Part One of a Four-Part Series

Most people agree that the ability to get and pay for good healthcare services can be life-changing and life-saving. Few topics stress families more, both emotionally and financially, and few cause more shouting in the media, on the internet, or across the political aisle in Washington.

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That’s made it harder every day for the public to sort out the real issues.

Defining the Terms of the Debate

We all seem to agree that healthcare costs are “too high,” but the recent “repeal and replace” debate blurred the difference between delivery of health care services and how we pay for those services. While options to reduce insurance costs and increasing efficiency are being explored at both national and state levels across the country, it’s important for each voter to understand at difference so we can tell our legislators what we want them to do on our behalf.

Despite Washington gridlock, there are actions we might be able to take in Massachusetts to ensure that our needs are met, no matter what happens nationally.

Currently, in the Massachusetts state Legislature, two pairs of initiatives examining health care funding are being considered. The first pair (H. 596 / S. 610) would create a commission to compare three years of actual health care costs in Massachusetts against what those costs would have been if paid through a “single-payer” system like Medicare. If results of that study were to reveal significant potential savings, the Legislature would be required to enact single payer legislation. The second pair (S.619 / H. 2987), would call for public financing for health care services for all Massachusetts residents without requiring such a study. Similar bills are currently underway in other states.

This is the first of a series of several commentaries to help readers understand and be prepared to guide their state legislators on this topic.

First, though, it’s important to clarify what insurance really is. Most of us don’t think twice about buying insurance for our cars, our homes, and some of our most precious physical belongings. Most of us do that just in case losses occur.

Healthcare is different in one critical way: when we get very sick, we usually can’t opt to do without care, and virtually no one can afford to pay cash for care the way you might replace a car or a piece of jewelry. Both chronic conditions (like Crohn’s disease and autoimmune disorders) and potentially terminal conditions (like cancer and heart disease) can generate unimaginable treatment costs.

Such healthcare costs have for years been the leading cause of personal bankruptcies in this country, even for people who thought they had health insurance. This is because prior to the passage of the Affordable Care Act in 2010, most insurance carriers were legally permitted to choose which medical services they would cover and to limit the total amounts they were willing to pay. Buyers didn’t realize what services were or weren’t covered, and changing insurance carriers once you got a serious diagnosis was often impossible because a new company could legally deny you coverage for having a "pre-existing condition.”

Two Kinds of “Healthcare” Costs

When we complain about "healthcare costs," we are actually lumping together two very different kinds of costs.

The “care” part of healthcare is the delivery of medical services that prevent illness and try to heal us when we get sick. It’s provided by a variety of medical professionals¾known as “providers”¾who are trained in the sciences of how the human body works. They work in a variety of mostly nonprofit hospital, clinic, and laboratory settings. Their primary job is to keep you healthy.

Healthcare insurance is a contract between an individual or employer and an insurance company. The contract determines how much the providers will be paid for what kinds of services. Its terms are designed and managed by people who analyze statistics about what medical costs are likely for people of different ages, genders, races, and locations. Some of the people processing claims have some medical training; yet most of those who set your rates and process your claims are trained in rate-setting and in ensuring that each claim meets the insurer’s payment rules before they approve payment. Their job is to follow rules set for paying claims while also supporting large administrative departments and making money for the insurance company.

The health insurance market is highly fragmented. Many companies offer different types of policies with different restrictions about what services they will cover and from what providers. That makes it hard for consumers to compare one company’s product and price with another’s. Further, care providers have to meet different companies’ paperwork requirements, so providers need to hire administrators to submit claims properly. The system is both costly and hard to navigate for both patients and providers.

What’s to Come

The second part of this series will address the intent of the Affordable Care Act, including patient protections, and why the public refused to accept key changes that were proposed in March by the Trump Administration.

The third post will explain the difference between a competitive “free-market” insurance system (depending on insurance companies with varying terms and pricing) and a single-payer system (like Medicare) and actions you can take to influence legislators’ votes.