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The Brill Pill

August 1, 2013
Chris Garlasco, Owner & Managing Partner - Founders Insurance Group

Chris Garlasco, Owner & Managing Partner – Founders Insurance Group

Over the past two years I have argued against the Affordable Care Act based on the mathematical problems with the plan. Appreciating that our clients as well as our ownership group here at Founders come from all different political points of view, I have been careful to approach the discussion only from an insurance and math principle perspective. At the core of my argument has been that whether the government or the private sector administers the insurance coverage, the math principals remain the same. Much of what I have said has been centered on theHealth care cost image high cost of medical care in America. Insurance, regardless of the entity that administers it, is simply a reflection of the cost of the actual care. The ACA does next to nothing in addressing this problem. It can be argued that the ACA has actually added to the cost of coverage and thus far, that seems to be the case and we have not even seen the full implementation of the law.

Recently, journalist Steven Brill wrote in Time magazine about problems associated with the actual cost of our healthcare. He discusses the obscenely high cost of a single Tylenol tablet verses the cost of Tylenol purchased in the private market and then extends the article to the actual price making process in general. Brill demonstrates many examples of a system that is operating in total dysfunction.

Having my share of hospital visits over the past thirty years, I was not surprised in the least at his findings. What did come as a surprise is the number of comments on various websites that seemed to find the cost of the care problem to be new information for many Americans!

I have contended that most Americans relate to the price point that directly affects their bank account. Since the majority of Americans paid for the cost of their insurance partially through work or entirely through the purchase of a private policy, the anger was often directed at the insurance carrier. I have gone so far as to suggest that the consumer be 100% responsible for the cost of the actual care and that insurers play a very different role than they do today. In reality, that isn’t likely to happen, but imagine for a moment if that were the case. Medical providers would be forced to compete on quality and price, the very mechanism that has brought America to the most powerful economy the world has ever seen. There is no doubt that we would see an end to the $77 charged for a box of gauze.

The fact is that until each and every American is directly attached in some way to the actual cost of their healthcare, it is unlikely that we will see a decrease in the expense of healthcare. It could be argued that the health insurance industry’s attempt to control costs with HMO’s and PPO’s only helped to accelerate the cost of the care as consumer’s only related the cost of their care to the cost of their co-pays. As a result, I would argue that 99% of insured American’s have no idea what their doctor charges for a visit, what an MRI’s actual cost is etc. The ACA doesn’t address this in any meaningful way. It actually makes a bad situation even more confusing and complicated. It also adds a lot of additional costs into the system. Its impact on the consumer directly through the exchanges or indirectly through the insurance carriers brings nothing more than increased dysfunction. Sadly, I expect that this situation will only get worse before it gets better.

As we enter into 2014, we will begin to see the problems associated with the ACA increase, especially for Americans with traditional insurance coverage. At some point, the debate over healthcare and health insurance (two separate things), will again reach a fevered pitch. Be on guard for solutions that sound too good to be true. Be sure to scrutinize anything that continues to keep the consumer away from the cost of their actual care. I firmly believe that most well intended Americans that supported the noble ideal of the ACA understood very little about how it would be implemented and how it would actually be cost effective. The “devil is in the details” as they say. The downfall of the ACA is in the details.

Have a great day!

Chris Garlasco

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