active and proactive role in their healthcare, from choices of care and providers, to participation in the pathway for treatment.
· Patients are three times more likely to choose a less expensive treatment option, as part of their active role in the healthcare they receive, resulting in cost conservation.
· Lower premiums in the purchase a healthcare plan.
· In 2007 additional tax breaks were enacted for consumer-driven and consumer-based, high deductible plan holders. In addition, newly enacted legislation, allowing Patients to use allocated plan funds to pay for premiums, to purchase “catastrophic healthcare coverage”, for Patients who are in the low-income bracket.
CONS - Consumer-based/Consumer-driven Plans
· Patients are forced to conserve limited coverage resource funds, and to prioritize what illnesses they will seek treatment for, before funds are exhausted and costs begin to shift to the Patients out-of-pocket resources.
· Patients are forced to make value judgments on care and treatment, and seeking Specialists providers, that the average Patient is not capable or trained to discern.
· Patients are three times more likely to choose a less expensive treatment option, at the expense of
informed and appropriate choices or a higher quality of care, without the benefit of training, and in order to conserve monetary allocation limits on coverage.
· Higher deductibles and annual spending limits
· Once spending limits are reached, a shift to the Patients out-of-pocket funds are substituted.
· Deductibles as much as 3000 to 4000 dollars are required, which can devastate the finances of low-income and middle-income Patients.
· The “RAND” study as summarized, by J. Newhouse (2004) concludes that visits to the Doctor and hospitals, declines under high cost-sharing. Additionally, low-income families reduced their use of unnecessary healthcare services, however, this same group, also reduced their use of beneficial and necessary, care and treatment. These statistics also noted an increased rate of death from preventable illnesses.
Conclusion
In general, most studies conclude that increasing the costs of co-payments and deductibles attributed to the Patients responsibility, result in the reduced utilization of healthcare services. Specifically, the residual effect, impacts both unnecessary medical treatment and services sought, as well as, appropriate, necessary and beneficial care and treatment. The greater reduction in accessing care, as a result of the cost impact, is experienced by lower-income Patients.
In support of this perspective, and in summary of the “RAND” Study on Consumer-Driven Health Plans, it additionally holds that declines in accessing necessary care, due to higher cost sharing, results in an increased rate of death from (specifically) “preventable illness” (Newhouse 2004).
Patients will continue to face a growing financial burden, as their healthcare costs increase and their ability to pay is overwhelmed by consumer burden. Payment responsibility for medical costs continues to be shifted by employers, to the employees, as a way to reduce company costs for benefits, as well as, Patients who are covered under the ACA struggle to pay co-pay costs and high deductibles.
Coupling the higher costs of medical care, higher out-of-pocket spending, the destabilization of the foundations of the ACA that was intended to bridge the gap between access to care and affordability, all of which, in addition to other factors, are having an exponential effect on how consumers are able to access medical care and pay their medical bills and living expenses. The current healthcare environment has placed consumers, employers and healthcare providers in an unsustainable position in the long-term, and one which, is not likely to be alleviated unless currently opposing legislative interests, reconstruct policies that
re-stabilizes the ACA and enhances previous shortfalls, or replaces the ACA with an alternate comprehensive healthcare system.
References
Jost, T. (2018, April 10) How Will State and Federal Actions Affect Individual Health Insurance Coverage for Middle-Income Americans?
Newhouse, J.P., (2004, November) Consumer-Directed Health Plans And The RAND Health Insurance Experiment
Solomon, P. (2017, March 30) Rising Healthcare Spending Takes Its Toll on Consumers - Retrieved from:
