The Allure Self-Managed Healthcare

The Affordable Care Act is the law of the land, and nothing the Tea Party does is likely to lead to its repeal.  But the ACA can be amended to make it less objectionable.  We just need to modify it to allow Tea Partiers (and others) to form their own healthcare groups.

All insurance, including healthcare insurance, works by forming risk pools.  The members of the pool contribute to a pool of money which is then used to pay the claims by the members.  Most participants pay in more than they use.  In healthcare most people pay more money into the pool than the cost of the care they receive.  

For risk pools to work, boundaries have to be drawn around what is paid for by the risk pool.  Car insurance policies place a limit on how much they will pay for any one accident.  It’s nice to think that as a rich country we don’t have to draw boundaries around healthcare, that we should be able to pay for any possible medical treatment, but we can’t.  

Many people blame private insurance companies for our expensive healthcare system, but insurers actually have very little to do with rising costs.  Advancing medical technology is the primary cause.  Our for-profit medical technology industry has made amazing advances in treatment and care that have allowed us to save people that used to die.  But its primary goal is still profit.  Every year the industry comes up with new procedures or refinements.  Most provide only incremental improvements in care but they all come with a higher price tag.  

So like it or not, health insurance needs boundaries just like auto or homeowners’ insurance.  Who draws those boundaries, of course, is one of the most contentious questions in the U.S. 

The Affordable Care Act greatly expands the federal government’s role in drawing these boundaries.  At the same time the ACA makes it much harder for insurance companies to control costs.  One of the tools insurance companies used to make sure private insurance remained affordable were annual and lifetime limits on payment for care, similar to the financial limits of auto or home insurance.  The ACA forced insurance companies to remove these financial limits.  

And so the conundrum facing our country: The ACA makes it very hard for insurers to draw reasonable boundaries around covered care, and much of our population doesn’t trust the government to draw the boundaries.

There is an alternative: We could allow individuals to come together to form their own healthcare groups, and then decide democratically how to draw the boundaries around the coverage that their healthcare pool will pay for.

In some ways this would be a radical transformation – we would actually be trusting the people receiving the care to set the limits they are willing to live with.  But the beauty of this approach is it fits easily within our existing healthcare system.  

We already have an infrastructure in place comprised of underwriters, brokers, consultants, claims processors and wellness companies that help employers shape and manage employer-funded health plans.  

We also have the legal structure in place as well – every state has some version of a mutual benefit company that could be used for self-managed health plans started by neighborhoods, political organizations or even large extended families.

Letting individuals form self-managed healthcare plans won’t immediately bring down healthcare costs, and it won’t make the decisions on how to draw the boundaries any easier.  But at least it will be the people actually receiving the care deciding on the limits they can accept.  

Our healthcare system is already moving in the direction of self-managed groups.  Large employers are implementing private exchanges that allow their employees to select from a range of group plans.  The ACA establishes exchanges for employees of small businesses.  It’s a short step from letting the members select from a limited number of groups to letting the group members decide what their group plan should cover. 

Self-managed buying groups would offer a uniquely American approach to improving healthcare in the United States, an approach that even the Tea Party could support. 

Blake Ashby is the Chief Product Officer of HealthSight, LLC. A version of this article originally appeared on TheHealthCare Blog.com.