Correction: This story has been updated because an earlier version included an inaccuracy. UW Health and Meriter Health Services provide medical services in the Madison-area as part of a 2017 joint operating agreement with Meriter’s parent company, UnityPoint Health.
Editor’s Note: The Ideas Lab asked the Democrat and Republican candidates for the U.S. Senate to submit 1,000 word essays on how they would tackle health care, the issue Wisconsinites surveyed as part of the Main Street Agenda project said is the third most significant problem they face heading into the Nov. 5 election.
The Affordable Care Act made numerous promises that it would slow down the increase in health care costs and improve the access to care. Additionally, President Obama said you would be able to keep your family doctor. The reality is health care costs have only spiked more rapidly since its enactment and access to care has declined in every community. The family doctor has sadly all but disappeared. The legislation sounded good in theory and included one worthy provision, which ensures individuals with pre-existing conditions are able to access health care, but everything else has made health care more expensive and worse.
Tammy Baldwin essay:We beat Big Pharma, but I’m not done fighting for your health care
In both my personal life and professional career, I have been forced to dive into the difficulties and complexities of our health care system to find solutions. In 1991, I was diagnosed with multiple sclerosis at the age of 27, which completely changed my life. As an entrepreneur, I have started a myriad of businesses, purchasing health insurance for thousands of employees throughout my career.
A little over 10 years ago, the continued increase in medical costs began to negatively impact my businesses and my employees. Eventually, I even had to move to self-insure my employees in an effort to keep our health care costs static.
It allowed mass consolidation between health care systems, creating oligarchies and monopolies. As a result, massive health care systems don’t need to be efficient and aren’t forced to provide a value proposition to patients.
I’ve seen this firsthand in my hometown of Madison. Madison’s largest health care provider, UW Health, (operates together) with the second largest provider, Meriter Health Services, (as part of a joint operating agreement). Estimates suggest the combined entity now controls nearly 60% of the market for hospital services in the Madison region. Health care monopolies have led to less efficiency, higher costs, and a decrease in access.
This mass consolidation has also led to the rapid decline in the presence of the family doctor. ACA placed so many regulations on the family doctor, and the consolidated health care systems made it harder for the family doctors to remain in the broader insurance pools, which forced many doctors to retire or sell to larger physician practices. Massive health care systems then buy up independent, physician-run practices, further enhancing their pricing power.
Another major flaw in the ACA is the medical loss ratio. The MLR is a de-facto cap on profits that requires health insurers to spend a minimum percentage of their revenue on medical care. While this sounds good in theory, in reality the rule has only fueled medical care costs to rise faster.
The reason is if you’re capping what a health insurer can make on a dollar of premium, they no longer have an incentive to push back on medical costs to grow their profits. In fact, the only way a health insurer can grow their profits is by letting medical costs go up.
This also fueled vertical integration with health care providers merging with health insurers and even pharmacy benefit managers, decreasing transparency and increasing costs. Cigna, United Health, and CVS Aetna all either own or are affiliated with PBMs, which has allowed them to inflate their medical payments to their affiliate, passing on the higher cost to patients. Health premiums have risen 20% faster since the MLR took effect under the ACA than in the five previous years.
Rising health care costs under the ACA have put individuals and families in a precarious financial situation. In 2010, according to KFF, family coverage cost $13,770. In 2023 family coverage costs rose to $23,968 — an increase of 74% over 13 years. More than 60% of Americans are living paycheck to paycheck, meaning they are just one medical bill away from a financial emergency.
Since 1980, the two sectors with the highest rates of inflation in our economy have been health care and higher education. The correlation between these two industries is that the federal government has gotten increasingly involved with an influx of money. More money sounds appealing at first, but in reality it has only allowed these two industries to continually raise prices on consumers. Specifically in health care, from 1980 to 2023, the Medical Care CPI increased by approximately 445%. That is astounding.
While increasing prices is a major problem, an equally important problem is the decline in access to care.
Rural communities throughout the country and here in Wisconsin are struggling to provide access to care. Last spring, two hospitals in Eau Claire and Chippewa Falls, along with 19 clinics throughout western Wisconsin, were forced to close due to a multitude of factors including record-high inflation, staffing shortages and regulatory complexities.
Smaller hospital systems are having a harder time dealing with the mass regulations by the federal government and changes in reimbursement rates. Sen. Baldwin’s solution was to make matters worse by requiring even more restrictions and regulations. We must address the root causes of what is forcing these closures and limiting access to care.
Our health care system is broken, and it is critical that we elect individuals who have real-life experience in the space to provide solutions. As your senator, I will fight for increased price transparency throughout the health care system, empowering patients and employees to price shop and make informed decisions. I will fight to require health insurers and PBMs to disclose their negotiated drug rebates and discounts, revealing the true cost of prescription drugs. I will fight to support Community Health Centers to bolster access to care for patients in rural and underserved urban areas. And I will fight to address the physician shortage and increase training programs for new doctors.
ACA sounded good in theory, but in practice has a multitude of flaws. Results matter and Wisconsinites are struggling because of our broken health care system. We need a significant overhaul that puts patients first and prioritizes market based solutions to reduce costs, expand accessibility and increase transparency.
Eric Hovde is the Republican candidate for the U.S. Senate in Wisconsin. He is the CEO of Hovde Properties, a Madison-based real estate development company.
Question: Last spring, two hospitals (in Eau Claire and Chippewa Falls) and 19 clinics closed in western Wisconsin. The Marshfield Clinic Healthcare System instituted staff furloughs earlier this year. In the Milwaukee area, some providers are reducing services. Health care systems cite staffing difficulties, inadequate Medicare and Medicaid reimbursements, higher costs and declining rates of patients with private insurance. How would you propose to tackle this problem?
Question: Health insurance premiums continue to rise at double-digit percentages. Meanwhile, the number of people in Wisconsin signing up for health insurance through the Affordable Care Act hit a record high earlier this year. What can be done to make health care more affordable for Wisconsin families? From your perspective, what role does the ACA play in this? Would you, for instance, suggest repealing, replacing or reforming the ACA?
