Bending The Cost Curve

Too often lost in all the discussion of ACA is that its prime architects were just fundamentally wrong. This is not an argument that ACA should not have been passed, it's an argument that the wonks who had all those wonky wonk wonk profiles written about them as they were getting rich on grifting in various ways were wrong about what they saw as the fundamental problems - and solutions to - our private insurance system. Obviously my solution is just burn the whole thing to the ground, but if that is not your position - if for whatever reason, you think this is a system that is either worth preserving or politically necessary to preserve - then following the ACA leaders was a tragic mistake.

All the talk about "bending the cost curve" and "skin in the game" was all about making employers (for group plans) and individuals (for... I dunno, your ambulance, or something) better shoppers. This was going to be the big cost cutting benefit of ACA. Cutting costs for who? Well, overall costs. Make that trend line a bit less steep. Success! Pop the wonk champagne corks. This was obviously dumb to anybody not corrupt or stupid, but alas.

One of the general theories to the ACA was that health care is too expensive in America because people paying for care aren't trying hard enough to get a good deal. The Obama administration's main plan to control costs was to make health-care buyers better shoppers. The Cadillac tax was designed to encourage employers to try to shop for cheaper insurance plans and to increase deductibles for their workers. The idea was that forcing people to have more "skin in the game" would result in them becoming smarter health-care consumers and not buying care they don't need.

The Cadillac tax was one of the main ways the ACA applied this payer-focused theory to the large employer market, while the law's new exchanges did the same for the individual and small business market. The exchanges were designed to be a central hub to make comparing plans easier, thus helping individuals be better shoppers. People on the exchanges were nudged toward high-deductible "silver" plans, and subsidies were capped so middle-class people would need to pay the full price of whatever plans they chose.

But this strategy didn't work, because the problem isn't that businesses or individuals have never thought to try to negotiate for lower premiums. Similarly, regular people can't shop smartly for care because they don't have the training to know which treatments they actually need or can skip. There is after all a reason it takes so long to become a doctor. The problem is that dominant hospital networks and drug makers with patent-protected monopolies have all the leverage to set prices as high as they can. Since the passage of ObamaCare, the average premium for an individual coverage by private employer insurance has gone from $5,049 in 2010 to $6,896 in 2018, even as the average deductible for employer coverage increased from $646 to $1,350. Since 2014, the ACA exchanges' first year, average benchmark premiums have gone from $3,276 to $5,724.

Imagine being in the hospital waiting for your chemo treatment and hearing the president telling you that the problem with our health care system is that people don't have enough "skin in the game." The thing about health care is that you do, by definition, have skin in the game. Your fucking skin.