Targeting outbound US patients? Understand American healthcare first

 

A new, highly detailed report  ‘Comparing Health Insurance Reform Options: From “Building on the ACA” to Single Payer’ has been published by The Commonwealth Fund and The Urban Institute, written by many authors and led by Linda Blumberg.

It shows how eight health care reforms in the USA could affect insurance cover, national health care costs, and spending by government, consumers, and employers.  The reforms could mean the US could achieve near-universal cover, and even decrease national health spending, by building on the current public–private insurance system.

As the 2020 campaign heats up, it is critical that medical travel organisations and international hospitals targeting US patients understand how various health reform proposals will affect health care costs and health insurance cover in America.  To help, I’ve simplified the key findings of this detailed report.

Affordable Care Act

The Affordable Care Act (ACA) had, until recently, substantially reduced the number of uninsured Americans, increased access to care, reduced uncompensated care for hospitals and other providers, and largely eliminated discrimination against the sick in private health insurance markets. There are still significant problems as 30 million people in the United States remain uninsured, while a substantial number of others are underinsured.

While many Americans have experienced lower costs after getting cover through the ACA, others have found that premiums and cost-sharing requirements are still too high. Following a Supreme Court decision that made Medicaid expansion optional for states, low income adults in the 17 states that have yet to expand the programme have been left without any financial assistance for cover. Additional policy changes made by the Trump administration and Congress have also created new problems and exacerbated others.

The Commonwealth Fund and The Urban Institute report looks at eight health care reform packages intended to address shortcomings of the current health insurance system. The reforms run from less to more comprehensive in their cover and impact on government costs. They range from a set of incremental improvements to the ACA, to a single-payer plan similar to Medicare for all proposals. 

Eight reforms that build on the ACA

  1. ACA Enhanced 1: Improves the ACA’s current premium and cost-sharing subsidies and adds a reinsurance programme for the individual market to protect insurers against very high claims.
  2. ACA Enhanced 2: In addition to the above reforms, this includes restoration of the ACA’s individual mandate penalty and reversal of the Trump administration’s expansion of short-term, limited-duration plans.
  3. ACA Enhanced 3: This builds on Reform 2 by closing the Medicaid eligibility gap for adults with very low incomes in states that have not expanded their Medicaid program. It also introduces a limited auto enrolment mechanism for most people receiving benefits from the Temporary Assistance for Needy Families (TANF) or Supplemental Nutrition Assistance Programme (SNAP) programmes.
  4. ACA Enhanced 4: Adds to Reforms 3 with a public plan option and/or a capping of the provider payment rates in private non group insurance plans.
  5. Universal Cover 1: The first reform plan to achieve universal cover builds on Reform 4 by enabling workers to opt for subsidised non group cover instead of their employer’s insurance plan and introducing a mechanism through which all legal U.S. residents are deemed insured. This reform features a public option in the non-group market.
  6. Universal Cover 2: Adds to Reform 5 by boosting premium and cost-sharing subsidies further.Single Payer Lite: A single-payer plan that covers all people legally residing in the U.S. and includes all the ACA’s essential health benefits. There is cost sharing for individuals pegged to income but no premiums. There is no private insurance option.
  7. Single Payer Enhanced: This plan covers all U.S. residents, including undocumented immigrants, and features a broader set of benefits than Single Payer Lite including adult dental, vision, and hearing care as a well as home- and community-based long-term services and supports benefit. There are no cost-sharing requirements. There is no private insurance option.

Reforms review

Each reform option improves the affordability of health insurance considerably, through lower premiums and cost-sharing and broader public programme eligibility. Reductions in consumer costs are greatest in the single-payer plans. But as affordability increases, the taxes necessary to finance the reforms would increase as well.

Reaching true universal cover requires either an auto enrolment mechanism for those not voluntarily enrolling in insurance or a single-payer system that enrols the entire population in a single plan.

Employer cover falls as the generosity of assistance in the individual market increases. The single-payer options eliminate employer cover (and other private insurance) altogether.

Federal spending increases as subsidised cover becomes more generous and more people enrol. However, the individual mandate, reinsurance, and cost-containment strategies like the introduction of a public plan option, can also lower the federal funds necessary to finance reform.

If the employer insurance system remains largely intact, universal or near-universal cover can be achieved with reasonably moderate increases in federal spending.

The report’s research goes on to look at the effects on numbers covered, federal and state and employer and individual costs.

Five issues to consider for health system reforms

The report raises five issues important to consider when designing health insurance system reforms.

  1. Levels of provider payment rates. Many of the reforms revolve around at least some regulation of the payment rates for health care providers. Payments to hospitals and physicians vary considerably across services, provider types, insurers, individual providers, and geographic areas. How much and how fast provider payment rates can be reduced without affecting access and quality of care is unknown. The more people enrolled in rate-regulated cover, the greater the implications of where the payment levels are set.
  2. Phase-in period. Estimates assume immediate full implementation of each set of reforms. As reforms increase in breadth, the necessary phase-in period lengthens. The first years of a reform’s implementation may be focused on creating new systems related to eligibility and enrolment and developing new payment systems and regulations, lowering total costs in the budget window. The researchers assume that provider supply will, over time, expand to meet the increased demand for services. But the expansion of supply for particular services may take longer than for others, particularly under a single-payer plan. Promised improvements in access to care may not occur uniformly. The larger the population enrolled in cover with lower, regulated provider payment rates, the more important it will be to phase in lower reimbursement levels over time in order to minimise disruption in the health care delivery system. 
  3. Effects on employer health care spending and wages. The researchers estimate reductions in health care spending by employers for each set of reforms. These reductions increase if moving from incremental to more ambitious reform approaches. Reductions in employer spending on health care may be passed back, over time, to workers in the form of higher wages.
  4. Effects on household spending.  Depending on the reform approach and income level, households see considerable savings in health care costs, with the greatest savings under the incremental approaches accruing to lower- and middle-income families. Health care savings are very large across the board under the single-payer plans. However, households will face higher taxes with any of these reforms, and these taxes are not accounted for here.
  5. Effects on total national health spending. It is possible to design a set of insurance reforms that achieves universal cover for the legally present U.S. population without increasing total national health spending. Whether or not a single-payer plan increases total national health spending depends on the extent to which use of health care services increases because of added benefits and reduced cost-sharing; the levels at which provider payment rates are set; the needed administrative costs to run the programme; and the number of people covered. Under Single Payer Lite, national health spending falls relative to oral and vision care.

Why does this all matter to medical tourism?

The ACA has been discussed for years, then built up and then partially dismantled. The most that health insurers and self-funded employers have been able to do during this time is try to keep up with legal changes, sometimes coming with no warning after a presidential tweet. So, when offered domestic or international medical tourism add-ons, most US health insurers have been unenthusiastic.

The bad news for organisations seeking to sell treatments abroad to the US corporate, business or health insurance markets is that, until November 2020 nobody will know who the President is and what party will be in power, with what healthcare and health insurance agenda. Once the government has decided what to do it has to then get the laws passed by Congress and Senate, and implement the change. At the earliest, it is likely to be 2022 before we know the details of any health insurance or healthcare reform.

There are some in the medical travel market who still suggest there is significant potential in the US outbound medical tourism. In reality the large numbers in the market are the individuals not fully protected by the healthcare and insurance system.  Many of these people that have no spare cash for healthcare, whether at home or overseas, are increasingly being swept up into various state funded or state subsidised insurance programmes.

The best advice for organisations seeking to seriously sell into the US market  is to understand and keep up with how US healthcare, health insurance and politics are permanently entwined. Those medical travel destinations targeting American patients with the "come to us as we’re 80% cheaper than in the USA" message should update their approach.

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