Healthcare Reform Part 4: Congress' Scheme, Examined
By Roger A. Forsyth, MDNovember 12, 2009
Congress is asking the U.S. public to believe things about healthcare ‘reform’ that defy common sense (unless you believe in the Ponzi school of economics). A Ponzi scheme promises unbelievably large returns on your money but invariably goes bankrupt when the public catches on and refuses to continue pouring good money after bad. The financier Bernie Madoff was the last example of a large Ponzi scheme and ‘reform’ may be the next example if Congress tries to provide comprehensive coverage for the uninsured today while hiding the true cost until tomorrow by a) billing us now but withholding benefits for six years and b) overestimating ‘savings’.
Initially the public was told that the primary reason for reform was to reduce the cost of healthcare and make us more competitive. The bill that passed Congress raises the cost by at least 1.2 trillion dollars over ten years by providing comprehensive coverage for the uninsured without truly doing anything to lower the cost of insurance. The fact that the bill is “paid for” with new taxes and fees does not change the fact that costs are going up and not down. The promise that “the curve will be bent” (costs will be reduced) in the future is likely to be an empty one given our recent history. The public should insist on reform that reduces cost today while also reducing the number of uninsured. This would be possible if we addressed cost before addressing expansion.
In the past, the public could rely on newspapers to analyze legislative proposals and point out their weaknesses. Today, claims that are made by Congress often go unchallenged in the newspapers. Here are a few facts that refute congressional claims.
The Claim: Government provided health insurance is cheaper and better than private insurance.
The Facts:
Medicare consumes 3.2% of GDP, its cost is increasing at a rate (7.4%) that greatly exceeds the rate of inflation, it will spend more in 2009 than it takes in, it will go broke in 2017 which is two years earlier than predicted, it pays only 94% of actual cost thereby causing private insurers to raise rates for those under 65 and causing private physicians to refuse Medicare patients or raise rates on non-Medicare patients. Medicare has low administrative costs because it pushes many administrative costs onto others, it has high rates of waste and fraud because it avoids spending the money needed to avoid these costs, and its rate of denial of services is higher than that of the private insurers who are so often vilified. Medicare does not generate fees and taxes that help to defray the cost of healthcare but private insurers do, Medicare hides some of its cost through its ability to generate government bonds that cover its shortfall.
The Claim: Reform will not reduce services.
The Facts:
The elimination of Medicare Advantage means the elimination of the extra services such as vision and dental that participants received. If past actions predict the future, the 500 million dollar reduction in payments to Medicare will not be achieved by identifying and eliminating waste, fraud, and abuse but by arbitrarily reducing the payments by a given percent. Those perpetuating waste, etc. will continue to do so while honest providers will be forced to reduce services to match the reduction in payments.
The Claim: You can keep the plan that you have.
The Facts:
If your plan does not meet the specification of the Secretary of Health and Human Resources (SHHR), your employer must change your plan. Most likely, the new plan will be more expensive since the Secretary will mandate the inclusion of services that you will be unlikely to use. If your current plan costs your employer more than 8% of payroll, he will likely drop it and pay an 8% fine instead. If your employer can divide his business into two small businesses that are not subject to government regulation, he could drop your coverage entirely. If your insurer or employer makes any change in your policy, you fall under the new rules and will have to have a government endorsed plan.
The Claim: Cost will only increase for the wealthy and for employers.
The facts:
That is not the conclusion of the Congressional Budget Office. The new policies put forth by the SHHR will increase cost by increasing the services included in your policy. If you refuse insurance you will have to pay a penalty. If your employer pays more in taxes, he will pay less in wages. Federal taxes will go up to pay to set up programs to force doctors to use government approved treatments (comparative effectiveness), state taxes will go up because the Federal government will force states to pay more for Medicaid, there will be grants for inner-city social work, for training ethnic nurses, for providing linguistic and culturally appropriate services, and for supporting community activists. It is not clear what any of these things have to do with lowering the cost of healthcare or helping us to become more competitive internationally.
The Claim: Healthcare reform will not interfere with the practice of medicine.
The facts:
Section 1302 of the Congressional bill starts demonstration projects with the goal of forcing patients to go through a gatekeeper in a “medical home”. Comparative effectiveness boards will dictate accepted practices. Section 1158 reduces payments for patient care to the level of the lowest cost region of the country. This will inevitably reduce the quality of care in high cost metropolitan areas.
The Claim: This reform will not affect job creation.
The Facts:
70% of jobs are created by small business. Raising taxes on those with incomes of over $250,000 will disproportionately affect small business owners. If they face up to a 4+% increase in Federal tax, a 5% surcharge for health insurance costs, payroll taxes of 8%, and state tax increases, where will they get the money to expand and hire?
Common sense should tell us that if Congress does not have the will to manage Social Security, Medicare, Medicaid, the Post Office, Amtrak, or the national budget without bowing to special interests and running a deficit, they will be likely to be similarly inefficient if they take over medical care. When costs go up they will not fire the newly hired inner-city social workers, providers of linguistic and culturally appropriate services, or community activists. They will raise fees, raise taxes, and cut services.
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Reply #1 on : Fri November 13, 2009, 00:22:22
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What are these?