Congress is once again considering healthcare reform and repeal of the Affordable Care Act — Obamacare — and President Trump has gutted the ACA by executive decree. Because I have been a physician in the managed-care field since the early 1970s, both as a practicing provider of care with over a thousand pre-paid patients and a senior administrative officer with several national managed-care companies, I want to share some history and observations.
In 1973, Congress passes the Health Maintenance Organization Act to inject a competitive model into medical insurance. There were escalating problems in delivery and cost. Healthcare costs were 8 percent of the GDP and rising at 8 percent to 12 percent a year; Americans faced unequal access to healthcare throughout the country; there was a real or perceived lack of quality and/or quality assurance systems; and there was little consumer input into the command and control structure.
The HMO Act made about $200 million available in grants to companies that, among other things: were nonprofit; had consumer members in the command structure; offered a comprehensive benefit package that included minimal benefits determined by the federal government; has a community rating process to determine its prepaid premium; limited co-pays and deductibles, and were in a significant minority position in relation to premiums; offered an open-enrollment period each year —with no pre-existing illness exclusions.
By the end of the ’70s the grant-assistance programs had run out of money for startups and operations for nonprofits, and had only helped to create a little competition on a membership basis. To attract capital from the private capital market, modifications of the original requirements for grant assistance were allowed. Almost all nonprofit companies became for-profit, ceased having consumer input on boards, ceased open enrollment, used medical underwriting instead of community rating for premium determinations, and developed complex co-pay and deduction strategies to limit benefit exposures, increase profitability and value for shareholders, and increase compensation for senior executives.
Today, healthcare costs are 18 percent of the GDP, and on a per-capita basis adjusted for currency, the United States is twice as expensive as most other First World countries, while medical outcomes place about 30th overall.
Since the private-insurance model will be a significant part of our system, it is imperative that we return to the old, well-thought-out solutions to the insurance problems. We must have a competing nonprofit model — a public option. We must develop rules and regulations that ensure that insurance companies compete fairly, and manage cost and quality successfully inside their revenue stream, and not just selectively insure people whose cost will be lower than their premiums.
We must require everyone to have comprehensive coverage, including minimum benefits determined by a national body. We must require limitations on medical underwriting and require reasonable restrictions on co-pays and deductibles in relationship to expenses.
These elements have been part of the solutions in all other parts of the civilized world.
Charles C. Wilhelm M.D. is a second-generation practicing physician and insurance executive.