OP-ED

What Most Needs Repealing and Replacing

Tomorrow night the House of Representatives will debate the repeal of the Patient Protection and Affordable Care Act (ACA), what many call “ObamaCare.” Some critics complain that this is a futile exercise because there is little chance of short-term success. But that’s the wrong way to look at it.

At the time of its passage, most members of Congress had no idea what was in the ACA. Nancy Pelosi was more correct than she realized when she said, “We have to pass it to see what’s in it.” Even now, we don’t know half of “what’s in it,” but we know enough to have an intelligent debate. Ideally, tomorrow night’s proceedings will be educational — in a way that the debate last spring was not.

In anticipation of the event, representatives from the National Center for Policy Analysis, the Heritage Foundation, the American Enterprise Institute, the Cato Institute and the American Action Forum will conduct a briefing on Capitol Hill tomorrow at noon. Our goal: to discuss ten structural flaws in the Affordable Care Act. We believe each of these is so potentially damaging, Congress will have to resort to major corrective action even if the critics of the ACA are not involved. Further, each must be addressed in any new attempt to create workable health care reform.

1.  An Impossible Mandate

Problem: The ACA requires individuals to buy a health insurance plan whose cost will grow at twice the rate of growth of their incomes. Not only will health care claim more and more of every family’s disposable income, the act takes away many of the tools the private sector now uses to control costs.

Solution: 1) Repeal the individual and employer mandates, 2) offer a generous tax subsidy to people to obtain insurance, but 3) allow them the freedom and flexibility to adjust their benefits and cost-sharing in order to control costs.

2.  A Bizarre System of Subsidies

Problem: The ACA offers radically different subsidies to people at the same income level, depending on where they obtain their health insurance — at work, through an exchange or through Medicaid. The subsidies (and the accompanying mandates) will cause millions of employees to lose their employer plans and may cause them to lose their jobs as well. At a minimum, these subsidies will cause a huge, uneconomical restructuring of American industry.

Solution: Offer people the same tax relief for health insurance, regardless of where it is obtained or purchased — preferably in the form of a lump-sum, refundable tax credit.

3.  Perverse Incentives for Insurers

Problem: The ACA creates perverse incentives for insurers and employers (worse than under the current system) to attract the healthy and avoid the sick, and to overprovide to the healthy (to encourage them to stay) and underprovide to the sick (to encourage them to leave).

Solution: Instead of requiring insurers to ignore the fact that some people are sicker and more costly to insure than others, adopt a system that compensates them for the higher expected costs — ideally making a high-cost enrollee just as attractive to an insurer as low-cost enrollee.

4.  Perverse Incentives for Individuals

Problem: The ACA allows individuals to remain uninsured while they are healthy (paying a small fine or no fine at all) and to enroll in a health plan after they get sick (paying the same premium everyone else is paying). No insurance pool can survive the gaming of the system that is likely to ensue.

Solution: People who remain continuously insured should not be penalized if they have to change insurers; but people who are willfully uninsured should not be able to completely free ride on others by gaming the system.

5.  Impossible Expectations/A Tattered Safety Net

Problem: The ACA aims to insure as many as 34 million uninsured people. Economic studies suggest they will try to double their consumption of medical care. Yet the act creates not one new doctor, nurse or paramedical personnel. We can expect as many as 900,000 additional emergency room visits every year — mainly by new enrollees in Medicaid — and 23 million are expected to remain uninsured. Yet, as was the case in Massachusetts, not only is there no mechanism to ensure that funding will be there for safety net institutions that will shoulder the biggest burdens, their “disproportionate share” funds are slated to be cut.

Solution: 1) Liberate the supply side of the market by allowing nurses, paramedics and pharmacists to deliver care they are competent to deliver; 2) allow Medicare and Medicaid to cover walk-in clinics at shopping malls and other unconventional care — paying market prices; 3) free doctors to provide lower-cost, higher-quality services in the manner described below; and 4) redirect unclaimed health insurance tax credits (for people who elect to remain uninsured) to the safety net institutions in the areas where they live — to provide a source of funds in case they cannot pay their own medical bills.

6.  Impossible Benefit Cuts for Seniors

Problem: The ACA’s cuts in Medicare are draconian.  By 2017, seniors in such cities as Dallas, Houston and San Antonio will lose one-third of their benefits. By 2020, Medicare nationwide will pay doctors and hospitals less than what Medicaid pays. Seniors will be lined up behind Medicaid patients at community health centers and safety net hospitals unless this is changed. Either 1) these cuts were never a serious way to fund the ACA, because Congress will cave and restore them, or 2) the elderly and the disabled will be in a separate (and inferior) health care system.

Solution: Many of the cuts to Medicare will have to be restored. However, Medicare cost increases can be slowed by empowering patients and doctors to find efficiencies and eliminate waste in the manner described below.

7.  Impossible Burden for the States

Problem: Even as the ACA requires people to obtain insurance and fines them if they do not, the states will receive no additional help if the estimated 10 million currently Medicaid-eligible people decide to enroll. Although there is substantial help for the newly eligible enrollees, the states will still face a multibillion dollar, unfunded liability the states cannot afford.

Solution: States need the opportunity and flexibility to manage their own health programs — without federal interference.  Ideally, they should receive a block grant with each state’s proportion determined by its percent of the nation’s poverty population.

8.  Lack of Portability

Problem: The single biggest health insurance problem for most Americans is the lack of portability. If history is a guide, 80% of the 78 million baby boomers will retire before they become eligible for Medicare. Two-thirds of them have no promise of postretirement health care from an employer. If they have above-average incomes, they will receive little or no tax relief when they try to purchase insurance in the newly created health insurance exchange. To make matters worse, the ACA appears to encourage employers to drop the postretirement health plans that are now in place.

Solution: 1) Allow employers to do something they are now barred from doing: purchase personally-owned, portable health insurance for their employees. Such insurance should travel with the individual — from job to job and in and out of the labor market; 2) Give retirees the same tax relief now available only to employees; and 3) Allow employers and employees to save for postretirement care in tax-free accounts.

9.  Over-Regulated Patients

Problem: The ACA forces people to spend their premium dollars on first-dollar coverage for a long list of diagnostic tests. Yet if everyone in America takes advantage of all of the free preventative care the ACA promises, family doctors will be spending all their time delivering care to basically healthy people — with no time to do anything else. At the same time, the ACA encourages the healthy to over consume care, it leaves chronic patients trapped in a third-party payment system that is fragmented, uncoordinated, wasteful and designed for everyone other than the patient.

Solution: 1) Instead of dictating deductibles and copayments, give patients greater freedom to save for their own small dollar expenses in health savings accounts, which they own and control; and let them make their own consumption decisions. 2) Allow the chronically ill access to special health accounts, following the example of Medicaid’s highly successful Cash and Counseling program, which allows home-bound, low-income disabled patients to control their own budgets and hire and fire those who provide them with services.

10.  Over-Regulated Doctors

Problem: The people in the best position to find ways to reduce costs and increase quality are the nation’s 778,000 doctors.  Yet today they are trapped in a payment system virtually dictated by Medicare. The ACA promises to make this problem worse by encouraging even more unhealthy government intervention into the practice of medicine.

Solution: Providers should be free to repackage and reprice their services under Medicare. As long as their proposals reduce costs and raise quality, Medicare should encourage resourceful, innovative attempts to create a better health care system.

John C. Goodman, PhD, is president and CEO of the National Center for Policy Analysis.  He is also the Kellye Wright Fellow in health care. The mission of the Wright Fellowship is to promote a more patient-centered, consumer-driven health care system. Dr. Goodman’s Health Policy Blog is considered among the top conservative health care blogs on the internet where pro-free enterprise, private sector solutions to health care problems are discussed by top health policy experts from all sides of the political spectrum.

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SylviaPeterpcpTTTLynn Recent comment authors
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steve
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steve

They should also add int eh large percentage that goes to billing costs and admin costs due to private insurance.
http://content.healthaffairs.org/content/24/6/1629.full
Steve

nate
Guest
nate

“a single-pay system would be the most efficient using the present tax system to collect payment at source.” Statements like this is why liberals should just be ignored when grown up decisions are required. I would hate to see what Peter considers an inefficient system. “In the United States, the IRS estimated in 2007 that Americans owed $345 billion more than they paid, or about 14% of federal revenues for the fiscal year of 2007.[4]” It would be interesting for someone with a college degree to estiamte what would happen if you combine 10% payment fraud, like Medicare has, with… Read more »

nate
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nate

“where was this discussion and presentation from Republicans during the ACA debates?”
Peter are you really that ignorant of how congress works? If Reid doesn’t allow a presentation there is nothing Republicans can do to make one but call a press conference on the steps and hope the media reprots it. Same with Pelosi. Its scary that people as poorly informed as you are actually allowed to vote.

DeterminedMD
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DeterminedMD

Nice projection by a lawyer, Peter, regarding fearing not having control over all 100% of your life. You know, many doctors chose medicine partially for having some autonomy, but legal intrusions have basically ruined that as an option.
Jumping up and down shouting “hurray, hurray”, eh, Peter?
Don’t get sick after 2014, unless you can perform surgery on yourself or figure out how to write for your own antibiotics. Or, watch a couple of segments of “1000 ways to Die” on Spike TV for some ideas of how to treat yourself.

Peter
Guest
Peter

“Over regulated Doctors” resonated with me most as it is true – not one new doctor is created yet it feels like the doctors will have to spend MORE time performing heroics in paperwork than with patients.”
Ever look at the heroics in paperwork created by the private insurance industry? Doctors always fear anything they don’t have 100% control of, that includes medicine. Bitch, bitch, get another profession and see if life gets easier.

Sylvia
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Sylvia

Thank you for this extremely well, thought-out post. “5. Impossible Expectations/A Tattered Safety Net” and “10. Over regulated Doctors” resonated with me most as it is true – not one new doctor is created yet it feels like the doctors will have to spend MORE time performing heroics in paperwork than with patients.
Did you see the study/survey out yesterday regarding doctors ‘fearing’ healthcare reform? http://www.myfoxboston.com/dpp/news/national/us-doctors-fear-health-care-reform-study-claims-25-ncx-20110119
Portability and a burden on the states are next on my list. All in all, thank you for 10 points that really summarized what the issues are.

Peter
Guest
Peter

I agree, where was this discussion and presentation from Republicans during the ACA debates? I see most of John’s proposals keeping the present tiered access system so that wealthy Americans continue to get all the health care they want, and lower income citizens must still struggle for affordable care and access. His proposals also do nothing to cut national health costs. He also misses the facts. The fine for non-purchase of insurance is actually the GREATER of $695 to a max of $2085 or 2.5% of income – no small fine. Of course a single-pay system would be the most… Read more »

steve
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steve

“a) any test that was done recently by another provider would be a good start. Administering medicare supps we would always see the same test being ran by multiple providers.” 1) Incentives matter. Docs, when they financially benefit from the tests, are incented to perform them. Of course the part you miss, is the office staff time, hence money, it takes to deal with private insurers to get pre-approvals. Again, much more of my billing costs go to dealing with private insurer problems than Medicare. 2) A lot of tests are repeated since we cannot get access to the old… Read more »

pcp
Guest
pcp

Thanks for the response. I was not criticizing Dr. and Dr. Schwartz, but the reporter who made the false connection between the problems the docs face and the ACA.

DeterminedMD
Guest
DeterminedMD

Thank you for the disclaimer. And, it is now 2011, we still do not know the entirety of the facts to this bill, and yet it seems to be more likely truth than falsehoods about costs, and misleading conclusions by the CBO that Democrats still use as defense today. I just want to know, will you contact the Schwartzes to let them know they at least are not accurate in what they report to the press, because you have all the facts and know better? That is how your comments come across! Hey, I’ve been doing Locum work for the… Read more »

pcp
Guest
pcp

“To tell readers to not read an article, to not make the time to independently read a legitimate story” All I did was make a recommendation. An article that blames “Obamacare” for the problems these two doctors have with private insurance company pre-auths is problematic, to say the least. “fully digested it to summarize it to your alleged conclusion it being 906” Nothing alleged. It’s a fact. The bill is 906 pages, with enormous margins. “And my guess is ‘pcp’ here has figured out how to benefit from it” Please note that I have NEVER said I support this bill.… Read more »

DeterminedMD
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DeterminedMD

I have two issues with commenters like you in your above statements: 1. To tell readers to not read an article, to not make the time to independently read a legitimate story, because they should take your opinion as the one and only faith is beyond presumptuous, it is demeaning, like the Democrap rhetoric behind this debate now in the first place! 2. While I am impressed, if you truly read all of what, 2400+ pages, and fully digested it to summarize it to your alleged conclusion it being 906 “low-text density”, then why did it not get slimmed down… Read more »

pcp
Guest
pcp

DeterminedMD:
If you would read the bill, as I have done, you would find that it is 906 low-text density pages. Long, but well within the normal range for a piece of legislation.
You would do well to get your basic facts straight before beginning your rants.

pcp
Guest
pcp

The article discusses the Drs. Schwartz:
“Lately, they’ve faced their share of challenges, including some that are a result of Obamacare”
That’s total BS, so don’t waste your time reading the article. The problems the Schwartzes (and most other doctors) are facing have nothing to do with the ACA.

DeterminedMD
Guest
DeterminedMD

Also, read this link at the washington examinier by Tina Korbe today, I think it says nicely what is going on with physicians on the front line, not the disgusting false rhetoric by corporate medicine that supports this montrosity legislation, like the AMA lackies!!!!
http://washingtonexaminer.com/print/opinion/op-eds/2011/01/tina-korbe-house-debates-repeal-new-jersey-doctor-and-wife-struggle-obamacare?utm_source=feedburner%20dcexaminer%2FOped-contributors&utm_medium=feed%20OpEd-Contributors&utm_campaign=Feed%3A%20dcexaminer%2FOped-contributors%20%28OpEd-Contributors%29&utm_content=%24{distributionCha&utm_term=feed%24{distributionEndp
hope the link works!