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Fixing Private Health Insurance

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Fixing Private Health Insurance

National Affairs June 22, 2020
Health PolicyMedicare/MedicaidAffordable Care ActOther

The novel coronavirus has placed an enormous strain on America's health-care system, further exposing problems of cost and insecurity that have become increasingly apparent in recent years. As millions of Americans suddenly lose their jobs in the midst of a pandemic, they may find themselves without health-care coverage precisely when they need it most, and unable to purchase affordable alternatives from the individual market.

The pandemic has struck at a time when neither political party seems satisfied with the structure of American health care. While Republicans have failed to repeal and replace the Patient Protection and Affordable Care Act (ACA), many Democrats appear more eager to sweep away private insurance entirely than to build on the legislation. The notion of single-payer health care, which would have seemed outlandish a few years ago, is now taken more seriously because rising costs have made the flaws in the structure of private health insurance harder to ignore. According to a survey of employer-sponsored plans by the Kaiser Family Foundation, between 1999 and 2019, average annual premiums for family coverage jumped from $5,791 to $20,576. Rising costs have caused plans to hike their deductibles, which more than doubled between 2008 and 2018. Many businesses have stopped offering coverage altogether.

Employers, rather than individuals, purchase health insurance for 89% of privately insured Americans, as they can do so on a pre-tax basis. But because employees living in different neighborhoods each insist that insurance cover treatment at their local hospitals, group insurance plans have little ability to negotiate good rates by threatening to leave facilities out of their networks. This dynamic has led to rapid increases in health-care spending as hospitals compete for well-insured patients by constantly upgrading their facilities with few cost constraints.

Continue reading the entire piece here at National Affairs

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Chris Pope is a senior fellow at the Manhattan Institute and author of a recent report, “Medicare For All? Lessons from Abroad for Comprehensive Health-Care Reform.” Follow him on Twitter here. 

Photo by LIgorko/iStock

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