First came the Affordable Care Act, then the American Health Care Act — time and again, politicians talk about controlling health care costs but end up missing the point.
Based on the historical rate of inflation, health care spending could consume nearly 50 percent of gross domestic product in 30 years — an unsustainable trend that can’t be solved through changing the insurance landscape.
The A.C.A., or Obamacare, focused on expanding coverage, with very little to address cost of care in the early stages. That was a fatal flaw: Voters saw already expensive health care costs rise and were unhappy being forced into the system.
The A.H.C.A., which the House passed last week, focuses on the cost of coverage, but in the wrong way. Cutting billions from Medicaid will reduce government expenditures, but only by cutting care for millions of people. The move back to underwriting for pre-existing conditions will reduce the cost of insurance for healthy people but will drastically increase the cost of insurance for people with underlying health problems.
Instead, we have to tackle insurance itself. In the United States, we pay a large amount of money to insurance companies for the privilege of being the middleman in uninsurable primary care transactions.
Other industrialized countries, where health care costs per capita are less than half of what they are in America, offer lessons. Americans spend about 25 percent to 30 percent on administrative costs; if we brought that in line with those other countries, to about 15 percent, we could save about $320 billion of the $3 trillion our country spends on health care.
Countries that provide good primary care have better health outcomes and lower costs because they provide efficient care of common and chronic illnesses. In America, the high cost of medical education, a reimbursement system that favors specialists and a poorly supported primary care network have decimated our primary care work force.
In the 1980s, Spain created taxpayer-funded community health centers located within a 15-minute radius of every citizen. This dramatically improved health measures and provided a good base of primary care for everyone in the country.
In the United States, community health centers could be funded directly by the government based on population, not fee for service. They would provide a broad, well-defined range of services, including primary care, with weekend and evening hours, telemedicine, basic pharmaceuticals and education for management of chronic illness. Mental health care would be provided, including management of drug addiction. And they could serve as a base for managing crises such as epidemics and bioterrorism events.
Anyone could use a community health center without income verification, free. People could still use private primary care providers, but they would have to pay for them, directly. Insurance would be reserved for emergencies, through inexpensive catastrophic coverage. Even Medicaid and Medicare could eventually be moved into a catastrophic-only model.
Such centers already exist throughout the country, many providing state-of-the-art primary, mental and dental care for low-income people at about $1,000 each a year. At that price, the entire country could be covered for $325 billion a year.
The savings would more than pay for the program: Right now, the government spends $250 billion a year on tax credits for employer-based coverage. Since insurance costs would decrease significantly, the revenue lost by this credit would decrease proportionately. And about 11 percent of Medicare payments are for physician services and another 27 percent are for Medicare Advantage payments, totaling $240 billion per year. Since a good chunk of that is for primary care, it could be diverted to community health care services.
America has spent almost a decade making dramatic changes in its health insurance system, without addressing the real problem. We have the capacity to tackle the underlying costs with a tried-and-true solution. The only question is, do we have the political will?
Carolyn McClanahan is a certified financial planner and doctor.