Unintended Consequences of Health Reform

Since the passage of PPACA, the players in the healthcare industry (which includes hospitals, clinics, physicians, pharmacies, pharmaceutical companies, medical materials/device manufacturers, insurance companies, employers, brokers/agents, CPAs, Healthcare IT providers, etc., etc., etc.) have been desperately trying to figure out how the elements of Healthcare Reform will ultimately impact them – both generally and specifically.  Since every man, woman and child in the United States may need to access medical care at some point in their lives, no one is immune from the impact of major changes to the healthcare delivery system.

Regardless of your political leanings, I think everyone could agree that the cost of healthcare (and therefore health insurance) is uncomfortably high for most families today AND these costs are increasing at a completely unsustainable rate.  According to the most recent Kaiser Survey, the average cost of a family’s health insurance in 2011 was $15,073 while the median family income for 2010 was $49,445.

Agreeing that there is a problem is the first step to finding a solution.  However, “fixing” this particular problem is not quite so straightforward, and there are many extremely intelligent and well-meaning people who strongly disagree about how this “fix” is defined much less achieved.  This is most evident to me as some of the unintended consequences of healthcare reform become realities.  Here are a couple of examples:

  • Limiting the purchase of non-prescribed over-the-counter medicine from FSAs and HSAs – This punishes the diligent, engaged healthcare consumer by eliminating a previously utilized tax break while clogging primary care physician offices (already stress by mandatory free wellness visits) with OTC prescription requests.
  • Issuing over 30 waivers to select companies (impacting over 1,000,000 workers) – Though I would probably prefer we all had waivers, I think it shows a tremendous lack of conviction in the principles of the law (which I also do not particularly agree with either) to issue waivers from what was supposed to be critical consumer protection features of the law.  Why were some waivers issued and others not?  What possible criteria could be used to fairly determine that?
  • Mandating coverage for children without medical underwriting – This is a very difficult concept to oppose.  How could anyone with a heart deny a child with health conditions insurance coverage?  Unfortunately, the law did not mandate that insurance companies continue to offer broad coverage options to children.  So, most carriers either stopped offering these policies or drastically reduced the number of options available.  The next step will surely be larger than average price increases.
  • Limiting pricing variance (currently based on age, sex, smoking status, etc.) from least expensive to most expensive – While this will be good news for those who are currently on the high end of the pricing spectrum, it will be relatively worse news for those on the lower end of the spectrum.  Currently, underwriting and pricing variances reward people with good health and good demographics with lower prices.  This will remove an element of consumerism that is essential to cost control.

I applaud our elected officials for taking on this challenge.  However, I think our founding fathers intentionally made it difficult to pass laws so that the Federal Government would not try to do things it cannot OR should not.  The Federal Government is NOT a good micro manager (otherwise it would never buy $50 hammers or $15 muffins).  It should recognize that about itself and govern accordingly.

Here is a thought, the Federal Government should pass NO laws that do not include both a plan AND the appropriate funding to enforce them.  That ought to keep them from dipping their toes (or doing cannonballs) into waters when they really cannot swim.

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