ObamaCare




ObamaCare is a very interesting topic. I personally have very mixed feelings on it. On the 'big picture' of ObamaCare, I tend to be moderately in favor of it. Yet, like all political pieces of legislation, the devil is always in the details. The success of piece of legislation is rarely in the big picture sound bite, but in the thousands and thousands of paragraphs of legislation that almost nobody reads.

First The Good

The good thing about ObamaCare is that is does try to ensure all Americans have health insurance. It does this by mandating that they purchase health insurance and it will penalize them if they don't.

The Mandate

Now, I do agree this is an infringement on freedom. That libertarian side of me twitches under the threat of force of government. It begs to ponder, if this program is so good, why do you need to force people into it? Nonetheless, the mandate makes sense in the larger context of healthcare in America. America does not operate in a total libertarian paradise and this is even more so true with healthcare in America, even as it stood pre-ObamaCare. Obama is correct when he says that currently uninsured people must still be treated if they arrive at the hospital. Does anyone see that law changing? Probably not. So given that, it makes sense to make sure everyone has insurance so these people are accounted for by forcing them to get insurance. The other large need of the mandate comes from ObamaCare's removal of pre-existing conditions as  a method of denial for insurance companies.

If they kept the removal of pre-existing conditions and didn't have the mandate, the whole thing would break down. It would be rational for people to not buy any insurance, and then when they get a major illness like Cancer, run to an insurance company to buy insurance and then get treatment. The insurance company couldn't deny you insurance due to your pre-existing cancer. That would collapse under it's own weight very quickly.

The Exchange

The exchange is also a pretty decent idea. It helps to remove the tie-in of healthcare to your employer and also helps to make moving around the country while keeping yourself insured. It also attempts to make it easy to choose plans primarily by making them available as 'gold' 'silver' or 'bronze' plans. This is not to say that any of this is not available under current insurance plans. Most companies today do offer tiered service.


The Problems with ObamaCare

We now talk about some of the issues with ObamaCare. This is not say these issues cannot be fixed via further legislation. Nor do I wish to underemphasize the important of the big picture good ideas of ObamaCare.

It Doesn't Address Affordability

ObamaCare is also called the Affodable HealthCare act. Yet, it does very little to actually reduce the cost of healthcare. It does provide a lot of subsidies for people. Yet, that costs the government a lot of money. They could have just as easily provided subsidies for people by giving them money directly for healthcare. If anything, that simply transfers the problem of affordability from people to the government. Judging by the current state of America in terms of it's debt and deficit, this is hardly an easy program for the government to take.

Despite the media rhetoric, healthcare is expensive because medical care is expensive. Doctors, nurses, medical researches, medical equipment, care givers... are just expensive. Healthcare is not expensive in the US because of private insurance making profit.

ObamaCare does attempt some cost side issues, but it largely falls on bureaucracy. Things like mandating Insurance companies spend a certain percentage of their revenue on care. Or penalizing hospitals whose patients return soon after. These are interesting little tweaks, but do little on the cost side.

 The history of government being able to control healthcare costs are also not very weak. In 1997 the US government tried to tie Medicare increases to GDP http://en.wikipedia.org/wiki/Medicare_Sustainable_Growth_Rate. It hasn't really kept a hold on costs. The government has been very weak in enforcing the cuts as well.

Most US healthcare is NOT For-Profit

This one is a big one that sometimes takes people by surprise. Like I said, there is this myth out there that healthcare in the US is this massive for-profit operation and that is why it is so expensive.  By in large, medical care in the US is still non-profit. As I said above, healthcare is just damn expensive.

http://en.wikipedia.org/wiki/Medical_centers_in_the_United_States
The non-profit hospital's share of total hospital capacity has remained relatively stable (about 70%) for decades.[1] There are also privately owned for-profit hospitals as well as government hospitals in some locations, mainly owned by county and city governments.
Insurance companies probably make a profit, but its a skim off the top kind of profit. If we look at insurance in other sectors, the trend is that cooperative or non-profits simply don't offer much cost savings.

I'm in Canada, and a cooperative insurance company like http://www.cooperators.ca has rates very similar to any of the for-profit insurers.

It is thus no wonder that few advocate of healthcare reform in the US think that just making healthcare non-profit would solve anything.

Prevention is Posted to save Money

Whenever people ask about how healthcare costs will be reduced, it becomes popular for politicians to start talking about prevention. If we just use prevention, people would be less sick, and thus we would save money! It should plausible and so many people believe it.

The reality is far different.
Most healthcare costs are in the final few years of life. Most healthcare costs are in old age. The longer you spend in old age getting ailments, the more it costs.

Viewed in this light, it might actually come as no-suprise, that healthy people end up costing MORE.

http://www.cbc.ca/news/technology/smokers-the-obese-cheaper-to-treat-than-healthy-long-living-people-study-1.764092

Ultimately, the thin and healthy group cost the most, about $417,000 US, from age 20 on.
The cost of care for obese people was $371,000 US, and for smokers, about $326,000 US.
The results counter the common perception that preventing obesity will save health systems worldwide millions of dollars.
"This throws a bucket of cold water onto the idea that obesity is going to cost trillions of dollars," said Patrick Basham, a professor of health politics at Johns Hopkins University who was unconnected to the study. He said government projections about obesity costs are frequently based on guesswork, political agendas, and changing science.

It did not implement Rationing

 One of the good ideas that Obama had at the start of his healthcare reform was the idea of rationing.
That is to say, is it worthwhile to spend $500,000 on a surgery for someone who is probably going to die in 1 year with little hope of recovery?  The answer most of us would make if we had to make a cold calculation would be No.

Yet, this got politicized into being called Death-Panels.  The reality is that if the government is going to be providing people with healthcare, it is going to have to deny people some care. You can't have infinite demand for anything.

Interestingly, in Canada, a similar issue came up.
http://www.cbc.ca/news/canada/toronto/hassan-rasouli-case-top-court-upholds-life-support-right-1.2125140

The Supreme Court of Canada has dismissed an appeal that would have permitted doctors to end life support for a severely brain-damaged man without the consent of his family or a substitute decision maker.

It is very hard to convince people that someone they care about should be allowed to die because the government wants to save money. Sure, we can all think of it in the abstract in cold hard rational logic. But let's face it, when anyone's loved one is in poor health, we want every possible treatment tried, no matter the cost.

And yet of course, healthcare workers need to be paid.  Equipment needs to be purchased... Money spent on someone is money NOT spent on someone else...

Rationing is inevitable.
Private insurance rations by the cold hard reality of cost. It will cost you too much to try every treatment and most people come to their senses and let someone pass.
When the government comes in and promises healthcare; either by legislation or directly providing it, it becomes hard to say there is no money.

A reform of end-of-life care from treatments to palliative care would have reduced costs. 



Subsidies and Regulations Wildly Choose Winner and Losers

In the thousands and thousands of pages of ObamaCare are rules and regulations and subsidies. Who gets a subsidy? How much they get? When are they qualified? When is something mandated? This is not a program that treats all the poor the same, or all the middle class the same.

http://www.forbes.com/sites/jeffreydorfman/2013/09/26/on-october-1-obamacares-price-tag-will-surprise-americans/

If an employer offers its workers health insurance, but an employee turns it down because the cost is too high, that worker is not eligible for a government subsidy in the health care exchanges. Thus, two families with the same income could pay very different rates for their health insurance because one was offered insurance at their job and the other was not.

A family of four earning just under the limit might receive a subsidy of around $5,000 based on paying 9.5 percent of their income toward health insurance and the public figures so far on what plans are likely to cost in the exchanges. If the family earns just a little too much, they get no subsidy. Thus, a small raise could actually be a financial burden to a family near the income limit for the subsidies.
 So prepare for the next battleground of health care as a “right.” Once people have fully received their free or subsidized health care courtesy of the government and taxpayers, the cries will grow in volume to make these plans the equal of the best plans available and to reduce the inequities outlined above. After all, why should people get lower quality health care simply because they have less money? And why should health care be a financial burden on anyone?
Given the country’s recent history, once that argument begins it will be won by those demanding access to all doctors and hospitals and more subsidies for those falling through the cracks. At that point, all cost restraint will be lost (not that there is much going on now). If we head down that road, government-paid health care costs will bankrupt the country.
http://www.theguardian.com/world/2013/sep/30/us-employers-slash-hours-avoid-obamacare
A survey by the International Foundation of Employee Benefit Plans published last month, found that 15% of large employers (50 or more employees) and 20% of smaller employers had plans to adjust hours so that fewer employees qualify for full-time medical insurance under the ACA.
Let's not even get into the lobbying various industries will get into to determine what must be covered under an insurance plan on the exchange.

The point here is simply that deep in these thousands of regulations are winners and losing and unintended or unstated consequences that are going to dramatically affect the success of ObamaCare.


Conclusion

As I said at the beginning,the basic idea of ObamaCare is a good one. Then again, as someone who works as an engineer, there are lots of good ideas. What ultimately matters is the execution.

On this point, it is going to be an interesting time for ObamaCare. It has to viewed in light of the thousands of pages of rules and regulations and the actual consequences of it's policy on healthcare.

I personally hope, some good policy makers adjust the rules of ObamaCare to help fix the details. If they don't, I personally think it will fall apart.  Either through financial strain, or through being pushed down the rung of health care delivery into an option for the poor; a medicaid replacement.







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