Dec
1
How to Slash U.S. Healthcare Costs by 75%
“If [these measures] were rolled out nationally, the United States would save $2.4 trillion per year across individuals, businesses, and the government.” — Sean Flynn
Democratic presidential candidates are pushing things like “Medicare for All” and a “public option”, which will only increase costs and perpetuate the weaknesses in our current system. In his book, The Cure That Works, economist Sean Masaki Flynn, PhD, recommends two fundamental changes to the system that will drastically improve the welfare of patients and the nation as a whole.
“Under our current system, it’s nearly impossible for people with health insurance to find out in advance what anything covered by their insurance will end up costing. Patients have no way to comparison shop for procedures covered by insurance, and providers are under little pressure to lower costs.”
On the other hand, non-covered medical services like LASIK eye surgery are priced according to the market, as providers must advertise and compete for customers. So, the first change Flynn recommends is legally mandated price tags, with everyone being charged the same regardless of insurer or anything else. (He isn’t the first to suggest this, of course.) That way, the (potential) patients know going in what they’ll pay. Plus, the administrative costs involved with claims-processing will be reduced, since doctor and insurer won’t be haggling over how much the doctor will get reimbursed.
The second recommended change is one to make sure the patient has “skin in the game”. He advocates something called deductible security, whereby an insurance policy with annual deductible is paired with a health savings account (HSA) that the policy’s sponsor — i.e., a private employer or government entity — funds each year with an amount equal to the annual deductible. Participants have money to pay for out-of-pocket expenses, but they “spend prudently because they know that any unspent HSA balances are theirs to keep.”
Flynn talks about the successes of Whole Foods, the state of Indiana, and the nation of Singapore, all of which implemented one or both of these policies. For example, a study that tracked healthcare spending and outcomes for Indiana state employees during the 2007-2009 period (when deductible security was first offered), showed that “behavioral changes resulted in 35% lower health-care spending than when the same employees were enrolled in traditional health insurance.” Plus, there was no decrement to health outcomes, because “employees enrolled in the deductible security plan were going in for mammograms, annual check ups, and other forms or preventive medicine at the same rate as when they were enrolled in traditional insurance.”
Sean Masaki Flynn, PhD
By examining Singapore’s success (and they have one of the healthiest populations in the world), Flynn estimates, “if we were to require price tags in addition to deductible security, the combined savings would amount to about 75% of what we are paying now for health care.” That would free up a lot of money that would hopefully be put to better use — e.g., paying down the Federal debt, shoring up Social Security, etc.
Flynn concludes,
“If we are going to be serious about squashing health-care costs and improving the quality of care, we need to foster intense competition among health-care providers to win business from consumers who are informed, empowered and protected from financial surprises. Price tags and deductible security are the only polices that accomplish all of these goals.”
Of course, these two changes are insufficient by themselves to completely fix U.S. healthcare, as there are other aspects of the current system — e.g., the indigent and other uninsured, need for tort reform, etc. — that need to be addressed. But, the measures described above would be steps, even leaps, forward. Plus, Flynn writes about other tools that can be used to implement these changes. This is the sort of reformative thinking we need, and I sincerely hope that Washington will take note and take action with Flynn’s (and others’, like those of Dr. Marty Makary (The Price We Pay)) recommendations.
