There is no time in recent history where health care has been this important to so many people. The Coronavirus pandemic has shown us how necessary it is to have a strong public health system, and just how lackluster ours is now.
Even before the pandemic, Delaware has historically suffered from high health care costs. According to the Kaiser Family Foundation, Delaware has the fourth-highest health care expenditures per capita in the nation, falling just behind Washington DC, Alaska, and Massachusetts. However, this doesn’t result in better care. Plenty of people, especially in vulnerable communities, fall through the cracks of our system.
It is clear that on a national level, we need Medicare for All. At a state level, there is so much that we can do to start bringing universal health care to Delaware. We need to control health care costs, create a public option for all Delawareans, and invest in communities that have greater health needs.
We Need to Stop Out-of-Control Health Care Costs
It is no secret that Delaware’s health care costs are too high. In 2018, Governor Carney signed an executive order which increased cost transparency and created a spending benchmark to reduce per capita spending increases to 3% by 2022. While these are good first steps, there is much more that we can do, expanding on innovations within our state and looking to other states as guides.
Implement All-Payer Rate Setting
One way we can reduce costs is looking to our next-door neighbor, Maryland, which is the only state in the country with all-payer rate setting. The idea behind all-payer rate setting is that the state, health insurance providers, and hospitals get together to set one cost for each medical procedure. This creates one price for all insurance providers, reducing costs from administrative overhead and overcharging. When paired with benchmarking, this system would allow costs for individual procedures and overall state spending to go down.
Reduce disparities between insurance plans
The difference in reimbursement rates between different private insurance plans, Medicare, and Medicaid doesn’t just create administrative bloat, it hurts health care access. When Medicaid pays lower rates than private insurance, doctors are less likely to take poor patients who use the system. When private insurance pays lower rates, primary care physicians are driven out of business altogether. Luckily, some action has been taken on the latter example, but the introduction of all-payer rate setting could reduce these disparities more broadly.
Directly lower the costs of prescription drugs
While there are many steps that can be taken to indirectly lower the costs of over-priced prescription drugs, their prices can also be lowered directly through legislation. This remedy should be used carefully, making sure to prevent shortages, but the bill passed this year capping insulin costs at $100 a month is a good model for how prescription drug costs can be brought under control.
We Need to Create a Health Care Public Option
An all-payer rate setting system can do a lot to reduce general health care costs, but it doesn’t solve the problem of health insurance coverage. If you are uninsured, or if you have exorbitant co-pays and deductibles, you’re still less likely to go to the doctor. This is especially the case with preventative care, which can prevent bigger health problems later on.
Delaware’s situation is made particularly bad by the fact that our individual market has low enrollment and only one commercial insurer, giving people no real option. In response to this, the state created a Medicaid Buy-in Task Force, but the end result was just a waiver to create a reinsurance program that would stabilize the individual market. I believe that more should be done.
I propose the creation of DelaCare, a state-backed public option similar to Washington’s recently-created Cascade Care. Offered on the individual marketplace, DelaCare would set a new standard for affordable care and reduce costs for all Delawareans.
Reduce overhead costs associated with private insurance
In Delaware, the administrative costs of private health care per capita can reach over $3000 a year for individual plans, around 37% of the overall cost of health care per capita. Medicaid, on the other hand, has administrative costs of around 7%. Advertising, executive salaries, and confusing bureaucracies are causing huge cost increases that DelaCare would not have to deal with. This would make it cheaper for everyone using it, providing an affordable plan available for everyone.
Take advantage of rate-setting measures
One of the biggest issues with Washington’s new system (the first of its kind) is that it does very little to reduce rates of payment, limiting overall cost savings. In Delaware, since the rate of payment for all plans would be set by the state through all-payer rate setting, DelaCare would be cheaper for consumers without paying less to providers. This would make hospitals and physicians more likely to accept patients using DelaCare, as they would receive the same amount of money either way.
Use state funds and federal waivers to reduce costs
A public option on its own may increase competition, but competition does not ensure affordable health care. To make sure that everyone can afford DelaCare, the state should subsidize it to make sure that it is truly affordable, not just on par with what already exists. Funds can either come from increased revenues on the state level, or redirected funds from a Section 1115 or Section 1332 waiver, depending on what seems to be the most reasonable in the budget process.
One of the keys to building a strong community and a strong state is making sure that everyone is healthy. Unfortunately in Delaware, we are still far from that goal. But by implementing these reforms, we can take the first steps towards a state where health care is treated as a right and not a privilege.