Laissez-faire economists and health policy wonks have long lamented the Affordable Care Act’s (ACA) (AKA Obamacare) relentless assault on free market principles.
The foundation of the reform revolved around restricting consumer choice, and many insurers, while initially ecstatic over their new-found coercive powers, soon came to realize that they would be likewise restricted ad naseum.
Piles of paperwork drove private practices out of business, and in many areas, hospitals vertically integrated themselves with insurers to drive down costs by skimping on quality. A seemingly decade-long, grueling game of monopoly is no longer solely a description of family time during the holidays; it is also the status quo of the healthcare industry.
And yet, despite roadblocks at nearly every step, the free market has picked itself up and come roaring back with a vengeance.
Today’s insurers, markedly different from the companies that lost billions when the ACA was first implemented, are making better profits than ever. Like a weed growing in the asphalt, they are using every sense of entrepreneurship they have to maneuver a previously barren landscape.
Take Centene, a St Louis based health insurer which, prior to 2014, had absolutely no experience selling to individuals. The once obscure company started out as a Medicaid contractor, taking over patient management from the bungling hands of state governments. Then, in 2009, came Obamacare.
When the floodgates first opened, Georgia, like any other state, had hundreds of insurers. In 2018, they will have four, with many poor, expensive counties only offering one or two choices.
Insurers ran in and got burned— they failed to predict that people who would utilize Obamacare would be far sicker than expected, and they no longer had any right to deny them coverage based on preexisting conditions. Counties in Iowa were left without any insurers because a single patient, whose healthcare costs rack up over a million dollars a month, could not be denied.
Centene, meanwhile, cautiously lurked on the sidelines. They had for decades managed these kinds of sick, often stubborn, patients during their time in the Medicaid business. When the big names finally cut their losses and pulled out, Centene swooped in, offering cut rate plans that offer the bare minimum by the ACA’s stringent standards. But high deductibles and coinsurance would not be enough to make Centene successful— a plethora of others had tried this strategy and failed. Centene, operating above and beyond Obamacare’s delusional guidelines, realized the value of and implemented preventative medicine.
It has long been known that prevention is the future of medicine: as many as 50% of medical deaths, and the costs and suffering that come with, are entirely avoidable.
Heart disease, the number one killer in this country, is 80% a function of our lifestyle, while cancer, soon to be the number one killer, is also 50% preventable.
Obamacare tried to tap into prevention: they mandated that all insurers offer preventative services, and even that public schools compel students to take fruits and vegetables.
As one would expect, without any incentive to be healthy (remember that under Obamacare you cannot be penalized for developing a pre-existing condition), the preventative services went unused and the apples went straight into the trash.
Centene, as a business with a vested interest, hit customers where they could feel it: in their wallet.
They offered incentives for people to get vaccines or get regular checkups; they made unnecessary visits to the ER or specialists deliberately costly.
Since 2014, Centene has tripled in stock price and quadrupled in market value to nearly 40 billion dollars. It has since moved into Georgia, among dozens of other states, and taken advantage of the lack of competition among poor, unhealthy and thus expensive markets.
Others have followed suit. Life insurer John Hancock has offered discount Apple Watches to encourage healthy living. Many insurers are offering discounts for regular checkups or exercise.
Some insurers have even been sued for ‘discrimination,’ with overweight patients arguing that they were unfairly penalized considering their weight is partly a function of their genes.
Certainly, there are controversies left to hash out, but ultimately, a business model under which the chooser bears the burden of his choice is the only long term solution to lower healthcare costs.
Obama believed he could mandate consumer-friendly business practices and healthy living. As is often the case with government regulation, his reforms accomplished the exact opposite.
The ACA paved the way to the monopolization of medicine and hyper-inflating costs that many have predicted will be the downfall of American healthcare. Such defeatists have failed to see that the free market is stronger than any policy, presidency, or pathos appeal.
Centene is living proof that business will adapt to any climate, and in their pursuit of profit, can even successfully better society by encouraging healthy living, and thus greater productivity, among their customers.
Adam Barsouk
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