King v. Burwell Is Done. Now What?

The Affordable Care Act status quo has been affirmed by the Supreme Court, but this doesn't mean that it has been rescued. While subsidies will continue flowing to federal exchanges, significant challenges remain: A lack of patient-friendly information on the exchanges along with the growing threat of hospital monopolies that can drive up costs will cause new headaches for people enrolling on exchanges. Addressing these problems will require conservative reformers to take a step back and work with local policymakers to help enable constructive but powerful changes to the law.

Of the 11.7 million people enrolled in exchange plans, a growing number will be facing high deductibles. The most commonly purchased plans on the exchange, for instance, had average deductibles of nearly $3,000 in 2015. While this is something that conservatives have wanted to see for many years, high-deductibles demand transparency on price, quality and safety. We're still a long way away from that.

Imagine yourself trying to decide between an iPhone 6 and a Galaxy S6, but neither Apple, nor Samsung, nor any store like Best Buy is willing to tell you what it will cost. Instead, they tell you that the price will depend on what other services are bundled with the phone and whether you qualify for "income-based cell phone insurance." Later, they'll send you a bill for things you never knew you had to pay for and that intuitively seem overpriced.

Shopping for a doctor's visit, MRI, or any other non-emergency service is even worse. And since for many years most Americans had insurance plans with low or zero-dollar deductibles, (and with relatively low copayments) the demand for transparency wasn't there. That is changing, but lack of consumer-friendly information on plans, doctors and hospitals makes true choice difficult.

Thankfully, localities are beginning to tackle this in their own ways — some states are setting up so-called All-Payer Claims Databases, for instance, requiring insurers to make public payments to providers. But even these efforts are being challenged, and the Supreme Court will hear a case on the matter in the coming session.

Much of the reason that transparency is so difficult to come by is directly related to the lack of competition among hospitals. It comes down to incentives. For one, a slew of research has consistently found that highly concentrated hospital markets correlate with higher health care costs. This means that competition can hurt the bottom line. Another recent analysis found that patients respond very strongly when presented with information on hospital safety (naturally, hospitals have an incentive to keep this information hidden from patients). In a more competitive market, hospitals would routinely volunteer the information, to attract patients by offering a better "product."

These perverse incentives, combined with the (admittedly) complex task of measuring and explaining to patients what "price" and "quality" in health care means, put hospitals in a position where transparency can induce competition, threatening the bottom line.

None of these obstacles are insurmountable, of course. APCDs are beginning to launch around the country, finally pulling back the veil on hospital prices. Private organizations are collecting and disseminating data on safety and costs as well.

Legislators can help. For instance, Congress could mandate that health insurance exchanges provide comprehensive cost calculators along with plan quality ratings. This would go a long way to helping those with high-deductible plans make the most of them. Similarly, pre-empting the Supreme Court on APCDs would be an important move as well (this would require clarifying that nothing in federal law prohibits states from establishing these databases).

We're a long way from stabilizing health care markets in a way that benefits patients. With King v. Burwell now in the rearview window, reformers should turn their attention to the challenges that will continue plaguing health care markets around the country.

This piece originally appeared in Washington Examiner