We create health over a lifetime. We create profits in three- or twelve-month bits. Herein lays a fundamental problem of health insurance – the clash of short-term and long-term.
The New York Times reported that Blue Cross/Blue Shield plans nationwide found that their newly insured members were racking up big bills for hospital and physician care. Though everyone anticipated this, apparently no one saw how big the truck was until it backed up and dumped.
So, not a big deal – these people used more medical services than the insurers expected. Naysayers can use the steep rate increase as evidence against the Affordable Care Act – “See? It’s costing all of us a lot more than ever before!” And a supporter might say, “See? It’s working! People are getting medical care that they need. Besides, has there ever been a year without rate increases in health insurance?”
The insurers are probably over-reacting, however. The surge in demand is very likely to fade. In California, a newly eligible person’s use of emergency and hospital care went down significantly after one year of being insured. When Wisconsin automatically enrolled low-income adults in 2009, outpatient and emergency room visits increased in the first year; but hospital stays and preventable hospital stays decreased by half.
A reported 20 million people have gained coverage, including children up to age 26, people newly qualified for Medicaid, and people buying from the exchanges. That’s 20 million fewer people wandering around hoarding up their demand for medical care.
When pent-up demand becomes a thing of the past, there will still be plenty of other pressures driving up health insurance rates. Tiny changes can make millions of dollars in difference. For example, smokers age 55 to 80 who have smoked for 30 years can currently get (with no co-pay) a lung cancer screening test. Changing this recommendation to include younger smokers — “new research shows . . .” — would save lives and simultaneously, add millions to our “tab”.
The long and the short of it is, health insurance will forever be trying to fit a long-term problem (lifelong health) into short-term solutions that fit into annual earnings. This argument is often made in support of wellness programs of dubious value, which is not the argument I would make. Rather, until we can take a broader view of medical costs and health, we will keep putting a round peg into a square hole.