This commentary was originally published by the Washington Examiner on October 9, 2017.
The United States spends more on healthcare than any other country, but it spends it on the wrong people. There are 15.8 million healthcare professionals nationwide, and 95 percent of them are non-doctors. Why?
The healthcare system is built for middlemen, not patients and providers.
Healthcare middlemen include insurance companies, government administrators, actuaries, billers, coders, consultants, and system "navigators." They are professional intermediaries whose services are supposed to make delivery and access to care more efficient.
Under Obamacare, however, they simply create inefficiency and drive up the cost of care.
Insurance companies benefit immensely from Obamacare subsidies and the individual mandate. Because Obamacare requires everyone to purchase health insurance, the government contracts with insurance companies to offer discounted plans based on income. To make up for their lost profits, insurance companies receive large subsidies, funded by taxpayers. Cost-sharing reduction payments (CSRs) are subsidies that fund coverage for people between 100 and 250 percent of the federal poverty line. CSRs cost $7 billion in 2017, which will increase to $14 billion by 2022.
According to Bob Kocher, special assistant to the president for healthcare and economic policy during the Obama administration, "For every doctor, there are now 16 FTEs that are non-doctors…Nine of them are administrators — and it's jumped from six [in recent years]." There are currently 923,308 physicians in the U.S., which means there are 8.3 million healthcare administrators. In other words, 54 percent of healthcare professionals are administrators, and only 6 percent are doctors.
Administration alone cost $253 billion in 2015, nearly 8 percent of total U.S. healthcare spending. That is more than double the global average share of administrative costs. It's no wonder the U.S. has a shortage of care, when it spends more on administrators than any other country.
Last year, the federal government also spent $100 million dollars on "navigator" grants. Nearly 100 organizations receive these grants, which they use to advertise Obamacare and help people enroll. The Trump administration will cut the Obamacare navigator budget by 90 percent in the next fiscal year, which has some healthcare professionals worried. The healthcare system is "very complex, and it is very confusing, and we have to make sure we keep the navigator services," says Susan Turney, CEO of Marshfield Clinic Health System in Wisconsin.
Health insurance should be easy to understand and acquire. Instead of hiring navigators to facilitate enrollment, Congress should make the system less complex and confusing in the first place. This would make the system cheaper overall, without reducing access to care.
Patients and providers need money more than middlemen. A 2016 survey by the Texas Medical Association shows that 54 percent of Texas physicians earn less income than they did in 2014. In 2015, medical underpayments totaled $57.8 billion for Medicare and Medicaid services alone. More and more physicians are no longer accepting Medicaid patients due to the stark financial losses.
In 2014, only 49.2 percent of physicians could afford to accept new Medicaid patients in California. In the nation's next most populous states, Texas, Florida, and New York, Medicaid acceptance rates were 61.8, 55.4, and 57.6 percent respectively.
Amidst the shortage of care, costs are rising. Individual health insurance premiums have increased 99 percent on average since 2013, and family premiums have increased 140 percent. Americans spend more money on healthcare under Obamacare, but they receive less care in return.
Spending more on middlemen will not solve the care crisis. If we want better care for the uninsured, we should use healthcare dollars to alleviate care provider and patients' expenses directly. Exemplary measures include reimbursements for physician charity care, tax deductions for medical expenses, and funding for outpatient charity clinics. A 2016 survey by the Texas Medical Association shows that physicians prefer these measures to insurance subsidies by far.
Recently, health insurance companies testified on healthcare reform before Congress. No doubt, they lobbied for CSR subsidies, lower insurance taxes, and the continuation of the individual mandate. These measures may temporarily stabilize the insurance market, but they will not improve costs or access to care.
In a free market, intermediaries perform a valuable service: they make transactions more efficient. In an overregulated, government-run healthcare system, intermediaries actually hurt the people they mean to serve – doctors and patients. In fact, healthcare is the only industry in which intermediaries pay for care instead of consumers, and decide what care is available instead of providers. Their role has grown far beyond what doctors and patients need.
If Congress wants a better healthcare system, in which care is more affordable and available, it must shift its attention away from intermediaries and focus on those who actually make healthcare possible.