Healthcare Reform Part 9: The Politicians gave us Healthcare Reform for Christmas; Can the Public Return It?

Be careful what you wish for—you may get it.  Surveys indicated that healthcare reform was usually only 4th or 5th on the public wish list but for those who listed it, the high cost of care and the possibility of being denied insurance were highly important.  Politicians seized on this concern and used the vilification of insurers to promote the belief that increased government involvement in healthcare would lower the cost of care while improving quality.  The recent Senate bill is an indication that the exact opposite will occur.

First we should review a few facts before we discuss what is likely to occur under the Senate plan.  Currently, 85% of the public has some level of insurance, 7% has chosen to forego insurance because they have concluded that the cost exceeds the potential benefit, 2% are undocumented aliens, and only about 5% either cannot afford insurance or are denied insurance because of pre-existing conditions. 

80% of the population is satisfied with their insurance.  In fact, despite the stories about denial of services by insurers, the United States is ranked number one in the world in “responsiveness” to patient concerns.  Private insurers deny 3.5% of claims, far less than the 6.5% denied by Medicare.  Private insurers are motivated to be responsive by the need to attract and keep customers, by the fact that they have to answer to regulators, and by the threat of lawsuits.  Government is less responsive because they have a monopoly that guarantees that they will have customers, they regulate themselves, and usually cannot be sued.  Private insurers generate profits that allow rapid modernization and ready access to high-tech equipment and specialists; government insurers are limited to the funds allocated by politicians.

The 5% who cannot afford insurance constitute about 15 million people.  If this group received sliding scale subsidies based on their incomes, it should cost an average of $2,500 per person per year or 375 billion over the next 10 years.  The Senate bill claims to spend 871 billion but this excludes the cost of four years of coverage, excludes 240 billion needed to rectify underpayments to physicians, double counts ‘savings’ from reductions in Medicare payments (300 billion), and ignores the fact that the taxes that will be levied on makers of medical devices and insurers will be passed to the public.  Factor in the taxes and premium increases and the 10-year cost is really 2.4 trillion.   Much of the cost will be generated by huge new bureaucracies.  Moreover, up to 20 million people will be forced into paying for coverage that will yield minimal benefits.

We now have a system that has imperfections but is responsive to need.  We are about to set up a system that is responsive to the venalities of politicians.  Even before a bill was drafted, the die was cast.  Instead of openly debating both conservative and liberal alternatives for change and choosing a mix that best met the needs of the public, the politicians only listened to the major interest groups.  Lawyers were assured that no malpractice reforms would be undertaken even though this is the one change that imposes no new costs.  Unions were exempted from taxes on overly generous policies.  Insurers, hospitals, certain physician groups, some retiree groups, pharmaceutical companies, etc. asked for and received concessions that usually did not serve the general public.  When the public complained that Medicare ‘savings’ were to be achieved by cutting services rather than waste, fraud, and abuse, they were ignored.

In passing an unpopular bill, the Senate gave a preview of how healthcare funds will be distributed in the future.  Nebraska gets a 100 million dollar exemption from Medicaid.  Blue Cross in Nebraska and Michigan and Mutual of Omaha in Nebraska will be exempted from some taxes but every other Blue Cross will have to pay them.  Floridians get to keep Medicare Advantage at a savings of 3.5 billion but almost no one else does.  Connecticut gets 100 million for a school while Vermont and Massachusetts get 500-600 million in Medicaid savings.  Louisiana got 300 million.  Five other states get varying exemptions.  The remaining 38 states will have to take up the slack.  Medical disbursements will now depend on whether your state is in or out of favor with the party in the White House.

The 6-7 billion dollars in giveaways (that we know about) pales in comparison to the long-term expenditures that will result from increased government involvement in healthcare.  Perhaps 118 small commissions will be set up to micromanage your health care decisions from a distance.  We recently learned that during this severe recession, government salaries rose.   A job that pays $40,000 in private industry pays $70,000 in government (plus far superior benefits).  The number of government employees making over $100,000 jumped 14%.  It is highly likely that the new bureaucrats will have to meet at resorts on a regular basis in order to figure out how to cut our benefits even further and reduce the increase in the cost of medical care that will result from the new commissions.

A Medicare Commission may decide which treatments will be covered.  For example, they could ignore the differences between individual patients and mandate that all heart patients must use drugs instead of the more expensive cardiac stent.  Insurance Exchanges will be set up that will mandate the coverage (such as infertility or ‘wellness’) that must be included in policies whether or not they will benefit the individual policyholder.  These will be political appointments so the governor’s brother-in-law, not a trained executive, will make the decisions on your healthcare.  Decisions will be based on the needs of the state rather than the needs of the individual or perhaps on the level of influence wielded by a given lobbyist.

Subsidies towards enrollment in Medicaid would be overly generous to those from low-income states.  For example, a family of four from such a state would be eligible for a subsidy if they had an income of $88,000, well above their states median income.  Such a subsidy represents a wasted expenditure. 

In summary, the new legislation will force us to spend an extra 2.4 trillion for ‘universal’ coverage when we could have limited coverage to the truly underserved and spent only 375 billion.  We are risking the loss of our number one ranking in responsiveness, our 80% satisfaction rate, our current level of Medicare coverage, our number one ranking in survival from cancer and heart disease, and our current speedy access to joint replacement by subjecting ourselves to the machinations of politicians who have demonstrated that their main goal is to make a deal—any deal—and are quite willing to raise our taxes in order to achieve their wishes instead of ours.

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michael
Posts: 1

Re: Healthcare Reform Part 9: The Politicians gave us Healthcare Reform for Christmas; Can the Publi
Reply #1 on : Tue December 29, 2009, 16:45:11

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I'm not too hopeful about the new plan myself. My own self-pay premiums are already set to go up by 75%, and I don't trust my provider's motivations. But do you really believe the state-by-state concessions, as ridicululous as they may be, were made b/c the states in question are in the favor of the White House? Or is it that their reps in congress were holding out and needing some grease on their wheels to go along with the plan? Also, it's not far to compare blue collar salaries with mid-to-upper-level government employee salaries. Try comparing to salaries for health insurance exec's and their own benefits, and whether that would be fair.

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