A  CRITIQUE  OF  THE  MEDICAL CARE  “REFORM”  BILL
Obamacare passed by Congress  is primarily a plan to extend coverage of medical insurance- a laudable goal. It  is not designed to make serious reforms in how medical care is delivered.
We must not believe that we can increase medical care coverage  and not increase costs, without radical changes in the provision of medical care. History  records that actual costs with Medicare, Medicaid, and Kidney Dialysis program are many times the “anticipated” costs.

Some features of the current plan make good sense, or at least partially good sense. For example --

  1. It will set up national, or state, insurance “exchanges” allowing citizens  to do  comparative shopping on insurance plans.
  2. It Obligates companies to provide insurance, or pay up to 8% tax on payroll.  However this is a double edge sword. For very many small companies it will be less costly to pay the fine, give up medical insurance, and allow their employees to enter the government subsidized system. This change has begun already.
  3. It Defines an Individual mandate to have insurance, with subsidies for low income individuals. The current bill provides for subsidies of individuals and  families with income up to 400% of the poverty level, or $88,000. This seems much too high a level for subsidies, and will include 50-75% of all families.
    The "individual mandate" in its current form has been declared constitutional. Without it, logically, uninsured individuals would buy their insurance "on the way to the hospital", and ruin the system. However easy fixes are available. For example, one proposal is to offer voluntary enrollment, with the current subsidies, one time a year for one month. While perhaps not perfect, it would encourage pre- purchase of medical insurance and preserve the community participation needed to make semi-mandatory coverage work. However, it does not and will not work as currently set-up. Young healthy adults prefer to pay the fine of +/-$600 that is vastly less less than the cost of insurance.
  4. Obomacare finances the cost of care for the "less well off": by a tax on the middle class, through the increased cost of their insurance Better to cover tthese costs through clear subsidies as a part of welfare or Medicaid, or through a partial credit against income taxes, so that the whole society shares the burden, not just the working middle class..
  5. It establishes  a  surtax on incomes > $1,000,000 and/or excise tax on high cost insurance policies. While this is an attempt to make income more fair, it is a stop-gap measure. It would be better to adjust the general income tax rates upward for all high income taxpayers as noted elsewhere in this document.
  6. It allows portability, meaning you can take your insurance policy with you if you change jobs.
  7. It allows no exclusions, meaning anyone without exception can buy any insurance policy offered. This is reasonable in a plan to cover all individuals, but absolutely will mean higher premiums for all, since more persons with chronic illness previously “excluded” or charged a higher premium can now join.
  8. It establishes a commission to do comparative treatment-research and present treatment guidelines, and then introduce changes in Medicare reimbursement rates which will promote adherence to these policies. Such studies and such guidelines are currently available, so it seems unlikely that this "new" idea will have a big effect on medical costs. 
  9. It calls for negotiated drug prices directly with pharmaceutical companies, but still lacks a truly competitive market place.
  10. It promotes development of Electronic records, which will finally help improve medical practice, but may or may not reduce costs, and will have a negative effect on MD/patient interaction.
  11. It specifies that Illegal immigrants may not buy Government sponsored insurance or get subsidies.
  12. It plans to reform medical delivery system-via pilot projects for “accountable care organizations", chronic disease management with incentive programs, and reduce reliance on fee- for-each-service care. Basically this is a call for development of group practices paid on a “duration of one illness” or "annual capitation" basis. These approaches  have been tried already, with limited success in reducing cost,  but may be more effective in a new version..Data available in November 2015 indicate thet do not produce savings.
  13. It standardizes insurance claim forms, which theoretically could “save  billions”. Actually this is already largely accomplished, so further large savings are unlikely .

Some parts of the Act seem highly problematical.

  1. To expand eligibility for Medicare, which certainly will place a huge new financial obligation on the US Government.
  2. To increase Medicare payments to hospitals and MDs as a reward for quality care, and reduce payments to hospitals in relation to supposed saving  from “increased productivity”- While these ideas are legitimate, the concepts  are ethereal.  There is no existing mechanism or ability to measure and respond to such variables, and programs mandated during the 1990s to judge and improve quality of care were abandoned. Initial reports indicate that this has actually increased expenses.
  3. To move children’s health insurance to other programs, or increase subsidies to the states. The Child Health program already includes perverse incentives, such as providing subsidized care to children in families with incomes of up to $90,000/year. This entitlement ends up moving children off parental insurance coverage onto  a government program.

And some very crucial areas have been omitted from consideration, or avoided entirely. For example-

  1. To decrease the currently exorbitant out-of-hospital care costs, by lowering payment schedules, public disclosure of the payment rates, and competitive bidding. For example, is a charge of $1500-2000 for a 5 mile ambulance ride  legitimate?  Are current $100 “medicab” rides to city clinics appropriate?  In recent days the fraud in these programs has been widely  displayed  in New York Times stories.
  2. To treat insurance companies as public utilities, supervised by state or national boards, allowing some fair profit margin (5-6%).
  3. To radically reduce current Medicare and Medicaid payments for high cost procedures (MRIs, colonoscopy, invasive cardiac procedures, exotic drugs, etc.) Surely these providers deserve adequate compensation, but reimbursement rates that offer incomes of 3-5-10 million/year, or drugs that cost $10,000/month, are an unsupportable drain on insurance programs and patients. Likewise there should be limits on payment to medical care administrators. It seems very doubtful that payment to hospital administrators of 5 million/year can be justified on any basis in a quasi-non-profit or government subsidized system. Every chief in every local hospital now assumes he/she should e paid >1 million/yr. Time to stop,and cut back.
  4. To have the Federal government negotiate with pharma in every program over the cost of drugs, as happens in the VA system but not Medicare.
  5. To re-organize payment scales under Medicare to increase payment to family physicians, internists, and pediatricians.   We will have no family practitioners unless this change is made very soon.
  6. To currertly tax free tax health benefits as income, in fairness with individuals who buy their own insurance. While this might incur the wrath of the UAW, it would be fair for millions of other Americans, and generate more than 50 billion /year to help finance health care costs.
  7. To get serious about malpractice reform. Surely compensation for wrongful damages suffered in medical procedures is appropriate. However all punitive damage  awards should be paid directly to the state or federal government. . Punishment for improper or illegal behavior is a function  of the government, not individual patients. Anxiety by doctors over  malpractice claims are thought to increase medical care cost by 8-12%.
  8. To study the single payer Canadian system, and see if it can offer an approach for this country. It has preserved private practive by physicians, made both physicians and patients relatively happy, and costs 1/2 the US bill.

The problem we face is not at all unique. A liberal congress wished to reach a legitimate goal, extending medical insurance coverage, but was not realistic about the cost, and ended up financing it through future indebtedness.  Logical ways to reduce costs were put aside, primarily because of political considerations. A cooperative approach between Democrats and Republicans was shelved because of the perceived political benefits of providing more health care, without regard for the immense increase in costs.
It is clear that we need “reform”, but the current law did not adequately address reform.  Spending enough time on a carefully thought out bi-partisan plan to improve the newly enacted law, that will influence 18% of the national economy, should be a high priority.

HOME