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Medical Costs Outrun President Obama’s Projections

Stanley Feld M.D.,FACP,MACE

No one should be surprised that the cost of
healthcare and medical prices are overrunning projections by the Obama
administration. It was self-evident with the passage of Obamacare. Now it is

President Obama has done all the wrong things to
lower costs and all the right things to raise costs.

Health Care Cost Institute analyzes claims data from UnitedHealth Group Inc.,
Aetna Inc. and Humana Inc.
The Institute said the cost for consumers with
employer-sponsored healthcare insurance plans increased 4.6 percent in 2011.
The government estimated a 3.9% increase for 2011.

A recently published study
by the U.S. Centers for Disease Control and Prevention found the number of
people without insurance climbed 1.7 percent in the first quarter of 2012.

Both numbers are the
opposite of the numbers President Obama promised in 2009 when he was forcing
congress to pass Obamacare.

CDC reported that 47.3 million people lacked insurance, and the health
institute said hospitals and doctors raised prices at a clip that outstripped

Why is President Obama not bending the cost
curve as he promised? I would say he either doesn’t know what he is doing or he
knows precisely what he is doing.

My guess is he is trying to force consumers into
a "Public Option" that will be created by the health insurance exchanges. He is
also trying to stick the cost of this “Public Option” onto state governments.
The state governments are required to balance their budget.

Even before states institute the health
insurance exchanges most states are suffering from large budget deficits when
they are supposed to have a balanced budget.

The health insurance exchanges will make it
worse.  The federal government will have
to bail states out as the payer of last resort. This will increase the federal
deficit even further. The federal government will have to print more money.

Printing more money will devalue savings,
salaries and purchasing power. The result will be further inflation. Somewhere someone like a China will not continue to buy the United State's depth and it will default on payment.

America is currently suffering from inflation.
It is being disguised because the government has eliminated fuel costs and food
costs from inflation calculation.

I believe Americans understand this. Governor
Romney must emphasize this in no uncertain terms.

Affordable Care Act, which
promises to expand coverage to 30 million Americans starting in 2014 and trim
health costs.


 “If you don’t bend the cost curve, ultimately
insurance gets more expensive,” said Douglas Holtz-Eakin, the president of the
American Action Forum, a Washington-based advocacy group that opposes the health
law. “It’s a big problem for the Affordable Care Act.”

Obamacare tries to limit insurers’
administrative expenses and profits. The Healthcare insurance industry is
supposed to pay at least 80% of premiums for direct patient care. (Medical Loss
Ratio of 80

However, President Obama
has permitted the healthcare insurance industry to continue to count expenses
for administrative services into the direct medical services column. The result
is a decrease in the amount of money available for direct patient care.

The Health Care Cost
Institute published the direct cost per person under employer- sponsored plans
increased from $4,349.00 in 2010 to $4,547.00 per person in 2011. United, Cigna
and Humana cover 40 million people.

I have previously published
that the cost per Medicare senior is $6,600 a year.

The obvious question is why
should an employer pay $15,000 to $20,000 dollars a person a year when the cost
is $4,547?

Why should I be paying a
premium of over $15,000 a year in after tax dollars for my Medicare premium and
supplements for my wife and me when it costs $6,600 per person? The $6,600 per
year average includes the sickest seniors. 

Each year the government
increases the Medicare premiums on a means tested basis because it spends money
above my premium cost. 

Keep in mind I have been
paying into the Medicare Trust since 1965. Now I am paying an additional
$15,000 a year for direct services that cost $6,600 per year per person.

Any salary earned by a
senior results in them paying into the Medicare trust.

Someone is ripping off the
system. The likely candidates are the healthcare insurance industry and the ever-increasing
government bureaucracy.

institute created last year to analyze claims data from major insurers, found
that charges for hospital emergency rooms rose 9.1 percent in 2011, after
adjusting for a reduction in the intensity of care they delivered.”

This statistic is a
distraction from the real issue. The real issue is to explain the difference in
direct cost compared to premium costs. 

President Obama believes
that hospitals owning and managing physicians practices will result in best
practices using evidence- based medicine.

I believe a system can be
built to teach independent physicians best practices combined with their use of
clinical judgment.

Holtz-Eakin, former CBO
head, believes that Obamacare encourages consolidation among hospitals and
doctors. The consolidation of hospitals and physicians is leading to greater
pricing power by the hospital system.

The problem with the
consolidation of hospital systems and physician practices, is that physicians
are not receiving an increase in reimbursement for their intellectual property
or technical skills.

The hospital system owns physicians’
intellectual property and technical skills. Its staff does the collecting and
financials. The hospital system enjoys the increase in revenues. The salaries
for its administrators have skyrocketed into an average of 1 million to 5
million dollars a year.

It is clear that the price
of adding 30 million people to the healthcare insurance rolls will increase
costs. The increasing price spiral will not be to the advantage of patients and

The costs will become
unsustainable and the government controlled healthcare system will collapse.

  The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone

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