Washington fighting over premiums while prices keep rising
Washington’s recent shutdown theater over who pays for the COVID-era “extra” Affordable Care Act/Obamacare subsidies is loud and familiar—and misses the mark. The spotlight is on insurance premiums and how much will be covered by individuals versus taxpayers. But the real issue isn’t who pays for high prices, it’s why those prices are so high in the first place.
States shouldn’t wait for D.C. to “fix” healthcare. They have the power and responsibility to tackle the root causes of rising costs: opaque pricing, misaligned incentives, limited provider supply, and outdated regulations—which also happen to be some of the same forces driving up insurance premiums. Here are a few examples of smart state policies that lower costs, expand access, and create a more competitive, patient-centered system.
Examples of Good Policy
Codify Price Transparency at All Facilities
Federal rules require price transparency, but those rules could be weakened or repealed. States should lock in transparency by requiring that both cash and insured rates be publicly available at all times. Not every patient will shop, but many want to—and employers need this data to negotiate better deals. Transparent pricing holds systems accountable for both cost and quality, and voters overwhelmingly support it.
Stop Penalizing Patients Who Pay Lower Cash Rates
Cash prices are often lower than insurer-negotiated rates because they’re paid upfront. States should require insurers to count these payments toward patients’ deductibles, even if the provider is out-of-network. This empowers patients to shop for value and bypass network restrictions that inflate costs. States such as Arizona, Indiana, Maine, Nebraska, Oklahoma, Oregon, Tennessee, and Texas have already moved in this direction.
Reward Patients and Providers Who Deliver Ethical Prices
If a patient chooses a lower-cost provider, they should share in the savings. Shared savings programs—already used for public employees in several states—can be expanded to all non-emergency services, in or out of network. States like Iowa have introduced strong bills, but entrenched interests have fought hard to block them.
Leverage the Skills of All Providers
We don’t have enough providers to meet demand. States should revisit scope-of-practice laws (which determine what providers you can see for what kinds of care) and allow providers to work at the top of their license. That includes letting pharmacists diagnose and prescribe, and allowing nurse practitioners to practice independently. States that have done so have increased access and lowered costs. States should also streamline the path for highly trained international physicians to practice in the U.S.
Expand Access Through Telehealth
COVID prompted major telehealth reforms, but huge gaps remain. Few states offer streamlined, cross-state registration for providers. States, like Florida, that have seen a surge of helpful behavioral health providers, especially counselors and social workers, are a good example. This is a game-changer for rural areas and mental health deserts.
Examples of Bad Policy
Unfortunately, not all “reforms” result in better outcomes or less expensive options. Below are two examples from the telehealth policy arena.
Outdated Barriers to Telehealth
Some states still require an in-person visit before a telehealth relationship can begin, or prohibit asynchronous (non-live) communication. In an age of smartphones and wearables, these rules are obsolete. They’re especially harmful for behavioral health, postpartum care, and chronic disease management, where patients may prefer text or audio first. Tennessee is one example of a state that still requires an in-person visit before any telehealth service.
Payment Parity Mandates
More than 20 states still require insurers to pay the same rate for telehealth as for in-person care. These mandates lock in high prices and discourage innovation. Worse, they guarantee an inflated payment for basic services, driving up costs without improving outcomes.
The Cost and Harm of Inaction
Anti-competitive, anti-patient policies hurt family budgets, limit access, and pour more money into a bloated healthcare system with uneven results. Worse, more than one-in-three Americans say they have gone without care because it was simply too expensive.
These costs trickle down to employers and families through higher premiums and deductibles. It doesn’t get the same headlines as egg or beef prices, but healthcare inflation has outpaced nearly every other sector for decades. And it continues to be the leading cause of personal bankruptcy in the United States. We all pay more and get less.
Inaction has created geographic healthcare deserts that leave patients who live in them with few options. Rural communities face long waits or long drives. Time-strapped workers delay care. New parents miss critical follow-ups that could prevent complications.
A Better Agenda for States
States should focus on four practical priorities:
1. Expand new care options
2. Remove barriers that prevent fully leveraging the healthcare workforce and available technology
3. Enforce price clarity to jumpstart a functional market for non-emergency services
4. Stop making it worse by passing special interest mandates or making it harder for new entrants into the market.
If full reform isn’t politically feasible right away, states can start with their own public employee plans. These reforms ripple out, lowering costs and expanding options for the broader population.
When the dust settles in Washington, the core problems in healthcare will remain. We’ll just know who’s footing the bill while D.C. is rearranging deck chairs. If we want lower premiums, we need to lower the cost of care. States have the tools. It’s time to use them.
Josh Archambault is president of Reformers Academy and a senior fellow at Cicero Institute.
