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Here's The Greatest Barrier to Quality Health Care (and It's Not Pre-Existing Conditions)

For decades, politicians and policy experts have focused on the wrong problem.

Opinions expressed by Entrepreneur contributors are their own.

In the Vice President debate, Senator Kamala Harris and Vice President Mike Pence debated over health care, and echoing the same argument from the first Presidential debate, pre-existing conditions were the main focus. Senator Harris declared that the Trump administration is “coming for” people with pre-existing conditions, while Vice President Pence ensured that he and President Trump do have a plan to cover pre-existing conditions. But what this discussion was lacking was any mention of the affordability of health care.

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Related: 2 Guys From Utah Co-Founded a Healthcare-Solutions Company. Within a Year, They Were Managing Covid Testing for 3 States

Don’t fault either party. For decades, politicians and policy experts have focused on the wrong problem. Obamacare did nothing to prevent health care costs from snowballing year after year, and Republican proposals have failed to address the real barrier to quality health care: the uncontrolled, rising price of health care.

Covid-19 has thrown millions of Americans off of their private health care plans. While Democrats and Republicans are unable to compromise on how to deliver affordable health care, the majority of Americans cannot afford health care on their own and neither party is proposing any effective solutions. The health care system the U.S. has in place only works for the few Americans that can afford outrageous health care costs.

Skyrocketing prices

The cost of health care – hospital and drug prices, especially – are grossly inflated due to a lack of pricing transparency, structural issues, and misaligned incentives that allow the health care industry to defy free-market norms and avoid competitive forces that would otherwise keep these costs in check.

A 2019 Rand Corp. study of hospital prices found hospitals charging an average of four times what Medicare pays for the same procedures and facilities. For all hospitals analyzed, Rand reported the average hospital charged almost 2.5 times Medicare reimbursement rates.

Even with guaranteed access for people with pre-existing conditions, rising health care prices are making insurance unobtainable for even middle-class Americans, with the middle 40 percent of earners spending an average of nearly 10 percent of their household income on health care. Covid-19 has only exacerbated the problem.

According to FAIR Health, the cost of hospitalization to treat Covid-19 is about $73,000. But even those who are insured can expect a coronavirus hospitalization to reach up to $38,000; a huge debt most Americans cannot pay. Why are the insurance companies letting the health care industry run rampant with these high costs?

Health care’s big lie

For decades, health insurance companies have been allowing health care prices to increase, all while telling business executives a big lie: You have no control over the price of health care. This deception has helped make the U.S. health care system the most expensive (and least effective) in the world.

Related: Healthcare is in Turmoil, But Technology Can Save Businesses Billions

This big lie is what permitted health care providers, especially hospitals and drug companies, to avoid market discipline and competitive pressures. Now, health care prices are totally out of control, quality of care is appallingly inconsistent, and transparency in health care pricing is non-existent. This all comes down to one thing: greed.

Insurance companies have worked to sideline business executives on health care spending because higher health care prices increase insurance company profits. With the Affordable Care Act capping their profit margins, the only way insurance companies can generate more profit is to grow revenue by raising the premiums they charge for insurance. By allowing health care prices to increase, insurance companies can hike their premiums, thus producing more revenue and higher profits. This doesn’t happen if executives are managing health care to lower prices.

Employers and employees across the nation are nearing a breaking point with the escalating costs of health care, and health care’s insurance company middlemen are profiting immensely from American’s suffering. To them, the commission on raising premiums far outweighs the strain on small businesses and their employees struggling to keep up with rising costs and declining quality. 

Keep the government out of health care

Promises from politicians no longer address the real needs of American people. Both Democrats and Republicans are vying to seize control of the health care debate for political gain, all while neglecting the very reason millions of Americans are uninsured; health care costs. Anyone can get access to health care, but when they look at the price tag, most people feel helpless.

The pandemic has made it painfully clear that America cannot wait much longer to fix the health care system in this country. The truth is health care costs can be managed, but both Democrats and Republicans have made it abundantly clear they won’t be the ones to handle it.

The government is not the answer to our health care woes. Innovative executives across the U.S. are proving that market discipline and standard supply chain management techniques are extremely effective at lowering and controlling health care prices, while still allowing health care providers a reasonable profit. Company executives must ignore the big lie and begin to manage the quality and price of health care like they manage every other expense of their business. Private companies have the power to bring down healthcare costs through the power of the free markets — not the government. 

Nelson Griswold

Written By

Entrepreneur Leadership Network Contributor

Nelson Griswold is the Managing Director of the NextGen Benefits Network and author of industry bestsellers NextGeneration Healthcare, Breaking Through The Status Quo and DO or DIE: Reinventing Your Benefits Agency for Post-Reform Success.