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Posted by on Mar 23, 2010 in Health, Politics | 11 comments

Short-term benefits, long-term shortfalls of health care passage

In the media afterglow of the historic signing of the health care reform bill, the immediate advantages of the legislation’s passage are rightfully being highlighted in news reports and analyses. Children cannot now be denied coverage based on pre-existing conditions, and insurers cannot drop their clients because they get sick. No matter how you felt about the bill’s passage, these are decent policies that are helpful reforms to the system.

They also didn’t need a 2,000-page+ bill written around them – and they don’t tell the whole story about the state of health care that we’ll be entering into courtesy of the bill’s passage. This will be forgotten in the euphoric coverage and human interest stories that will inevitably come, but the long view must not be forgotten.

For all the talk about the uninsured getting covered, what’s lost is that there will remain significant numbers of Americans without coverage. In a March 11th report, the CBO estimated that there wouldn’t be any significant drop in the number of uninsured Americans until 2014. Five years later in 2019, 23 million Americans will still be without insurance. This is less than the 54 million projected uninsured, so this is the source of the “coverage to 32 million” being touted.

During this time, premiums will not decrease – rather the rate of increase will be less than what it might have been otherwise. Sen. Dick Durbin alluded to this during remarks last week, and the Associated Press came to the same conclusion as well. It might bend the cost curve for consumers in a more friendly direction, but it won’t make health care costs go down.

In addition, employers will gradually be forced into offering their employees health care coverage, and some will need to buy more expensive plans to meet the new minimum requirements. Subsidies are advertised to make up much of the difference, as well as alleviating premium costs to individuals – but subsidies are more money out of the Federal Treasury that must be accounted for.

It brings us to cost. The CBO score (which helpfully looks at a window that only has government spending for half of the decade examined) that so many hailed as the game-changer in the House debate said that the bill would “only” cost $948 billion and shave $118 billion off the deficit over a 10-year time span (note: the operating deficit in one month, last month, was $248 billion. In a report the next day, the CBO acknowledge the Medicare “doc fix,” which updates reimbursement rates and has been pushed by Democrats as a means of letting doctors take Medicare patients without losing large amounts of money. It turns out that this package, which has been seen in separate bills in the House and Senate, would tack on an additional $208 billion to the price tag. And if the first 10 years of actual spending were scored (2014-2023), the actual price tag for a decade is over $2 trillion.

Cuts in Medicare will partially offset this, but that will also leave some seniors to find alternate methods of health insurance – which they’ll be mandated to buy, along with the rest of us, starting in 2014. The constitutionality of an individual mandate throws another wrinkle into the entire puzzle and should a court challenge strike it down (which I don’t believe is extremely likely at this point), a great majority of the house of cards will fall.

None of this even scratches the surface of the impact on actual health care providers as insurance companies are likely to lower their reimbursement rates to keep their costs in check. This will put the squeeze on hospitals and testing laboratories and may result in lower salaries or layoffs – which will negatively impact patient care.

Keep all of this in mind over the next few months as heart-warming stories and anecdotes are broadcast far and wide about the immediate positive effects of this new health care law. What’s bad about this law isn’t what happens in the first few months, but the state it puts us in over the next several years.

The narrative now is that Something Was Done – though what the something actually “is” doesn’t seem to matter much now. But, as before the law’s passage, there are legitimate reasons that people have to be concerned about the new law. It might be easier to accuse them of wanting kids to die of cancer or of just hating Obama – but the cold numbers reveal an increasingly risky future that isn’t secured by the passage of this law.

The legitimate question can be asked, “Why does this still matter? The battle’s over, the victors are flushed with righteous glory.” It matters because all of this will still need to be reckoned with in the years ahead. Searching for the short-lived political benefit to one party or the other is a myopic brush-off of the financial and societal reality that won’t be felt until years after the newsprint accolades have yellowed and the television pundits have been cancelled.

Cross-posted at Wellsy’s World

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Copyright 2010 The Moderate Voice
  • elrod

    How can you call for cuts in health care costs and simultaneously lament cuts in reimbursement rates? Won’t that, by definition, lead to cuts in health care costs? Isn’t that the point?

    The best way to cut costs is a public option. If mandates get thrown out by the courts you can bet that a public option will replace it. After all, the AG lawsuits charge that the government cannot force citizens to purchase a private good. Well, fine. Make it a public good like a tax and then it’s clearly Constitutional.

  • DLS

    “How can you call for cuts in health care costs and simultaneously lament cuts in reimbursement rates?”

    Well, if it causes doctors to refuse to accept patients (which happens with Medicare and Medicaid now), or providers lose money on these programs, we can’t expect the programs as is to encompass everybody.

    “If mandates get thrown out by the courts you can bet that a public option will replace it.”

    Don’t be surprised if the “single-payer” (and related — Medicare buy-in) crowd makes their own appeal and effort.

    “the government cannot force citizens to purchase a private good”

    I believe the feds can do this. They certainly are doing this by using taxes (that we must pay) for public services that are subcontracted. (And there are special examples, like Blackwater or Halliburton in Iraq!)

  • Schadenfreude_lives

    To those of us who did not let desire for HCR at any and all costs blind us to the outright lies and misrepresentations, the $2T price tag and the deficit busting aspects of this bill are no surprise.

    However, even those numbers are too low, as they do not take into account the detrimental effect on jobs and the recession, plus the additional fuel the massive borrowing and tax increases will put on inflationary pressures.

    And for its next great trick, Congress now seems ready to really try and destroy the economy directly through cap and trade and other ‘global warming’ initiatives. Nary a peep about jobs or deficit reduction, though.

    Hope and change!

    • DLS

      “Nary a peep about jobs or deficit reduction, though.”

      That’s too conventional. Besides, those 3% deficits forever kind of spoil that claim, anyway.

      No, we’re still waiting to see if the Demmies go on a rampage now that they’ve broken out of their self-made cage. Inmates leaving the confines of the asylum — will they go berserk, on a rampage of lefty legislation?

      The global warming worshipful are only one thing we may see — energy “reform,” immigration “reform” (sign them up legally for a change to vote this time!), labor law “reform,” financial industry “reform” …

  • $1597245

    You know what republicans, heck the media, are failing to acknowledge about the heath bill, is the education part. If all these doctors are going to leave they need to make sure there will be replacements. Check the scope on the education legislation in the health bill

  • JSpencer

    Imagine, if the republicans had chosen to address healthcare reform at some point during thier long stay in power, the changes could have been kicking in already. Not only that, but they could have been changes of their own construct. Instead they are complaining and spinning because the democrats picked up the ball and did something with it. I reckon I’d rather have an imperfect healthcare reform bill under my belt, one that can be tweaked and improved on, as my contribution to progress in America, than oh… say a horrible and unnecessary war in the middle east – a war whose trappings will still be creating fallout long after the democrat HCR has been fine tuned and realized as a success… probably even by republicans. Just helping a bit with the perspective here. 😉

  • elrod

    Now that this HCR law is passed I’d like to see:
    1) Tort reform, and
    2) A subsidy program for medical school tuition

    Cost controls are absolutely necessary – including reduction in reimbursement rates. However, we can mitigate the effect it will have on the supply of doctors by exempting them from lawsuits – along with a strong governing body that defrocks doctors who actually are guilty of medical malpractice – and by covering the costs of med school.

    Most people become doctors not because they want to be rich, but because they want to “do good.” If we are going to cut their payment rates – and we should – then we should cut the costs of entrance to the field.

    • ProfElwood

      Medical education costs have been driven up by the AMA, in their overly successful attempts to limit the number of doctors. Medical reimbursement rates aren’t too high or too low, they’re both. Since the scale is determined more by politics than need, they’re a gravy train for some, a starvation diet for others.

      One of the most important reforms is being fought by both sides: limits. There’s needs to be some point where a treatment may be possible, but simply not worth it. Currently, patients aren’t being given realistic outcome assessments and the payers, both private and public, are paying for them.

  • DLS

    “A subsidy program for medical school tuition”

    It can be bolder than that, Elrod, and may need to be.

    Places like the emptying northern Great Plains and other rural areas, as well as inner-city areas, the places where Bernie Sanders’s clinics may be established, are in need of providers. A serious short-to-medium-term (say, through the 2020s or even the 2030s) could have a “service” component to school payment by the federal government (also the states, but nobody thinks much about the states and their role nowadays). How about payment of expenses (tuition, “room and board,” and a living stipend that is generous, not slave wages) for not only the educational years but one’s residency, effectively putting the doctors doing their residencies and beyond, maybe for the five first years of pratice, in underserved areas?

    That includes parts of the country near and dear to you, in fact.

  • DLS

    “reduction in reimbursement rates”

    I have mixed feeling about this. It’s no panacea. Medicare and Medicaid underpay currently, and there’s no excuse for reimbursement that actually causes providers to lose money and actually force them to engage in cost-shifting if they must take government patients. But obviously “costs” is not the same thing as “charges,” and in the end what you’ll see either going to Medicare for all of us, or VA eventually to be able to control costs even more and better, is the need to stop “leakage” into the private sector, or as I call it, the “public option” (which disenchanged government patients will seek unless it’s prevented). Typical forethought or foresight like Conyers’s (in his Medicare for All bill) prohibits private duplication of anything intended to be public and non-profit (to control costs as well as to ensure and defend universality, something neglected by many of you on here and elsewhere).

    What we’ll probably see someday is at least Medicare for everyone, no private duplication to prevent “leakage” of affluent voluntary fllight to the private sector, and if not VA then at least goverment takeover of the expensive “infrastural” things like expensive hospitals (public utility model) to control costs.
    (that and government rationing and appropriateness cost-control impositions)

  • DLS

    “the “public option” (which disenchanged government patients will seek unless it’s prevented)”

    Bad typos today and other problems (including vision problems and time constraints). Sorry.


    the “private option,” which will materialize among disenchanted affluent public-care consumers, unless it’s prevented, typically by prohibition of private duplication of public heath care benefits — stopping “leakage” out of public care and erosion of universality

    It’s obvious and predictable.

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