Cost

Hurried healthcare reform has left numerous other states with MORE UNINSURED and HIGHER COSTS.

First and foremost, we must do reform right. Healthcare reform must not increase costs for those who already have insurance. Costs are already spiraling out of control, and we must work to address those increasing costs if we are to expand coverage to more Californians.

We have to control costs before we can get health insurance rates under control.

• Reforms should include provisions to control costs such as:
  • Allowing emergency rooms to send patients who are not critically ill or injured to less expensive clinics.
  • Allowing consumers greater access to healthcare by permitting retail health clinics.
  • Prohibiting perverse contracting arrangements that provide incentives for over-utilization.
  • Reducing costs of underlying services for doctors, hospitals and pharmaceuticals.

• AB1X includes a misguided proposal to cut costs that would actually result in higher costs.  This bill would require health plans to spend 85 percent of premium revenue on patient care. Administrative costs are largely “fixed costs” that do not vary with premiums. Consequently, products with lower premiums naturally have higher percentage of revenue attributable to administrative cost. That means the least expensive plans have a higher percent of their costs attributed to administration. Therefore, the most affordable coverage options would be the first ones eliminated under such a provision, putting coverage even further out of reach.

• By allowing a wide range of products, consumers have more control over their healthcare costs. We should provide consumers more options with less mandates to help decrease costs – like non-maternity coverage for seniors, generic drug only benefits and catastrophic coverage plans.

• Additionally, much of health insurers’ administrative efforts serve to control costs, such as disease management, care management, anti-fraud efforts, and information technology. Ultimately, the goal is to control costs and improve medical outcomes, not to be subject to arbitrary bureaucracy and regulations.

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