Why Obamacare Won’t Work

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With all the controversy over specifics and politicians wrangling for more power, people have missed the big picture.

The big picture is simple:  Obamacare fails at every major goal is has set out to achieve.

Let us take another step back in the health care debate.  After all the yelling, screaming, and demagoguery, what exactly are our leaders trying to achieve?  Ultimately, when you boil it down, they want to accomplish two major things:  universal coverage, and minimizing increases in costs.

Here is the scary thing:  after spending a $1 trillion more in the next decade…the Democrats bill will do neither.

Why will this bill fail in achieving those simple goals?

1.  There is no increase in competition.

For some reason, Democrats don’t understand what competition means.  Competition in the marketplace is a fight to the bottom…as in, the bottom dollar.

The neoliberal version of competition places the government, in one form or another, as the driving force in costs.  But that is just it:  that is exactly what has been happening in health care in this country for decades.  Medicare is the standard by which all insurance companies base their payment schedule on.  So the liberal argument for a new insurer simply is no change at all.

The public option would have set up a system by which no private insurer could compete.  Neoliberals would argue that means the private option is more efficient.  That is ludicrous.  What is does mean is that when government runs a system, it does not abide by the same rules as the rest of the world.  The public option would not pay taxes, either on the local, state, or federal level.  It would be exempt from most state regulations.  It would likely be exempt from state courts.  The list of built in advantages goes on and on.  But the one place it would not give an advantage is the bottom dollar.

The one option that could have really decreased cost, the removal of that anti-trust exemption that would allow insurance to be sold across state lines, was blocked by Democrats and Republicans alike…for purely political reasons.  And politicians protected employee based coverage, instead of giving all Americans more choice in their own health care.  In the end, big business and big politics won over any cost argument.

2. There is no cost containment.

This actually was the most important issue confronting the health care system.  Finding money to pay for the uninsured is the easy part.  Everyone knows how to solve that.  The hard part is actually, as Obama famously says, ‘to bend the curve’.

Well, the CBO, on every version of the health care bill out there,  has said that none of them will contain the rate of cost increase.  Zero.  Most of them will cost individuals much more than they are paying today, in fact, because we will have to subsidize low income populations and the uninsured.

Atul Gawande, who has written extensively about quality and cost in health care, has an excellent piece on the lack of cost control in the bill in a recent edition of the New Yorker.  I disagree with his ultimate comments on the bill, but his analysis is dead on.

Ultimately, someone needs to ration.  I know, ration is a bad word.  But we as individual ration on a daily basis.  When we choose where we eat, what car we drive, where we live…we self ration.  What none of us want is ‘big brother’ rationing for us.  We need a system in which all but the most necessary medical care is a choice…a real choice, based on cost.  Sure, things will still not be ‘fair’, but that is the only way to make costs level off.   Without people knowing what everything costs and making decisions based on cost, there is no logic to the system.

3. No fundamental change.

For a party that preaches hope and change, there is remarkably little change in this bill.

For all practical purposes, all the Obamacare bills do is shift the spending from private to public insurers.  It does shift other dollars around (such as Medicare cuts going to subsidize the uninsured),  but it does not really change the way medicine is practiced.

For one, there is no tort reform.  Without tort reform, doctors will continue the very expensive and stupid practice of defensive medicine, which costs the nation billions of dollars.  This was not changed at all.

There was little to no reform on self referral; the practice where doctors send patients for questionable testing because the testing is done in facilities where the physician has an economic self interest.  Much of the increase in imaging costs over the past decade can be attributed to such devices.

And there is no real move toward a system that focuses on cost effective preventative care. Obama talks a lot about this, but ultimately the bill has little or no action on the subject.

4. No deficit control.

I know…President Obama promised that he would not sign a bill that would add to the deficit.  But it depends on how you spin it.

In almost every CBO projection to date, the 10 year study starts in 2010 and ends in 2020.  The actual health care coverage would not begin until 2013.  But the taxes and revenue builders in the bill start in 2010…a full 3 years before the program begins.   Thus, you only have 7 years of a health insurance…but 10 years of taxes.  Quite convenient.

In every CBO estimate, the next decade (2020-2030) would see massive deficits from the Obamacare program, on the scale of trillions, not billions.  Democrats can spin this all they want, but so far they have yet to present any bill that is deficit neutral 20 years out.

5. No universal coverage.

This is the irony of all ironies.  None of these bills would cover 100% of people…some 5-7% of people would still be left out.  What happens to these people?  I really have never heard a good answer from anyone regarding this donut hole.

Liberals are now balking because there is no public option and no cost controls.  Well, there are certainly right about the latter.  In many ways, progressives are correct in their rhetoric:  the current bill is no more than a huge boondoggle for health care insurers, who by no means are innocent in today’s health care crisis.  Without creating more interstate competition, little or no improvement will be made.

UPDATE: Ben Nelson, the last Democrat straggler, has agreed to vote for the Obamacare provision after getting abortion language he wanted, as well as money to pay off his home state.  The irony is, Nelson basically caved.  The abortion statement is no stronger now than last week.  But Nelson got paid off with hundreds of millions of dollars for Nebraska.  I hope the Cornhuskers enjoy it.

No Republicans, including RINOs Snowe or Collins are expected to vote for the bill.  That means this is a Democrat bill, through and through…and they now own it, lock, stock and barrel.

CBO numbers are still pending…but the spin will be the same:  10 years of taxes to fund 7 years of mandates…that is always budget neutral.

Additonally, liberals have been spinning the negative poll numbers (51.6% against/37.9% for on RCP) on the fact that there is no public option and abortion coverage.  So now, will progressive jump on the bandwagon?  I doubt it.