OP-ED

Saving the Good in Healthcare Reform

Some have suggested piecemeal repeal of the most obnoxious features of the Affordable Care Act (ACA). The risk of this approach is comparable to that in cancer surgery: you might not get it all. In 906 pages of arcane statutory language, a lot can be hidden.

I suggest instead that we wipe the slate clean with a total repeal, and then consider reenacting any features that most agree are good. This would be the most efficient method because the list of items is shorter. Much shorter.

The most popular part is probably the elimination of “pre-existings.” You can’t eliminate the uninsurable condition of course, only the insurance company’s ability to deny coverage to people who have it. How would such an isolated law work?

In a free market, coverage for people with pre-existings might well be available, without any law—if insurers could simply charge a premium reflecting their risk, or limit the potential pay-out. The premium, naturally, could be very high. That would be a strong incentive to buy insurance when young and healthy, and resist temptations to spend the premium money on iPods and new cars instead. But for many it is already too late.

The U.S. already has the equivalent of fire insurance for those whose house is burning down. It is called Medicaid. Roll into the emergency room desperately ill, and the hospital will treat you, and probably enroll you in Medicaid—likely after you have spent through any assets and lost your SUV and your home.

To prevent such personal tragedies, how about a law that simply said: “Insurance companies must take all comers, without price discrimination for pre-existing conditions.” This is called “guaranteed issue” and “community rating” (GI/CR).

GI/CR would work well, if insurance were a magical money multiplier (MMM): put $100 in the slot machine, pull the lever, and watch $6 million in medical services pour out. The problem is that if a lot of healthy people who don’t expect to need medical services decline to feed in their premiums, knowing they can always do so as soon as they get sick, premiums will have to escalate rapidly. This is called adverse selection (only sick people sign up), or the death spiral. It has happened every time GI/CR has been tried.

This popular part of ACA is impossible without the hated and unconstitutional individual and employer mandates.

What about doing away with limits on lifetime coverage? Limiting out-of-pocket expenditures? Doing away with copayments? All of these have the same problem: lack of an MMM, such as a money tree or the Philosopher’s Stone that turns base metal into gold. The more we require insurance to pay out, the more money has to be poured in, with the inevitable loss to administrative overhead.

How about “giving doctors incentives to be more efficient”? In a free market, that is called the profit motive. In the ACA, the “incentives” are sticks painted to look like carrots, involving vast new reporting systems, with payments funneled through managed-care mechanisms. The choice is freedom—or ACA bureaucracies. Which of the some 159 new bureaucracies do we want to keep?

What about “affordability” provisions? Since prices are going up, in ACA “affordable” means forcing someone else to pay. It’s a matter of redistributing money from those who earn more than 400% of the federal poverty level (around $88,000) to those who earn less. Americans are divided into winners and losers, guaranteeing constant fights over one’s share of a shrinking pie.

One part everyone might favor is the one about allowing people to keep their insurance plan and their doctor if they like them.

Oh, that’s not in the bill. That was just a Presidential promise. The ACA has rules for “grandfathering” some plans—a good term since they are not expected to have a long life expectancy. ACA also appears to be designed to drive independent doctors out of practice, and it virtually outlaws new doctor-owned hospitals.

If we continue to scour through the ACA looking for isolated good points that will make things better or less costly, rather than worse and more expensive, I predict that our thought experiment will lead to what in mathematics is called the “null set.”

So far I have found no such provisions, zero. Nought, nada, nichts, zilch.

Jane M. Orient, M.D., is an On Air contributor speaking on Healthcare Reform. Dr. Orient has been in solo practice of general internal medicine since 1981 and is a clinical lecturer in medicine at the University of Arizona College of Medicine. She is the author of Sapira’s Art and Science of Bedside Diagnosis and YOUR Doctor Is Not In: Healthy Skepticism about National Health Care. She is the executive director of the Association of American Physicians and Surgeons.

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20 replies »

  1. Why not kill Insurance Reforms before they can begin. Kill Joy or No Joy? Why not tell everyone to stop whinning and Die already! All of these years you smug profit guzzling manipulators have taunted the uninsured; that Health Care was a Privledge and not a basic Human Right. Now it does become a priviledge that everyone contributes toward as common goal to reduce costs and now the program is demonized as being unprofitable and unworkable! It works for millions of uninsured and uninsurables! The insurance industry handed every element of the bill to your legislators and believe me they stand to profit substantially!
    It is not Obama Care but Insurance Reforms that have been watered Down by Republicans who were sleeping with Health Insurers. I’m tired of the providers and insurers bitching about their Profit ratios.

  2. “Any state that tries to weaken it will be shooting itself in the foot.”
    Weaken what? The already weak mandate? The Obamacare mandate is so weak it is meaningless.

  3. “No state has GI without a mandate and a requirement carriers sell policies at healthy individual rates.”
    I’m glad we agree. And given that every state will have GI starting 2014, it is pretty evident what should be done with regard to the mandate. Any state that tries to weaken it will be shooting itself in the foot.

  4. I am only disagreeing with the author’s assertion that it is impossible to have GI without a mandate.
    I think she clearly said you can’t have a GI without a mandate AND Price control. No state has GI without a mandate and a requirement carriers sell policies at healthy individual rates.
    She clearly said you can have GI if you allow the carrier to charge the fair price of insuring the risk
    “Why should my taxes or my premiums subsidize the catastrophic care of an uninsured who could have afforded his premiums?”
    If you lived in MA that is exactly what is happening. Any state that has GI and any form of rate cap the same thing is happening. This is exactly what ObamaCare mandates.
    States that have a mandate are going to see cost skyrocket, proably more then those that don’t becuase your codifing the path to take advantage of the system. Its giving people a road map on how to abuse the system

  5. Nate, allow me to step out of my flaming limo and do answer the Hummer vs. health insurance question with one word: Taxes.
    Health care should be financed by taxes. I prefer payroll taxes, but I can live with VAT properly defined. Note that this does not necessarily imply single payer, but it does imply universal mandatory coverage, even for Hummer drivers.
    The reason this ACA law is so convoluted and, although a step in the right direction, rather sub-optimal is because essentially it is a half measure, and like all half measures it can create more problems than it solves.

  6. “Paolo you took part of what she said, ignored the other part, repeated the part she ignored then disagreed with her over it?”
    I am only disagreeing with the author’s assertion that it is impossible to have GI without a mandate. This is obviously not true. There are at least 6 states that have been doing this for a while. And if the Republican platform is successful, in 4 years, we will have 49 states doing this.
    “paolo, what would happen if NY required insurers to sell their NY policies at MA rates without the mandate?”
    NY insurers would go out of business.
    “see the problem now?”
    I’m not sure what problem you want me to see. The problem I see is that while GI is here to stay after 2014 (nobody is going to repeal this part of the law), the mandate may or may not persist. States that insist on having no mandate are simply going to see insurance premiums skyrocket.
    With or without the ACA, the uninsured use up health care resources. A person who can afford insurance premiums but chooses to remain uninsured is simply getting a free ride. That person’s risk cost should be coming out of that person’s pocket, not out of the insured or out of the general fund. Why should my taxes or my premiums subsidize the catastrophic care of an uninsured who could have afforded his premiums?

  7. “All that was accomplished through the ACA was that now the American people believe that the government owes them free healthcare.”
    No, most Americans want affordable healthcare. Seniors want free healthcare. But guess who gets what they want – those who actually vote, and/or lobby. Voting percentage of citizens in that last election from 18 to 29 = 11%, over 60 = 34%

  8. “It’s beyound his ability to grasp.”
    Nate, there is only a funding shortage because the system costs too much – even you should realize that since that’s how you make your living, by beating up on everyone in the system. Don’t like that Medicare is sucking tax dollars faster than FICA deductions, then raise FICA, cut benefits and/or pay hospitals/docs/pharma less. But no, no one, not even Repugs has the balls to do that. No one will cut revenues because that’s where politicians get their donations from, they only want to deny care to those that can’t pay into an overly compensated, overly billed money machine. How’s that for “grasp”?

  9. paolo, what would happen if NY required insurers to sell their NY policies at MA rates without the mandate?
    see the problem now?

  10. in lieu of requirement to buy insurance, a true mandate, you could use public funding as the money tree, vouchers, subsidies, etc but that is the basis of medicaid and it is being slashed, government is transfering Medicaid liability to private insurance already, see the age 26 deps.
    Its an option but not
    HCR is fundementally flawed

  11. “The current bill is expected to reduce total health care costs by a significant amount unless the health industry can pay off enough congresscritters to change it in their favor. ”
    No its not, everyone that works in thge industry says this has already increased cost more then it would have other wise and will dramatically effect the system in 2014. This bill will double the healthcare inflation if not changed.
    As expected the liberals missed the point and the details becuase your blind to facts. No matter how many times you say it people like Peter will never grasp that if you somehow created a magical administrator that cost nothing and had no insurance cost at all you wouldn’t make a dent in the funding shortage. It’s beyound his ability to grasp.
    Flaming limo liberals like Margalit can never wrap her head around the fact all but 5 million of the uninsured can afford insurance or are already entitled to free insurance and choose to not take it. Everyone but a hanbful was healthy when they started their life, the problem as the author pointed out is people making the personal decision to not buy insurance when they are healthy and instead buy consumables. Liberals are fundamentally opposed to ever holding anyone accountable for their decisions unless you disagree with them politically. Notice Margalit will never in her life give a logical answer on how to deal with those that can afford insurance but instead buy a hummer.
    Paolo you took part of what she said, ignored the other part, repeated the part she ignored then disagreed with her over it?
    “In a free market, coverage for people with pre-existings might well be available, without any law—if insurers could simply charge a premium reflecting their risk, or limit the potential pay-out. The premium, naturally, could be very high.”
    The problem with GI as proposed is not the GI aspect it is the caps on rating and what can be charged. You don’t need a law to require insurance to sell a policy if they can charge a fair price. The problem, as she clearly pointed out, is HCR requires a policy be sold at an unfair price with no enforcement of purchase. HCR is dependent on a money tree, insureres are somehow going to be able to sell policies below cost to a market that doesn’t have to buy until they need it.
    This all of course blew right over the head of all the liberals that don’t grasp basic market theories and economics yet.

  12. With or without the ACA, healthcare providers, payors, and physicians will experience 3 things in the next 3-5 years:
    1. More patients than we’ve seen at any point in history
    2. Less resources/reimbursement to take care of those patients
    3. We will be asked to provide a better outcome than we have in the past despite points 1&2.
    All that was accomplished through the ACA was that now the American people believe that the government owes them free healthcare. This will be a demand placed on every political candidate now and in the future. Two questions loom: 1. How much control should the government have – after all – they are the largest funding source in healthcare at approx 70% and 2. How will we pay for it? – I personally believe there should be universal access, I just don’t want to foot the bill.
    The solution is simple and yet requires a complete overhaul of the healthcare continuum and the segregated relationships of the 4 P’s involved: Patients, Payors, Providers, and Physicians.
    Under the current system there is minimal if any incentive alignment of these parties. Physicians don’t care if hospitals go broke, payors don’t care if the physician has to see twice as many patients as they did 5 years ago, and patients…well they just don’t want to have to write a check for anything, including insurance premiums and co-pays.
    Look at the salaries of the top hospital/healthcare provider organizations, look at the top salaries of the payor/insurance organizations, and look at the top salaries of national physician group management companies – do you think it isn’t lucrative to “work the system”
    Here’s the problem:
    An 87 year old lady shows up in the hospital coughing, wheezing and has a low grade temp. The chest x-ray reveals mild pleural effusions. These are clear signs and symptoms of pneumonia. Ideally the physician would prescribe some P.O. antibiotics and send the patient home, however the patient is mildly confused and lives at home alone. Fear of malpractice and the fact that this physician is paid staff at the hospital and, oh yeah, the patient is a Medicare beneficiary.
    The patient is admitted and gets to spend a few days in the hospital on IV ABX and possibly get to visit an LTACH. All of this resulting in tens of thousands of dollars of care versus a few hundred dollars for a quick trip to the ER and a single prescription.
    The system doesn’t allow us to take care of the patient the “right” way, so we treat according to what the system will pay.
    See my blog for solutions to these problems
    http://healthcareguru.wordpress.com/2010/03/16/ancillary-service-utilization/

  13. The real weakness of ACA is not limiting the incomes or billing practices of Dr. Orient and her colleagues. She hasn’t even investigated the income limitations of the “house burning down” Medicaid. Using an insurance mindset to solve healthcare won’t solve healthcare cost issues, unless you only want to control cost by denying care.
    “It’s a matter of redistributing money from those who earn more than 400% of the federal poverty level (around $88,000) to those who earn less.”
    No, it’s about redistributing money from private hospitals, specialists, insurance companies and other providers who get rich from other peoples misery.

  14. “This popular part of ACA is impossible without the hated and unconstitutional individual and employer mandates.”
    Actually, it’s not impossible. Several states like NY, NJ, or VT have had GI with no mandate for years. They simply have more expensive individual insurance than a state like MA where there is a mandate.
    For example, in MA a 40-year old male can purchase insurance for himself for $200-$300 / mo. In NY, the same person would pay over $1000/mo.

  15. The point of the post, MG, is pure and simple propaganda. Fasten your seatbelt because this is going to occur daily until the 2012 elections.
    The fifty million uninsured are of no concern here. After all, according to Devon, Americans should have the coverage they can “afford”. Can’t get clearer than that.
    Since most people are healthy at any given moment in time, pitting the “healthy” against the “sick” is also rather brilliant. Almost as good as inciting the “young” against the “old”, because everybody knows that if you happen to be young and healthy on election day, you will remain young and healthy forever, or at least until the next election.

  16. Dr Orient’s objections to the Affordable Care Act seem to boil down to two less-than-startling points:
    1. The healthy don’t want to subsidize the sick—at least until they get sick themselves.
    2. Her Association’s member physicians and surgeons want to continue to increase their incomes without any interference from anyone.
    There’s little question that ACA is less than perfect, but perhaps Dr Orient might reveal to us her secret solution to the problems of fifty million uninsured and health care premiums increasing at more than three times GDP.
    Devon Herrick’s comment is rather more constructive, but I wonder what kind of minimum catastrophic coverage he has in mind, and how its actuarial value would compare to ACA’s requirements. ACA allows for catastrophic coverage for young adults, while the actuarial value of 60 percent for the Bronze benefit level (the minimum for everyone else) equates to some $2500 in out-of-pocket costs for the average enrollee, and far more for the really sick.

  17. What exactly was the point of this post besides taking idealogical potshots and rehasing the terribly obvious? I am disagree with Nate but at least he brings some points/facts to his comment posts.

  18. Considering the political situation, repeal is not likely. The Republicans would like to eliminate restrictions on the health industry but these are what most consumers consider the “good” parts of the bill. These are not likely to be repealed either.
    The current bill is expected to reduce total health care costs by a significant amount unless the health industry can pay off enough congresscritters to change it in their favor.
    I think we have political gridlock and we should learn to love the ACA.

  19. Good post!
    Another factor that makes GI/CR unstable is the PPACA’s “essential benefit package” that requires all individuals have comprehensive coverage — rather than the coverage most Americans can afford. People with pre-existing conditions can often obtain coverage by increasing their deductibles. But high-deductible don’t provide large cross-subsidies from healthy to sick that public health advocates desire. If the mandate only required catastrophic coverage (like auto insurance only requires liability) it might be easier to implement. The problem with any mandate is self-interest: special interests will lobby to require their respective services be included in the benefit package; consumers will game the system and wait to sign up until they need care.

  20. “If we continue to scour through the ACA looking for isolated good points that will make things better or less costly, rather than worse and more expensive, I predict that our thought experiment will lead to what in mathematics is called the “null set.””
    That would of course depend on the definition of “good”.

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