Medical Robbery

So what about Obamacare?

Unfortunately this has become a litmus test issue from which people derive their political identification and affiliation. Wild claims and counterclaims have gone on now for years along with judicial procedures going all the way to the Supreme Court. And more cases are on their way.

Among those claims and counterclaims there has been very little said about the main topic of this blog, the cost of American healthcare. Yet one of the most potent criticisms that can be laid against Obamacare is precisely that it does very little about medical costs. Instead it has focused on widening the access to health services to the previously uninsured which numbered in the tens of millions of people. So it is really health insurance reform rather than a bona fide reform of the healthcare system. The same market-destroying shenanigans of hospitals and pharmaceuticals can continue under Obamacare as they did before. 

Obamacare increases access to healthcare services in two major ways: by not letting insurance companies deny coverage because of current or prior illness and by offering subsidies to lower wage earners in order to make insurance more affordable.  But by not seriously addressing the pricing problem, it is just changing the pockets hospitals and pharmaceuticals get to pick. Instead of patients' pockets, they get their collective claws in those of the general taxpayer and of healthy individuals. Healthy, usually younger individuals will be forced to pay premiums to cover the scandalous prices the sick incur and the taxpayer will cover the scandalous prices the poor under Medicaid run up. But in the end the system remains broken and unsustainable, for the reasons we have stated in prior posts.

Having said that, Obamacare does deal with pricing in three small ways. One, it forces hospitals that receive federal funds to make the charge master public. If anything this provision will force hospitals to explain their fees to the media and the public. Of course, they will plead indigent care, PPO discounts, and a variety of other excuses that can be dressed up real nicely. Two, hospitals that call themselves "non-profit" and are thus free of federal taxation, will not be able to bill charge master rates to private patients. They will have to offer them the same "discount" they offer insurance companies. Unfortunately--and for unknown reasons--four years after passage of the law, regulations for implementing these two provisions have not yet been issued.  

The government is also moving toward a "bundled payment" system for Medicare patients. Since Medicare pays rates much lower than what hospitals charge everybody else, the hospitals get back by piling on the services they provide, often to the dying. A bundled payment is one sum for a given procedure, say a knee replacement. If the doctors and hospitals do everything right and efficiently, the payment can be generous. But if things don't go right, say a readmission becomes necessary, the hospital gets to charge no more, unlike at present. This may lead to better and lower cost medicine, if it ever becomes general practice. As stated in a prior post, some surgical centers are already using a "bundled" or an "all inclusive" payment.

The key question to both supporters and opponents of Obamacare is, how do you propose to keep medical costs down? Without a good answer to that question, the controversy becomes mere political theater.