In recent years, explosive cost increases in the United States healthcare delivery system have prompted a closer look at how healthcare providers and health insurance companies calculate baseline prices for certain advanced medical procedures. Health insurance companies wield tremendous influence over the market price of local healthcare due to their ability to extend or restrict health insurance coverage based on their own internal policies. This means that local employers who provide health insurance to their employees must pay the premiums, and have very little leverage in negotiating for lower rates. Without a solid public option for citizens, for-profit health insurance companies compete only with each other in a given municipality. This has resulted in a continuous price creep as well as a gradual reduction in coverage for pre-existing conditions, as well as more advanced hospital procedures. Hospitals provding neuosurgical services, orthopedic surgery services, and cardiothoracic surgery services are at the high end of the fee spectrum.
As a partial counter to health insurance companies’ growing influence over healthcare delivery, the Affordable Care Act of 2010 carries a mandate that health insurance companies may no longer discriminate based on pre-existing conditions. The Affordable Care Act also established an online marketplace for public health insurance options, as well as the Small Business Health Options Program (SHOP), an online market where small business owners can compare health insurance options for their employees.
While the Affordable Care Act represents an important step toward universal coverage (a system in which a government-managed fund pays for nearly all healthcare services rendered), it still does not address the main problem with healthcare spending: the fact that the government has relatively little leverage when bargaining with health insurance companies. For example, in a country with universal coverage, the government manages the public fund which pays for healthcare costs. The government also holds contracts for hospital procedures, surgeries, and medical products, which gives them tremendous leverage when choosing a manufacturer or healthcare provider to receive a national contract. Healthcare providers and product manufacturers therefore have tremendous incentive to make their products and services safe, effective, and affordable. This practice goes a long way toward eliminating the artificial price creep of private insurance companies.
In order for universal coverage to take root in the United States, there must be a strong public option that the government can use to negotiate with private health insurance companies. Though the Affordable Care Act makes important advances, such as mandating that small business owners with over 50 full-time employees must provide health insurance for their full-time staff, it still does not establish the principle of universal coverage in the United States. Until that point, healthcare delivery costs will continue to creep at an unsustainable pace.