It is time for Texas to deal with runaway medical costs. If we do not, we are destined for a fiscal and health care crisis.
Because of runaway health care costs, Texas is on a path to cut funding or raise taxes. The percentage of the budget spent on health care, for our employees and those on medical assistance programs, continues to increase. This leaves less money available for schools, roads and tax relief.
Similarly, Texans are paying more for healthcare. According to a recent report by the Hamilton Project, "Health care – including out-of-pocket expenditures on health insurance, medical services, drugs, and medical supplies – constituted a relatively small fraction of households’ budgets in 1984. Thirty years later, expenditures have increased by a full 60 percent for the middle-income households."
Because of this increase, Texans are having to cut living expenses and dip into their savings to pay the premiums, co-pays and deductibles.
Likewise, employers are struggling to afford the benefits that attract and keep talented employees. According to an annual survey by the National Business Group on Health, overall health care benefit cost increases at large U.S. employers are expected to increase 6 percent for 2017. These increases will be greater than the increase in the prices changed for the goods and services being sold by the same businesses.
Unlike the purchase of all other goods, we as consumers do not have readily available information regarding price and quality of health care. Also, because health insurance companies are paying providers directly for most transactions today, we as consumers don’t have a financial incentive to negotiate for discounts with providers. If we change these two dynamics, we will mitigate much, perhaps all, of the disproportionate increases in the cost of medical care. Transparency in pricing and increased competition brings down the costs of services — this is a fact.
To make this change, I propose two things. First, require medical providers to publish estimates of the cost of certain procedures online and disclose those estimates when someone inquires. Second, require insurance companies that contract with state or county governments to include an incentive plan for insureds who negotiate savings, so if an individual is able to save the money by negotiating a discount, that individual should participate in the savings.
These two changes will force providers to begin competing on price, which will decrease medical inflation in the long run.
I intend to introduce legislation to accomplish this next session. It is going to be an uphill battle. There are very powerful special interest groups working in the Capitol who don’t want these changes.
I encourage you to ask candidates what they will do about rising health care costs and join me in making this a top issue for the upcoming session.