The state Legislative Analyst’s Office has issued a report on how the Patient Protection and Affordable Care Act will affect California, which decades ago was the birthplace of the notion that a superior health care payment scheme is prepaid health maintenance rather than post-care health insurance. The Golden State and more specifically Kaiser Permanente pioneered the health maintenance organization (HMO) as an alternative to indemnity “major medical” insurance designed to cover hospitalizations and other major unforseen health care costs.
The rapid rise in health care costs over the past decade has turned the principle that preventative care costs less than “insured” care on its head. Since about 2003, California HMO premiums have ironically gone up faster than those for indemnity-based catastropic and preferred provider organization (PPO) plans, sending more people into the latter category and paying higher deductibles and cost shares than previously.
The LAO report suggests the HMO’s health maintenance objective has been stymied by a fragmentation of services and a lack of care coordination among providers and treating diseases but not necessarily focusing on improving the overall health of patients. Another cost driver identified in the LAO report is financial incentives that reward the quantity of services provided rather than the quality of that care. Services more accurately described not so much as health maintenance but sick care.
I believe America’s health insurance crisis is fundamentally due to the growing commercialization of health care and pharmaceuticals combined with a post-industrial service economy in which many people spend most of their sleep deprived waking hours commuting to and working at sedentary jobs. Too little time for exercise, sleep and nutritious “slow” food exacts a major toll on the nation’s overall health status. This is a socio-economic problem that no amount of health reform can solve.
The Obama administration and Congress can rightly claim to have made history by enacting health care reform after multiple failed attempts dating back to the administration of Frankin Delano Roosevelt. But unless Americans change how they work and live and value their health, it will be a hollow accomplishment. Health care costs will continue to go up as Americans get older and sicker, less fit and fatter. If current trends continue, by the time most of the reform provisions take effect in 2014, it will become actuarially evident that no system of paying for health care — pre or post reform — can be affordable. The health insurance crisis will be subsumed by a overarching health crisis.
Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email