When healthcare reform was just getting started a few years back, the pharmaceutical industry was an incredible force in the debate.  Their initial financial move really helped the Affordable Care Act gain momentum and perhaps was one of the most important factors in its passage in its current form.  Have you ever wondered why the industry was so supportive?  Is it because they saw the obvious need for reform and were afraid of the alternatives?  I am pretty sure it had to do with thinking of survival.

With the October 1st date rapidly approaching, there are a ton of articles out there both blasting and supporting the reform.  It is going to save huge amounts of money while at the same time costing incredible amounts.  Employers are all trying to figure out ways around the law.  Workers are concerned about their plans.  Everyone has an opinion but very few have any understanding of the law and the scope of the reforms.  Even those in the healthcare industry are confused about what is happening and how it will impact their profitability in 2014 and beyond.

For those of us who work in the healthcare industry, we better work aggressively to make the ACA work, because if it doesn’t the next set of reforms could be devastating.  Take a look at this piece in Forbes last week.  It is a very simple article with a very uncomplicated set of facts that should be considered in great detail.  The study shows that both Singapore and the United States have similar life expectancy, with perhaps Singapore being slightly better.  The interesting fact is that Singapore spends 4% of its GDP on healthcare while the US spends 14%, according to this study.  It is very difficult to look at this and a million other similar studies and see that change is not needed.  Big change.

The striking argument and the point of the article is really about what each country covers under what they call insurance.  Where is the line drawn?  In the US, we cover almost everything and call it insurance.  In Singapore, they cover only those things that are unexpected and that could really hurt someone financially.  To understand this difference take a look at your auto insurance policy.  It covers accidents and theft.  It does not cover gas, oil changes, tires, car washes and all of the other relatively small items needed to keep a car going.  Health insurance on the other hand now covers almost everything, even those things that are totally predicable such as annual physicals, office visits, drugs and vaccinations.

Pharmaceutical executives are well aware of the advantageous situation the industry has in the US where drugs are covered as part of the insurance system and covered in most cases even before a deductible is reached.  They also understand the huge benefit the industry has with the Medicaid rules as they currently exist.  In Singapore, pricing is much more transparent.  The free market sets the prices based on what patients can and will pay, not some behind the scenes insurance company.  Take some time to think about the comment from the physician within the article as it hits the core of the argument.  The point being made is that as insurance companies start to pay for the more predictable, they artificially raise prices as everyone must make a profit.  Think about how much gas could cost if it was included in your auto insurance and then consider how much the gas stations and insurers could mark up the price of gas because the driver wouldn’t care at all.

The ACA is an incredible win for the status quo.  Those in the industry today, if they maneuver correctly will continue to prosper.  Drugs continue to be covered as do most other aspects of healthcare delivery, even the most predictable.  The key is the system must work.  If the ACA fails, the next set of options may look more like Singapore.  If consumers really had to pay for drugs like they do for gas or oil changes, the industry would come crashing down.  Maybe that is why the pharmaceutical executives were so supportive of the moderate reform we see with the ACA.