Imagine a world where when you get sick, your doctor prescribes a medicine that your insurer can instantly prior-authorize. You pick it up at the pharmacy counter with a low, affordable out-of-pocket cost. Maybe that means $0. There’s no impediment to the healthcare you and your doctor agreed would be best for you. Your insurer came through!
As you now know, it doesn’t often work this way. That doesn’t mean it couldn’t. Let’s take a look at the most important issues that still need solving. Then, we’ll offer some suggestions for what you can do to help us make progress in achieving this vision. But first, Peter, what are some things that could make insurance better?
Out-of-Pocket Reform
First and foremost, we must reform our current system of health insurance so that it actually works as insurance. Out-of-pocket costs must be capped or eliminated so that those who are insured can afford their care. You’d be shocked at what other problems would go away if out-of-pocket costs were universally affordable. For example, a major threat to continued biomedical innovation (the anger people feel when they or a loved one can’t afford their out-of-pockets) would likely dissipate.
In this [OPTIONAL but recommended] essay from Aaron Carroll in the New York Times, you’ll learn even more about out-of-pocket costs’ deleterious effects. Carroll cites research showing that patients are less likely to seek high-value, needed care when their OOP burden is higher, even only by a little bit. He also notes the consequences of that avoidance:
“A simple $10 increase in cost-sharing, which many would consider a small amount of money, led to about a 23 percent decrease in drug consumption. Worse, they said it led to an almost 33 percent increase in monthly mortality. In other words, making seniors pay $10 more per prescription led to people dying.”
We’re starting to see progress on this front in the political arena: the Inflation Reduction Act capped OOPs for Medicare Part D beneficiaries at $2,000 per year. That’s a great start, but it’s not nearly enough. Expanding this cap to other government programs is a solid next step that could have a profound impact on healthcare accessibility in the U.S., but enacting it will surely be difficult. Expanding such a cap to private insurance plans would make healthcare more affordable for most Americans. And then we can talk about lowering that cap!
Real talk: eliminating or reducing out-of-pockets may have an impact on payors’ bottom lines. To cover the costs of our care, they may need to raise premiums. But with appropriate care comes savings down the road, as people avail themselves of preventative medicine that reduces ER visits and other costly downstream medical care. It’s an experiment we’ve yet to run.
This graphic illustrates the relationship between OOP costs and how likely patients are to fail to pick up a prescription, which ultimately leads to higher long-term healthcare costs.
In 2019, the Congressional Budget Office (a nonpartisan federal agency) found that covering OOP costs for Medicare beneficiaries would cost the program $10 billion but ultimately save $20 billion, due to reduced long-term healthcare costs. \OPTIONAL: You can find the full report [HERE.]