In advance of a daylong summit on health reform next week, a Senate committee discussed problems surrounding the health insurance market and how it might be solved.
The Senate Finance Committee held the session, the third in a series of hearings on health reform this year, Tuesday.
"The insurance market is broken," said Max Baucus (D-Mont.), chairman of the finance committee. "Premiums are high, benefits are shrinking, and 47 million Americans still lack health coverage altogether."
Baucus said statistics indicate that the average premium for family coverage is more than $12,000 a year, a figure that can be even higher for families that purchase coverage on their own rather than through their employer.
"Since 2000, health insurance premiums have grown faster than the economy and faster than wages," Baucus said. "These trends are unsustainable; the health insurance market is failing to keep premiums in check."
Employers are facing rising insurance costs, an increasing number have stopped offering health insurance altogether, and the insurance market is difficult to navigate.
Insurance issues also have an impact on how providers treat patients, said Sen. Chuck Grassley (R-Iowa), ranking member of the committee.
"A recent Health Affairs study showed that self-pay patients, including the uninsured, are charged two-and-a-half times more for hospital care than insured patients," he said. "Some hospitals even require payment upfront from the uninsured or underinsured before they provide treatment."
Grassley used the occasion to spread the blame to not-for-profit healthcare providers and their reaction to the health insurance coverage of the patients they treat.
"The enactment of Medicare in 1965 and the explosion of the insurance market since then has resulted in incentives for hospitals to treat only paying patients," he said. "I raise this issue again because as we talk about the tax incentives for health insurance, I want us to also consider the billions of dollars of tax benefits conferred to nonprofit hospitals. Given that the majority of our country's hospitals are operating as charitable institutions, any discussion of healthcare reform should consider their role in the market."
Health reform shouldn't jettison all aspects of how health insurance has been offered, said Ron Williams, chairman and CEO of Hartford, Conn.-based Aetna.
"Let's not pull the rug out from under the 250 million Americans who have coverage, but rather let's focus on encouraging solutions that work for each segment of the uninsured," he said. "We also must emphasize quality and value in healthcare - giving people the tools they need to better understand their own healthcare needs, live healthier lives and navigate the system to seek out the best value for every dollar they spend."
Williams also called for increased focus on the key issues facing the U.S. healthcare system - the high and rising costs of medical care in America; the lack of emphasis on value, quality and prevention; some state regulations that put affordable health insurance products out of the reach of millions of Americans; and the need to fix the individual market for health insurance in America.
The insurance problem is particularly vexing because 20 percent of the population needing the most care account for 80 percent of all healthcare spending, said Mark Hall, professor of law and public health at Wake Forest University in Winston-Salem, N.C.
"Various insurance market reforms have worked well to mitigate the worst excesses of these market-driven competitive practices, but these counteractive measures are not capable of eliminating these effects," Hall said. "Risk selection practices flow directly from the very nature of how competitive markets should and must respond to highly concentrated health risks. These effects will never be eliminated unless the market is fundamentally restructured. The basic requirement is to place people into large groups whose membership is not tied to health risk, and to limit the choice of plans within the group."