Time for a reality check on health insurance

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This blog post originally appeared as an opinion column in the Houston Chronicle.

It’s happening again — health insurance costs are going up. We’ve heard a lot of talk about narrow networks and the absence of some hospitals like M.D. Anderson Cancer Center from Blue Cross Blue Shield plans in the individual insurance market in Houston. Every year, we complain, we say we don’t understand why, and we look for someone to blame – greedy insurance companies, outrageously priced hospitals, someone else. I look at this year’s news as another opportunity to inject some reality into the national conversation about the cost of health care and how we pay for it.

First, we must acknowledge that the U.S. does not have a coherent, national system to finance health care. Instead, due to our unique history, we have relied primarily on privately run insurance plans to finance the costs. Our expectations of how health plans should work are shaped by the unique role of health insurance in the U.S. Until the mid-20th century, most people paid for health care themselves. In 1940, only 10 percent of Americans had health insurance. Everything changed in 1942 when Congress passed the Stabilization Act, which limited wartime wage increases to combat inflation during World War II.

Because employers were limited in setting wages, they looked for ways to provide non-cash benefits, including health insurance, as a lawful way to attract and retain talent. Insurance companies saw the opportunity and began offering plans with coverage for routine, basic care like checkups as well as major medical problems like cancer and complex surgeries, and vision and dental services. By the 1980s, the majority of Americans were covered by robust health insurance plans sponsored, and largely paid for, by employers. These robust plans became the “gold standard” by which Americans would measure the quality of health insurance going forward.

But then something happened: The costs of health care, and correspondingly health insurance, skyrocketed. Employers who had footed most of the bill for decades began scaling back the scope of plans and shifting costs to employees. Many employers dropped coverage entirely. People trying to buy insurance individually experienced high costs, and those with pre-existing health problems were often unable to purchase insurance at any price. When the Affordable Care Act was adopted in 2010, its primary goal was to enable the millions of Americans who had been effectively shut out of the insurance market the opportunity to purchase affordable plans.

After the passage of the ACA, Americans began talking about the costs of health insurance: premiums, co-pays, co-insurance and deductibles. Many of the new plans had high deductibles, and we became interested in the costs of care charged by doctors, pharmacies, labs and hospitals because we were paying those costs ourselves. This was a step forward – we began to recognize that there is a relationship between our health care choices and cost. Because we believed that someone else had been footing the bill, we’d been shielded from these facts for too long. Many with employer-sponsored plans still are.

So now it’s past time to confront reality: Health care is expensive, and when it is used, someone does actually pay the costs. We want it all: We want to pay “affordable” prices for comprehensive health insurance that spreads the risk of high costs with others; we want to choose from a large number of private insurance plans; and we want to choose when and where to get care. These features cannot coexist. If we want low-cost health insurance, we have to be willing to give up something: the scope of services covered; the number of plan options; the unlimited choice of providers. The changes we’re seeing in the individual market today reflect this reality.

The restructuring of our health care system is long overdue, and it will take us years to get it right. The conversations are hard, they get personal, and the partisan, political overtone is not helpful. We have to come to terms with the fact that what we want – unfettered access to all services and providers and affordable health insurance that shifts high costs to others – is impossible. We will have to make tradeoffs. Let’s keep the conversation going.