Also known as Obamacare, the Affordable Care Act will not go away.
So business owners should learn about the law, accept it and work with it or work outside traditional insurance, said three Colorado Springs professionals acutely in tune with the national health care law now in effect.
Dr. Mark Tomasulo, a primary care physician who launched PeakMed Primary Care last year, along with Southern Colorado Economic Forum Director Tatiana Bailey, who has a Ph.D. in public health, and Heidi Cottle, president of Benefit Services Group, owned by National Financial Services, spoke to the local Middle Market Entrepreneurs last week about the controversial law and the convoluted health care system in the U.S.
Tomasulo launched a practice that is “more of a direct-pay service” with a high-deductible, a monthly service fee, no co-pay and 24-hour access to a physician. He doesn’t accept insurance and doesn’t mark up the cost of medicine. He left traditional practice because “we’re becoming factory workers,” seeing dozens of patients daily without the ability to spend quality time with them, he said.
“To have a relationship with our patients — we really need to get back to that,” Tomasulo said.
“There’s a lot of reasons health care is in trouble,” said Bailey. One factor is an aging population, she said.
Most – 85 percent – of the money spent on health care is spent toward the end of life, Bailey said. “Health care is not a normal good [like a TV or a phone] from an economic perspective, but we keep treating it that way.”
Also, 20 percent of the $3 trillion Americans spend on health care is the administrative cost associated with transmitting payment through insurance companies, Bailey said. The 50 million uninsured people in this country receive health care paid for by people who have insurance.
For their 2015 taxes, some business owners will be required to prove to the Internal Revenue Service that they provide health insurance to their employees, and those employees will have to prove coverage themselves, said Cottle.
Because the cost of insurance keeps increasing, for health care costs to remain flat for employers, they must choose plans that cost 13 percent less per year, Cottle said. For some businesses, it costs less to pay the IRS fines and drop their insurance coverage for the first year, she said, but pick it up again in 2017.
She encouraged business owners to research the costs and do the math.
Penalties run $66.66 per employee, and the cost of primary care is roughly $310 per month for a qualified plan, she said.
Another factor driving the cost of health care relates to the ownership of laboratories, Bailey said. When physicians own the labs, the doctors are more likely to order tests at those labs, she said.
There’s usually a 600-1,000 percent markup on labs, Tomasulo said. For example, a CBC (complete blood count) test traditionally costs $30, but through his practice, it costs $1.14.
“The difference is massive. So when you talk about a patient that takes two or three medications, they actually make money coming into our practice because of the money they save on medications,” Tomasulo said. “What we want to do is change the dynamic of our health care system. You can’t put a Band-Aid on it any more. It’s unfixable.
“What you don’t get with your catastrophic policy or your Affordable Care Act plan is health care,” he said, adding that the ACA created health insurance for everyone, but not health care.
Tomasulo’s model eliminates 20 percent of the costs by not billing insurance, Cottle said. A practice with three to four physicians needs three full-time employees to deal with the insurance.
“It usually runs about 40 percent of my overhead to run an office,” Tomasulo said of his former practice. Now, “overhead is gone. Now you have to take the greed component out of that equation and give the savings back to the end users,” and the payoff comes in the high volume of patients.
Rising job demand
Citing a study by the U.S. Bureau of Labor Statistics, by 2020 the top-demanded jobs will be in health care, Bailey said.
“You distinguish yourself as a community that knows how to deal with this much more proactively, you stand out in the nation. And you also bring down costs, which employers like,” said Bailey, who moved here last year from Michigan.
“Our health care premiums in Colorado are half what they were in Michigan for the exact same plan. We have great potential in this area to do some pretty innovative things” with health care, Bailey said.
A week earlier, Tomasulo had attended a conference of the Prime Health Collaborative, a group of health care providers, administrators, investors, innovators and others “dedicated to supporting innovation and technology … with the goal of improving health and lowering health care costs,” according to its website.
“The state of Colorado is No. 6 in technology innovation for health care in the country,” Tomasulo said. “Colorado Springs is a massive mecca in terms of IT and tech.
“The greatest part about it is that they have nothing to do with health care. They’re coming from all different industries trying to innovate a dysfunctional system.
“It’s really, really exciting to be in health care today. The truth is, if you’re an out-of-the-box thinker and you really start to look at the change that is possible, Colorado is a phenomenal place to be right now in terms of health care,” he said.
Cottle agreed, saying that other states are watching how Colorado’s system manages its solutions.
“There are a lot of positive things happening here,” Cottle said. “There are a lot of creative solutions being fostered out of this region.”