A Prescription for Lower Health Insurance Premiums

With the inauguration behind us, it’s only a matter of time until we start to see administrative changes that will impact virtually every sector of public life, touching on everything from energy policy to trade regulations. One area that is already gearing up for major change is healthcare. President Donald Trump has repeatedly promised to “repeal and replace” Obamacare, appointed Rep. Tom Price to head the Department of Health and Human Services and proposed various measures aimed at increasing competition amongst insurance providers to drive down cost. While only time will tell whether these efforts will produce their intended effect, it is clear serious changes need to be made.

Healthcare costs are simply too high; according to a recent Gallup poll, Americans once again named the cost and access to healthcare as the most urgent health problems facing our nation. Furthermore, healthcare now consumes more than 16 percent of our country’s GDP and exceeds $1.5 trillion in costs. This has facilitated the rise of a bloated bureaucracy with excess administration and regulation – much of which, unfortunately, increases costs while failing to contribute to quality care.

To understand how we got here, we need to look at the history:

1929 is mostly remembered as the year of the stock market crash that sparked the Great Depression, thrusting the United States and the world into the longest and deepest recession of the 20th century. But 1929 was also the year that our modern health insurance system was born, right in the heart of Texas.

Justin Ford Kimball, a former Dallas school superintendent, became the Baylor University official in charge of Dallas hospital units. Kimball offered teachers the opportunity to contribute fifty cents a month to a fund that would guarantee them up to 21 days of care at Baylor Hospital. The success of the “Baylor Plan” encouraged planners to offer community-wide plans, which eventually came to be known as the Blue Cross Plan.

Fast forward to the end of World War II, when insurance started to become employer-based. Those health benefits were exempt from individual federal, state and city taxation, which created an enormous tax advantage for employer-sponsored group health benefits. This led to rapid expansion in coverage and gave an unprecedented amount of power to insurance companies, who soon learned to exploit the concept of risk.

In 1965, the federal government stepped in to provide coverage for individuals without employment, such as seniors, and brought us Medicare. Unfortunately, this system has been poorly administered, and we are now seeing it suffer from $200 billion annual losses due to wasteful spending, fraud and abuse.

Government interference has continued to exasperate our ailing health system, which we most recently saw manifest through the Affordable Care Act (ACA), commonly referred to as Obamacare. ACA depends on the participation of insurance companies to deliver on its promise of reducing the number of individuals who have been too poor or sick to access coverage. But with major insurance companies like UnitedHealth, Aetna and Humana pulling out of exchanges, hundreds of thousands of Americans are now faced with losing their plans and rising premiums.

The insurance companies are leaving ACA exchanges because they say they aren’t turning enough of a profit, which has forced the remaining insurance providers to demand sharp price increases across the nation in order to stay afloat. In fact, government data reveals that monthly insurance premiums for popular plans on HealthCare.gov are increasing by an average of 25 percent this year.

Lurking in the background are the proposed mergers between insurance giants Cigna and Anthem, who are working to receive regulatory approval for the merger they announced in July of 2015. The $48 billion deal would create a conglomerate with more than 53 million members and more than $115 billion in annual revenues. On the basis of membership, the new company would be the largest insurer in the United States. Aetna and Humana are also looking to merge, and have until February 15 to obtain regulatory approval.

If these proposed deals come to fruition, there will be even less competition in the healthcare space, allowing three companies (each of whom would rake in about $100 billion per year), to completely dominate the industry. Attorney General Loretta Lynch has said, “If these mergers were to take place, the competition among insurers that has pushed them to provide lower premiums, higher-quality care and better benefits would be eliminated.”

Competition encourages innovation, transparency and lower prices. These principles are sorely lacking in our healthcare system, but mega-mergers are not the way to achieve them. We must focus on driving competition between insurance providers, not federal regulations upon the medical community that will continue driving up costs while doing little to actually improve patient care.

Jose I. Almeida, MD, FACS, RPVI, RVT is the Founder and Medical Director of the Miami Vein Center. He has been practicing in the Miami area for over 20 years. Dr. Almeida is a highly accomplished vascular surgeon and is known as a pioneer in Endovascular Venous Surgery. He is the creator and course director of the International Vein Congress (IVC), the largest educational summit dedicated to venous disease, which is now in its second decade.

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