My Oct. 24 interview with healthcare economist, Dr. John Bowblis (1) revealed serious flaws in Obamacare. Here are summaries of other pressing concerns. Analysis follows:
CONCERN: Obamacare does not address health care. It addresses health care insurance. Having insurance guarantees, providers of health care (PHCs)(2) will get paid something by you or your insurance.
ANALYSIS: The key is health care costs...not health care insurance. Until patients have incentive to think costs, this problem will persist. Suppose your co-pay is the same regardless of procedure or PHC, you don’t care who gets paid what. But if your co-pay varies by cost, you will make choices just as you do in stores. For instance, three labs can perform a blood test you need and each charges a different price. Today and under Obamacare, you don’t care who does what. If your co-pay is a percent of cost, you will think cost and make choices accordingly. That will drive down healthcare costs. We see this a little bit with prescription medications. Most of us choose generics.(3)
CONCERN: How much the PHC are reimbursed affects the quality and quantity of health care the insured (patient) receives. In most Western countries, patients are taken in order of perceived severity. Thus, the long wait-times we hear about in countries such as Canada.
ANALYSIS: In the US, the lines are much shorter because we use the price system as a rationing mechanism(4). While the amount of reimbursement usually is not a major factor in how long we have to wait to “be seen,” the amount of payment can impact the quantity and quality of care we receive(5). For instance, when Congress reduces Medicare reimbursement, doctors become a little scarcer. You might be seen by a CPN (nurse clinician), especially if the matter is relatively minor.
CONCERN: So if you’re on Medicare—-especially if you are in a Medicare HMO, such as Medicare Advantage—-the pool of money available for the above-mentioned types of reimbursements is going to be reduced by $716 billion dollars over 10 years, starting in 2014. That money along with all the new taxes you’ve heard about (see footnote 1) is being used to expand Medicaid for the medically indigent, be they illegals or bona-fide Americans.
ANALYSIS: This is where the so-called death panels come in. Suppose you’re 75 or over. By then, you have a fairly long medical history that includes some scary things. You’ve been successful against thyroid cancer, skin cancers, and prostate or cervical cancer (as your gender may be). You’ve had a joint or two replaced and had a fluke arterial fibrillation (A-Fib). You still need to lose 50 pounds. Your blood pressure, which was fine until the thyroid issue, is now controlled with medication. You still drive well, you’re mobile, exercise almost everyday, and your mind and memory are still sharp. You hold some part-time job (Wal-Mart greeter, teaching, etc.). You’re comfortable with the changing technology and stay busy. Then a routine check-up reveals you need a treatment that’ll cost in excess of $100,000. Your prospects for recovery and being able to resume close to your normal life are 65 percent, and with a reduced but still good quality of life, 25 percent. You’ll get 5-10 good years out of the procedure. Your prospect of dying or being left in an unsatisfactory state from the treatment is 10 percent. Your chances of dying within a year or so with no treatment are close to 100 percent.
Under Obamacare, you may be denied coverage if a so-called ethics panel-—what was originally and for obvious reasons labeled a death panel--decides it’s not cost-effective to pay for the treatment (6). Instead, you get palliative treatment if needed, end-of-life counseling, and other basically useless consolation prizes.
Obamacare says it will pay for so-called “end-of-life” counseling once every five years. This is new. Most people on their own have a living will and power of attorney for healthcare (POAHC). There’s software to do that at home. So why include this?
It’s one thing to say once every five years we’ll pay for you to have your living will and POAHC updated. But this includes other “end-of-life counseling.” One answer is that someone decided it might be better to prepare people to be abandoned by the system they helped finance. This is necessary because Obama wants to make sure the medically indigent have coverage and doesn’t want to be transparent about how. In other words, replace older burdens on society with younger ones.
When selling the idea of insurance for everyone, Obama, as usual, discusses the benefits but not the costs, other than the nonsense about “asking” people who make over $250,000 to pay a little more. There’s no asking. It’s a tax...not a fundraiser. And who’s to say what “a little” means. These are classic examples of Obama’s deceptive communications. Just as Obamacare is really the Unaffordable Care Act.
The honest approach would have been to say something like “Everyone should have health care insurance. That solves the immediate problem of access to healthcare. It doesn’t address other problems, which we will get to. Since I vowed to protect Medicare, that means we have to raise taxes or cut other spending to meet both important goals. A five percent surcharge on all federal revenue would bring in roughly $110 billion annually. For every dollar you now pay in federal taxes, you’ll pay $1.05. It’s an across the board tax hike for everyone on all federal taxes. It’s transparent, administratively simple, no loopholes, no penalties, no favoritism, no Supreme Court cases, no death panels. This is what it cost to insure the indigent and the elderly with no reduced coverage to anyone. So I am keeping both promises I made.” (7)
Instead, there is this plan full of vague taxes with complicated rules exempting certain favored groups. It was predicted to be so unpopular when people see the taxes and the rules, it was planned not to go into effect until after the election, claims about needing adjustment time notwithstanding.
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2= I hate the term “providers.” They are not deities.
3= Not all generics are equal in quality or cost. Your pharmacy stocks the one that offers it the greatest profit while you assume “they’re all the same” (generic equivalents). Of course for choice there are other factors such as the additional costs to the pharmacy of stocking multiple brands of the same medication. But these are relatively small when spread over the huge number of scripts sold. If customers demanded it, the pharmacy would comply. Or they may try to incent you to use their preference.
4= I know it often doesn’t seem that way, though a six hour wait is shorter than a six month wait. What do you prefer, human judgment as Canadians and others have to determine who is worse off (maybe a friend) or the impersonal and impartial price mechanism?
5= If a doctor is billing, say $1,000 an hour (that’s $200,000 a year for a 40 hour work week, 50 week working year), and normal reimbursement is $750 an hour, the doctor might have a 15 minute visit with you instead of the normal 20 minutes. That’s what typically happens. Let’s say Medicare will only reimburse $500 an hour, so the doctor sort of pops in for perhaps 10 minutes and write a prescription, and sends you on your way; or perhaps a CPN sees you instead of the doctor. There may then be a brief meeting between the CPN and doctor. The time would be even less under Medicaid. I know charges are billed by procedure not by the hour, but one is convertible into the other.
6= There are various ways such computations can be made. They involve terms you may have heard of such as present value, rate of return, life expectancy (i.e.; actuarial tables), payback period, payout, implicit cost, explicit cost, spillover effects, opportunity (or alternative) costs, cost effective, etc. A bigger concern than methodology may be who will serve on and staff these panels? Of course their titles will be dressed up to sound impartial and either incredibly moral or incredibly wise.
7= From an economic standpoint, the “fiscal drag” (burden of federal government on growth) would be predictable and some offsetting measures taken.